Exhibit 10.1

C & J Energy Services, Inc.

2012 LONG-TERM INCENTIVE PLAN

(Adopted as of April 5, 2012)

 

  1. Purpose.

The purpose of the Plan is to assist the Company to attract, retain, incentivize
and motivate officers and employees of, consultants to, and non-employee
directors providing services to, the Company and its Subsidiaries and Affiliates
and to promote the success of the Company’s business by providing such
participating individuals with a proprietary interest in the performance of the
Company. The Company believes that this incentive program will cause
participating officers, employees, consultants and non-employee directors to
increase their interest in the welfare of the Company, its Subsidiaries and
Affiliates and to align those interests with those of the stockholders of the
Company, its Subsidiaries and Affiliates.

 

  2. Definitions. For purposes of the Plan:

2.1. “Affiliate” shall mean with respect to any entity, any entity that the
Company, either directly or indirectly through one or more intermediaries, is in
common control with, is controlled by or controls, each within the meaning of
the Securities Act.

2.2. “Award” means, individually or collectively, a grant of an Option,
Restricted Stock, a Restricted Stock Unit, a Stock Appreciation Right, a
Performance Award, a Dividend Equivalent Right, a Share Award or any or all of
them.

2.3. “Award Agreement” means a written or electronic agreement between the
Company and a Participant evidencing the grant of an Award and setting forth the
terms and conditions thereof.

2.4. “Board” means the Board of Directors of the Company.

2.5. “Cause” means, with respect to the Termination of a Participant by the
Company or any Subsidiary of the Company that employs such individual or to
which the Participant performs services (or by the Company on behalf of any such
Subsidiary), such Participant’s (i) refusal or neglect to perform substantially
his or her employment-related duties or services, (ii) personal dishonesty,
incompetence, willful misconduct or breach of fiduciary duty, (iii) indictment
for, conviction of or entering a plea of guilty or nolo contendere to a crime
constituting a felony or his or her willful violation of any applicable law
(other than a traffic violation or other offense or violation outside of the
course of employment or services to the Company or its Subsidiaries which does
not adversely affect the Company and its Subsidiaries or its reputation or the
ability of the Participant to perform his or her employment-related duties or
services or to represent the Company or any Subsidiary of the Company that
employs such Participant or to which the Participant performs services),
(iv) failure to reasonably cooperate, following a request to do so by the
Company, in any internal or governmental investigation of the Company or any of
its Subsidiaries or (v) material breach of any written covenant or agreement
with the Company or any of its Subsidiaries not to disclose any information
pertaining to the Company or such Subsidiary or not to compete or interfere with
the Company or such Subsidiary; provided that, in the case of any Participant
who, as of the date of determination, is party to an effective services,
severance or employment agreement with the Company or any Subsidiary, “Cause”
shall have the meaning, if any, specified in such agreement

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2.6. “Change in Capitalization” means any increase or reduction in the number of
Shares, any change (including, but not limited to, in the case of a spin-off,
dividend or other distribution in respect of Shares, a change in value) in the
Shares or any exchange of Shares for a different number or kind of shares or
other securities of the Company or another corporation, by reason of a
reclassification, recapitalization, merger, consolidation, reorganization,
spin-off, split-up, issuance of warrants, rights or debentures, stock dividend,
stock split or reverse stock split, cash dividend, property dividend,
combination or exchange of shares, repurchase of shares, change in corporate
structure or any similar corporate event or transaction.

2.7. “Change in Control” means the occurrence of any of the following:

(a) An acquisition (other than directly from the Company) of any voting
securities of the Company (the “Voting Securities”) by any Person, immediately
after which such Person has “Beneficial Ownership” (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of the
combined voting power of the Company’s then-outstanding Voting Securities;
provided, however, that in determining whether a Change in Control has occurred
pursuant to this Section 2.7(a), the acquisition of Voting Securities in a
Non-Control Acquisition (as hereinafter defined) shall not constitute a Change
in Control. A “Non-Control Acquisition” shall mean an acquisition by (i) an
employee benefit plan (or a trust forming a part thereof) maintained by (A) the
Company or (B) any corporation or other Person the majority of the voting power,
voting equity securities or equity interest of which is owned, directly or
indirectly, by the Company (for purposes of this definition, a “Related
Entity”), (ii) the Company or any Related Entity or (iii) any Person in
connection with a Non-Control Transaction (as hereinafter defined);

(b) The individuals who, as of the effective date of this Plan are members of
the Board (the “Incumbent Board”), cease for any reason to constitute at least
two-thirds of the members of the Board; provided, however, that if the election,
or nomination for election by the Company’s common stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent Board,
such new director shall, for purposes of this Plan, be considered as a member of
the Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board (a “Proxy Contest”)
including by reason of any agreement intended to avoid or settle any Proxy
Contest;

(c) The consummation of:

(i) A merger, consolidation or reorganization (x) with or into the Company or
(y) in which securities of the Company are issued (a “Merger”), unless such
Merger is a Non-Control Transaction. A “Non-Control Transaction” shall mean a
Merger in which:

 

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(A) the stockholders of the Company immediately before such Merger own directly
or indirectly immediately following such Merger at least a majority of the
combined voting power of the outstanding voting securities of (1) the
corporation resulting from such Merger (the “Surviving Corporation”), if fifty
percent (50%) or more of the combined voting power of the then outstanding
voting securities of the Surviving Corporation is not Beneficially Owned,
directly or indirectly, by another Person (a “Parent Corporation”), or (2) if
there is one or more than one Parent Corporation, the ultimate Parent
Corporation;

(B) the individuals who were members of the Board immediately prior to the
execution of the agreement providing for such Merger constitute at least a
majority of the members of the board of directors of (1) the Surviving
Corporation, if there is no Parent Corporation, or (2) if there is one or more
than one Parent Corporation, the ultimate Parent Corporation; and

(C) no Person other than (1) the Company or another corporation that is a party
to the agreement of Merger, (2) any Related Entity, (3) any employee benefit
plan (or any trust forming a part thereof) that, immediately prior to the
Merger, was maintained by the Company or any Related Entity or (4) any Person
who, immediately prior to the Merger, had Beneficial Ownership of Voting
Securities representing more than fifty percent (50%) of the combined voting
power of the Company’s then-outstanding Voting Securities, has Beneficial
Ownership, directly or indirectly, of fifty percent (50%) or more of the
combined voting power of the outstanding voting securities of (x) the Surviving
Corporation, if there is no Parent Corporation, or (y) if there is one or more
than one Parent Corporation, the ultimate Parent Corporation;

(ii) A complete liquidation or dissolution of the Company; or

(iii) The sale or other disposition of all or substantially all of the assets of
the Company and its Subsidiaries taken as a whole to any Person (other than
(x) a transfer to a Related Entity or (y) the distribution to the Company’s
stockholders of the stock of a Related Entity or any other assets).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the “Subject Person”) acquired Beneficial Ownership
of more than the permitted amount of the then outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Company which, by reducing
the number of Voting Securities then outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person; provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company and, after such
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities and such Beneficial Ownership increases the
percentage of the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.

 

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2.8. “Code” means the Internal Revenue Code of 1986, as amended.

2.9. “Committee” means the Committee which administers the Plan as provided in
Section 3.

2.10. “Company” means C&J Energy Services, Inc., a Delaware corporation, or any
successor thereto.

2.11. “Consultant” means any consultant or advisor who is a natural person and
who renders services to the Company or a Subsidiary that (a) are not in
connection with the offer and sale of the Company’s securities in a capital
raising transaction and (b) do not directly or indirectly promote or maintain a
market for the Company’s securities. but who is not an Employee or Director.

2.12. “Corporate Transaction” means (a) a merger, consolidation, reorganization,
recapitalization or other similar change in the Company’s capital stock or (b) a
liquidation or dissolution of the Company. For the avoidance of doubt, a
Corporate Transaction may be a transaction that is also a Change in Control.

2.13. “Covered Employee” means, for any Performance Period:

(a) an Employee who

(i) as of the beginning of the Performance Period is an officer subject to
Section 16 of the Exchange Act, and

(ii) prior to determining Performance Objectives for the Performance Period
pursuant to Section 9, the Committee designates as a Covered Employee for
purposes of this Plan; provided that, if the Committee does not make the
designation in clause (ii) for a Performance Period, all Employees described in
clause (i) shall be deemed to be Covered Employees for purposes of this Plan,
and

(b) any other Employee that the Committee designates as a Covered Employee for
purposes of this Plan.

2.14. “Director” means a member of the Board.

2.15. “Disability” means permanent and total disability as defined in Code
Section 22(e)(3). A determination of Disability may be made by a physician
selected or approved by the Committee and, in this respect, the Participant
shall submit to any reasonable examination(s) required by such physician upon
request. Notwithstanding the foregoing provisions of this Section 2.15, in the
event any Award is considered to be “deferred compensation” as that term is
defined under Section 409A of the Code, then, in lieu of the foregoing
definition and to the extent necessary to comply with the requirements of
Section 409A of the Code, the definition of “Disability” for purposes of such
Award shall be the definition of “disability” provided for under Section 409A of
the Code and the regulations or other guidance issued thereunder.

 

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2.16. “Division” means any of the operating units or divisions of the Company
designated as a Division by the Committee.

2.17. “Dividend Equivalent Right” means a right to receive cash or Shares based
on the value of dividends that are paid with respect to Shares.

2.18. “Effective Date” means the date of the Plan’s approval by the Compensation
Committee of the Board, subject to the approval of the Company’s stockholders at
the 2012 Annual Meeting of Stockholders.

2.19. “Eligible Individual” means any Employee, Director or Consultant.

2.20. “Employee” means any individual performing services for the Company or a
Subsidiary and designated as an employee of the Company or the Subsidiary on its
payroll records. An Employee shall not include any individual during any period
he or she is classified or treated by the Company or Subsidiary as an
independent contractor, a consultant or an employee of an employment, consulting
or temporary agency or any other entity other than the Company or Subsidiary,
without regard to whether such individual is subsequently determined to have
been, or is subsequently retroactively reclassified, as a common-law employee of
the Company or Subsidiary during such period. An individual shall not cease to
be an Employee in the case of (i) any leave of absence approved by the Company
or (ii) transfers between locations of the Company or any Subsidiary, or between
the Company and any Subsidiaries.

2.21. “Exchange Act” means the Securities Exchange Act of 1934, as amended.

2.22. “Fair Market Value” on any date means:

(a) if the Shares are listed for trading on the New York Stock Exchange, the
closing price at the close of the primary trading session of the Shares on such
date on the New York Stock Exchange, or if there has been no such closing price
of the Shares on such date, on the next preceding date on which there was such a
closing price;

(b) if the Shares are not listed for trading on the New York Stock Exchange, but
are listed on another national securities exchange, the closing price at the
close of the primary trading session of the Shares on such date on such
exchange, or if there has been no such closing price of the Shares on such date,
on the next preceding date on which there was such a closing price;

(c) if the Shares are not listed on the New York Stock Exchange or on another
national securities exchange, the last sale price at the end of normal market
hours of the Shares on such date as quoted on the National Association of
Securities Dealers Automated Quotation System (“NASDAQ”) or, if no such price
shall have been quoted for such date, on the next preceding date for which such
price was so quoted; or

(d) if the Shares are not listed for trading on a national securities exchange
or are not authorized for quotation on NASDAQ, the fair market value of the
Shares as determined in good faith by the Committee, and in the case of
Incentive Stock Options, in accordance with Section 422 of the Code.

 

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2.23. “Incentive Stock Option” means an Option satisfying the requirements of
Section 422 of the Code and designated by the Committee as an Incentive Stock
Option.

2.24. “Nonemployee Director” means a Director of the Board who is a “nonemployee
director” within the meaning of Rule 16b-3 promulgated under the Exchange Act.

2.25. “Nonqualified Stock Option” means an Option which is not an Incentive
Stock Option.

2.26. “Option” means a Nonqualified Stock Option or an Incentive Stock Option.

2.27. “Option Price” means the price at which a Share may be purchased pursuant
to an Option.

2.28. “Outside Director” means a Director of the Board who is an “outside
director” within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder.

2.29. “Parent” means any corporation which is a “parent corporation” (within the
meaning of Section 424(e) of the Code) with respect to the Company.

2.30. “Participant” means an Eligible Individual to whom an Award has been
granted under the Plan.

2.31. “Performance Awards” means Performance Share Units, Performance Units,
Performance-Based Restricted Stock or any or all of them.

2.32. “Performance-Based Compensation” means any Award that is intended to
constitute “performance based compensation” within the meaning of
Section 162(m)(4)(C) of the Code and the regulations promulgated thereunder.

2.33. “Performance-Based Restricted Stock” means Shares issued or transferred to
an Eligible Individual under Section 9.2.

2.34. “Performance Cycle” means the time period specified by the Committee at
the time Performance Awards are granted during which the performance of the
Company, a Subsidiary or a Division will be measured.

2.35. “Performance Objectives” means the objectives set forth in Section 9.3 for
the purpose of determining, either alone or together with other conditions, the
degree of payout and/or vesting of Performance Awards.

2.36. “Performance Share Units” means Performance Share Units granted to an
Eligible Individual under Section 9.1(b).

 

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2.37. “Performance Units” means Performance Units granted to an Eligible
Individual under Section 9.1(a).

2.38. “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) of the Exchange Act.

2.39. “Plan” means this C & J Energy Services, Inc., 2012 Long-Term Incentive
Plan, as amended from time to time.

2.40. “Plan Termination Date” means the date that is ten (10) years after the
Effective Date, unless the Plan is earlier terminated by the Board pursuant to
Section 15 hereof.

2.41. “Prior Plans” means the Company’s 2010 Stock Option Plan and 2006 Stock
Option Plan.

2.42. “Restricted Stock” means Shares issued or transferred to an Eligible
Individual pursuant to Section 8.1.

2.43. “Restricted Stock Units” means rights granted to an Eligible Individual
under Section 8.2 representing a number of hypothetical Shares.

2.44. “Securities Act” means the Securities Act of 1933, as amended.

2.45. “Share Award” means an Award of Shares granted pursuant to Section 10.

2.46. “Shares” means the common stock, par value $.01 per share, of the Company
and any other securities into which such shares are changed or for which such
shares are exchanged.

2.47. “Stock Appreciation Right” means a right to receive all or some portion of
the increase, if any, in the value of the Shares as provided in Section 6
hereof.

2.48. “Subsidiary” means (a) except as provided in subsection (b) below, any
corporation which is a subsidiary corporation within the meaning of
Section 424(f) of the Code with respect to the Company and (b) in relation to
the eligibility to receive Awards other than Incentive Stock Options and
continued employment or the provision of services for purposes of Awards (unless
the Committee determines otherwise), any entity, whether or not incorporated, in
which the Company directly or indirectly owns at least 25% of the outstanding
equity or other ownership interests.

2.49. “Ten-Percent Shareholder” means an Eligible Individual who, at the time an
Incentive Stock Option is to be granted to him or her, owns (within the meaning
of Section 422(b)(6) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company,
a Parent or a Subsidiary.

2.50. “Termination”, “Terminated” or “Terminates” shall mean (a) with respect to
a Participant who is an Employee, the date such Participant ceases to be
employed by the Company and its Subsidiaries, (b) with respect to a Participant
who is a Consultant, the date such

 

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Participant ceases to provide services to the Company and its Subsidiaries or
(c) with respect to a Participant who is a Director, the date such Participant
ceases to be a Director, in each case, for any reason whatsoever (including by
reason of death, Disability or adjudicated incompetency). Unless otherwise set
forth in an Award Agreement, (a) if a Participant is both an Employee and a
Director and terminates as an Employee but remains as a Director, the
Participant will be deemed to have continued in employment without interruption
and shall be deemed to have Terminated upon ceasing to be a Director and (b) if
a Participant who is an Employee or a Director ceases to provide services in
such capacity and becomes a Consultant, the Participant will thereupon be deemed
to have been Terminated.

 

  3. Administration.

3.1. Committee; Procedure. The Plan shall be administered by a Committee which,
until the Board appoints a different Committee, shall be the Compensation
Committee of the Board. The Committee may adopt such rules, regulations and
guidelines as it deems are necessary or appropriate for the administration of
the Plan. The Committee shall consist of at least two (2) Directors of the Board
and may consist of the entire Board; provided, however, that (a) if the
Committee consists of less than the entire Board, then, with respect to any
Award granted to an Eligible Individual who is subject to Section 16 of the
Exchange Act, the Committee shall consist of at least two Directors of the
Board, each of whom shall be a Nonemployee Director and (b) to the extent
necessary for any Award intended to qualify as Performance-Based Compensation to
so qualify, the Committee shall consist of at least two Directors of the Board,
each of whom shall be an Outside Director. For purposes of the preceding
sentence, if one or more members of the Committee is not a Nonemployee Director
or an Outside Director but recuses himself or herself or abstains from voting
with respect to a particular action taken by the Committee, then the Committee,
with respect to that action, shall be deemed to consist only of the members of
the Committee who have not recused themselves or abstained from voting.

3.2. Board Reservation and Delegation.

(a) Except to the extent necessary for any Award intended to qualify as
Performance-Based Compensation to so qualify, the Board may, in its discretion,
reserve to itself or exercise any or all of the authority and responsibility of
the Committee hereunder. To the extent the Board has reserved to itself or
exercises the authority and responsibility of the Committee, all references to
the Committee in the Plan shall be to the Board.

(b) Subject to applicable law, the Board may delegate, in whole or in part, any
of the authority of the Committee hereunder(subject to such limits as may be
determined by the Board) to any individual or committee of individuals (who need
not be Directors), including without limitation the authority to make Awards to
Eligible Individuals who are not officers or directors of the Company or any of
its Subsidiaries and who are not subject to Section 16 of the Exchange Act. To
the extent that the Board delegates any such authority to make Awards as
provided by this Section 3.2(b), all references in the Plan to the Committee’s
authority to make Awards and determinations with respect thereto shall be deemed
to include the Board’s delegate.

 

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3.3. Committee Powers. Subject to the express terms and conditions set forth
herein, the Committee shall have the power from time to time to:

(a) select those Eligible Individuals to whom Options shall be granted under the
Plan and the number of such Options to be granted and prescribe the terms and
conditions (which need not be identical) of each such Option, including the
exercise price per Share, the vesting schedule and the duration of each Option,
and make any amendment or modification to any Award Agreement consistent with
the terms of the Plan;

(b) select those Eligible Individuals to whom other Awards shall be granted
under the Plan, determine the type of Award, the number of Shares or amount of
cash in respect of which each Award is granted and the terms and conditions
(which need not be identical) of each such Award and make any amendment or
modification to any Award Agreement consistent with the terms of the Plan;

(c) construe and interpret the Plan and the Awards granted hereunder, establish,
amend and revoke rules and regulations for the administration of the Plan,
including, but not limited to, correcting any defect, supplying any omission or
reconciling any inconsistency in the Plan or in any Award Agreement in the
manner and to the extent it shall deem necessary or advisable, including so that
the Plan and the operation of the Plan comply with Rule 16b-3 under the Exchange
Act, the Code to the extent applicable and other applicable law, and otherwise
make the Plan fully effective;

(d) determine the duration and purposes for leaves of absence which may be
granted to a Participant on an individual basis without constituting a
Termination for purposes of the Plan;

(e) cancel, with the consent of the Participant, outstanding Awards or as
otherwise permitted under the term of the Plan;

(f) exercise its discretion with respect to the powers and rights granted to it
as set forth in the Plan; and

(g) generally, exercise such powers and perform such acts as are deemed
necessary or advisable to promote the best interests of the Company with respect
to the Plan.

The Committee’s determinations under the Plan need not be uniform and may be
made by it selectively among Persons who receive, or are eligible to receive,
Awards (whether or not such Persons are similarly situated). Without limiting
the generality of the foregoing, the Committee shall be entitled, among other
things, to make non-uniform and selective determinations, and to enter into
non-uniform and selective Award Agreements, as to the Eligible Individuals to
receive Awards under the Plan and the terms and provision of Awards under the
Plan. All decisions and determinations by the Committee in the exercise of the
above powers shall be final, binding and conclusive upon the Company, its
Subsidiaries, the Participants and all other persons having any interest
therein.

 

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Notwithstanding anything herein to the contrary, with respect to Participants
working outside the United States, the Committee may determine the terms and
conditions of Awards and make such adjustments to the terms thereof as are
necessary or advisable to fulfill the purposes of the Plan taking into account
matters of local law or practice, including tax and securities laws of
jurisdictions outside the United States.

3.4. Indemnification. No member of the Committee shall be liable for any action,
failure to act, determination or interpretation made in good faith with respect
to the Plan or any transaction hereunder. The Company hereby agrees to indemnify
each member of the Committee for all costs and expenses and, to the extent
permitted by applicable law, any liability incurred in connection with defending
against, responding to, negotiating for the settlement of or otherwise dealing
with any claim, cause of action or dispute of any kind arising in connection
with any actions in administering the Plan or in authorizing or denying
authorization to any transaction hereunder.

3.5. No Repricing of Options or Stock Appreciation Rights. The Committee shall
have no authority to make any adjustment (other than in connection with a Change
in Capitalization, a Corporate Transaction or other transaction where an
adjustment is permitted or required under the terms of the Plan) or amendment,
and no such adjustment or amendment shall be made, that reduces or would have
the effect of reducing the exercise price of an Option or Stock Appreciation
Right previously granted under the Plan, whether through amendment, cancellation
or replacement grants or other means, unless the Company’s stockholders shall
have approved such adjustment or amendment.

 

  4. Stock Subject to the Plan; Grant Limitations.

4.1. Aggregate Number of Shares Authorized for Issuance. Subject to any
adjustment as provided in the Plan, the Shares to be issued under the Plan may
be, in whole or in part, authorized but unissued Shares or issued Shares which
shall have been reacquired by the Company and held by it as treasury shares. The
aggregate number of Shares that may be made the subject of Awards granted under
the Plan shall not exceed 4,300,000, no more than 2,150,000 of which may be
granted as Incentive Stock Options. Any Shares related to an award granted under
a Prior Plan that terminates by expiration, forfeiture, cancellation or
otherwise without the issuance of the Shares shall become available for Award
under this Plan.

4.2. Individual Participant Limit. The aggregate number of Shares that may be
the subject of Options, Stock Appreciation Rights, Performance-Based Restricted
Stock and Performance Share Units granted to an Eligible Individual in any
calendar year may not exceed 2,000,000. The maximum dollar amount of cash or the
Fair Market Value of Shares that any individual may receive in any calendar year
in respect of Performance Units may not exceed $5,000,000.

4.3. Calculating Shares Available. The Committee shall determine the appropriate
method for determining the number of Shares available for grant under the Plan,
subject to the following:

 

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(a) Except as provided in Section 4.3(b), in connection with the granting of an
Option, a Stock Appreciation Right (other than a Stock Appreciation Right
related to an Option) or a Share Award, or the granting of an Award of
Restricted Stock Units, Restricted Stock, Performance-Based Restricted Stock or
Performance Share Units, the number of Shares available under this Section 4 for
the granting of further Awards shall be reduced by the number of Shares in
respect of which the Award is granted or denominated.

(b) In the event that an Award is granted that, pursuant to the terms of the
Award Agreement, cannot be settled in Shares, the aggregate number of Shares
that may be made the subject of Awards under the Plan shall not be reduced. Any
Shares related to an Award granted under this Plan that (i) terminates by
expiration, forfeiture, cancellation or otherwise without the issuance of the
Shares, (ii) is settled in cash in lieu of Shares, or (iii) is exchanged with
the Committee’s permission, prior to the issuance of Shares, for an Award
pursuant to which no Shares may be issued, shall again be available for Awards
under this Plan.

(c) Any Shares tendered (i) to pay the Option Price of an Option granted under
this Plan or (ii) to satisfy tax withholding obligations associated with an
Award granted under this Plan, shall not become available again for grant under
this Plan.

 

  5. Stock Options.

5.1. Authority of Committee. The Committee may grant Options to Eligible
Individuals in accordance with the Plan, the terms and conditions of the grant
of which shall be set forth in an Award Agreement. Incentive Stock Options may
be granted only to Eligible Individuals who are employees of the Company or any
of its Subsidiaries on the date the Incentive Stock Option is granted.

5.2. Option Price. The Option Price or the manner in which the exercise price is
to be determined for Shares under each Option shall be determined by the
Committee and set forth in the Award Agreement; provided, however, that the
exercise price per Share under each Option shall not be less than the greater of
(i) the par value of a Share and (ii) 100% of the Fair Market Value of a Share
on the date the Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Shareholder).

5.3. Maximum Duration. Options granted hereunder shall be for such term as the
Committee shall determine; provided that an Incentive Stock Option shall not be
exercisable after the expiration of ten (10) years from the date it is granted
(five (5) years in the case of an Incentive Stock Option granted to a
Ten-Percent Shareholder) and a Nonqualified Stock Option shall not be
exercisable after the expiration of ten (10) years from the date it is granted;
provided, further, however, that unless the Committee provides otherwise, an
Option (other than an Incentive Stock Option) may, upon the death of the
Participant prior to the expiration of the Option, be exercised for up to one
(1) year following the date of the Participant’s death, even if such period
extends beyond ten (10) years from the date the Option is granted. The Committee
may, subsequent to the granting of any Option, extend the period within which
the Option may be exercised (including following a Participant’s Termination),
but in no event shall the period be extended to a date that is later than the
earlier of the latest date on which the Option could have been exercised and the
10th anniversary of the date of grant of the Option.

 

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5.4. Vesting. The Committee shall determine and set forth in the applicable
Award Agreement the time or times at which an Option shall become vested and
exercisable. To the extent not exercised, vested installments shall accumulate
and be exercisable, in whole or in part, at any time after becoming exercisable,
but not later than the date the Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any time.

5.5. Limitations on Incentive Stock Options. To the extent that the aggregate
Fair Market Value (determined as of the date of the grant) of Shares with
respect to which Incentive Stock Options granted under the Plan and “incentive
stock options” (within the meaning of Section 422 of the Code) granted under all
other plans of the Company or its Subsidiaries (in either case determined
without regard to this Section 5.5) are exercisable by a Participant for the
first time during any calendar year exceeds $100,000, such Incentive Stock
Options shall be treated as Nonqualified Stock Options. In applying the
limitation in the preceding sentence in the case of multiple Option grants,
unless otherwise required by applicable law, Options which were intended to be
Incentive Stock Options shall be treated as Nonqualified Stock Options according
to the order in which they were granted such that the most recently granted
Options are first treated as Nonqualified Stock Options.

5.6. Method of Exercise. The exercise of an Option shall be made only by giving
notice in the form and to the Person designated by the Company, specifying the
number of Shares to be exercised and, to the extent applicable, accompanied by
payment therefor and otherwise in accordance with the Award Agreement pursuant
to which the Option was granted. The Option Price for any Shares purchased
pursuant to the exercise of an Option shall be paid in any or any combination of
the following forms: (a) cash or its equivalent (e.g., a check) or (b) if
permitted by the Committee, the transfer, either actually or by attestation, to
the Company of Shares that have been held by the Participant for at least six
(6) months (or such lesser period as may be permitted by the Committee) prior to
the exercise of the Option, such transfer to be upon such terms and conditions
as determined by the Committee or (c) in the form of other property as
determined by the Committee. Any Shares transferred to the Company as payment of
the exercise price under an Option shall be valued at their Fair Market Value on
the last business day preceding the date of exercise of such Option. In
addition, (a) the Committee may provide for the payment of the Option Price
through Share withholding as a result of which the number of Shares issued upon
exercise of an Option would be reduced by a number of Shares having a Fair
Market Value equal to the Option Price and (b) Options may be exercised through
a registered broker-dealer pursuant to such cashless exercise procedures that
are, from time to time, deemed acceptable by the Committee. If requested by the
Committee, the Participant shall deliver the Award Agreement evidencing the
Option to the Company, which shall endorse thereon a notation of such exercise
and return such Award Agreement to the Participant. No fractional Shares (or
cash in lieu thereof) shall be issued upon exercise of an Option and the number
of Shares that may be purchased upon exercise shall be rounded to the nearest
number of whole Shares.

 

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5.7. Rights of Participants. No Participant shall be deemed for any purpose to
be the owner of any Shares subject to any Option unless and until (a) the Option
shall have been exercised pursuant to the terms thereof, (b) the Company shall
have issued and delivered Shares (whether or not certificated) to the
Participant, a securities broker acting on behalf of the Participant or such
other nominee of the Participant and (c) the Participant’s name, or the name of
his or her broker or other nominee, shall have been entered as a shareholder of
record on the books of the Company. Thereupon, the Participant shall have full
voting, dividend and other ownership rights with respect to such Shares, subject
to such terms and conditions as may be set forth in the applicable Award
Agreement.

5.8. Effect of Change in Control. Any specific terms applicable to an Option in
the event of a Change in Control and not otherwise provided in the Plan shall be
set forth in the applicable Award Agreement.

 

  6. Stock Appreciation Rights.

6.1. Grant. The Committee may grant Stock Appreciation Rights to Eligible
Individuals in accordance with the Plan, the terms and conditions of which shall
be set forth in an Award Agreement. A Stock Appreciation Right may be granted
(a) at any time if unrelated to an Option or (b) if related to an Option, either
at the time of grant or at any time thereafter during the term of the Option.

6.2. Terms; Duration. Stock Appreciation Rights shall contain such terms and
conditions as to exercisability, vesting and duration as the Committee shall
determine, but in no event shall they have a term of greater than ten
(10) years; provided, however, that unless the Committee provides otherwise, a
Stock Appreciation Right may, upon the death of the Participant prior to the
expiration of the Award, be exercised for up to one (1) year following the date
of the Participant’s death even if such period extends beyond ten (10) years
from the date the Stock Appreciation Right is granted. The Committee may,
subsequent to the granting of any Stock Appreciation Right, extend the period
within which the Stock Appreciation Right may be exercised (including following
a Participant’s Termination), but in no event shall the period be extended to a
date that is later than the earlier of the latest date on which the Stock
Appreciation Right could have been exercised and the 10th anniversary of the
date of grant of the Stock Appreciation Right.

6.3. Amount Payable. Upon exercise of a Stock Appreciation Right, the
Participant shall be entitled to receive an amount determined by multiplying
(i) the excess of the Fair Market Value of a Share on the last business day
preceding the date of exercise of such Stock Appreciation Right over the Fair
Market Value of a Share on the date the Stock Appreciation Right was granted
(the “Base Price”) by (ii) the number of Shares as to which the Stock
Appreciation Right is being exercised. Notwithstanding the foregoing, the
Committee may limit in any manner the amount payable with respect to any Stock
Appreciation Right by including such a limit in the Award Agreement evidencing
the Stock Appreciation Right at the time it is granted.

 

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6.4. Method of Exercise. Stock Appreciation Rights shall be exercised by a
Participant only by giving notice in the form and to the Person designated by
the Company, specifying the number of Shares with respect to which the Stock
Appreciation Right is being exercised. If requested by the Committee, the
Participant shall deliver the Award Agreement evidencing the Stock Appreciation
Right being exercised, which shall endorse thereon a notation of such exercise
and return such Award Agreement to the Participant.

6.5. Form of Payment. Payment of the amount payable upon exercise of a Stock
Appreciation Right may be made in the discretion of the Committee solely in
whole Shares in a number determined at their Fair Market Value on the last
business day preceding the date of exercise of the Stock Appreciation Right,
solely in cash or in a combination of cash and Shares. If the Committee decides
to make full payment in Shares and the amount payable results in a fractional
Share, payment for the fractional Share will be made in cash.

6.6. Effect of Change in Control. Any specific terms applicable to a Stock
Appreciation Right in the event of a Change in Control and not otherwise
provided in the Plan shall be set forth in the applicable Award Agreement.

 

  7. Dividend Equivalent Rights.

The Committee may grant Dividend Equivalent Rights, either in tandem with an
Award or as a separate Award, to Eligible Individuals in accordance with the
Plan. The terms and conditions applicable to each Dividend Equivalent Right
shall be specified in the Award Agreement evidencing the Award. Amounts payable
in respect of Dividend Equivalent Rights may be payable currently or, if
applicable, deferred until the lapsing of restrictions on such Dividend
Equivalent Rights or until the vesting, exercise, payment, settlement or other
lapse of restrictions on the Award to which the Dividend Equivalent Rights
relate. In the event that the amount payable in respect of Dividend Equivalent
Rights are to be deferred, the Committee shall determine whether such amounts
are to be held in cash or reinvested in Shares or deemed (notionally) to be
reinvested in Shares. Dividend Equivalent Rights may be settled in cash or
Shares or a combination thereof, in a single installment or multiple
installments, as determined by the Committee. The terms and conditions of any
grants of Dividend Equivalent Rights as set forth in an Award Agreement shall
comply with Section 409A of the Code and all regulations and other guidance
issued thereunder.

 

  8. Restricted Stock; Restricted Stock Units.

8.1. Restricted Stock. The Committee may grant Awards of Restricted Stock to
Eligible Individuals in accordance with the Plan, the terms and conditions of
which shall be set forth in an Award Agreement. Each Award Agreement shall
contain such restrictions, terms and conditions as the Committee may, in its
discretion, determine and (without limiting the generality of the foregoing)
such Award Agreements may require that an appropriate legend be placed on Share
certificates. Shares in a book entry account in Participant’s name may have
appropriate stop transfer instructions to the account custodian, administrator
or the Company’s corporate secretary as determined by the Committee in its sole
discretion. Awards of Restricted Stock shall be subject to the terms and
provisions set forth below in this Section 8.1.

 

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(a) Rights of Participant. Shares of Restricted Stock granted pursuant to an
Award hereunder shall be issued in the name of the Participant as soon as
reasonably practicable after the Award is granted provided that the Participant
has executed an Award Agreement evidencing the Award and any other documents
which the Committee may require as a condition to the issuance of such Shares.
At the discretion of the Committee, Shares issued in connection with an Award of
Restricted Stock may be held in escrow by an agent (which may be the Company)
designated by the Committee. Unless the Committee determines otherwise and as
set forth in the Award Agreement, upon the issuance of the Shares, the
Participant shall have all of the rights of a shareholder with respect to such
Shares, including the right to vote the Shares and to receive all dividends or
other distributions paid or made with respect to the Shares.

(b) Terms and Conditions. Each Award Agreement shall specify the number of
Shares of Restricted Stock to which it relates, the conditions which must be
satisfied in order for the Restricted Stock to vest and the circumstances under
which the Award will be forfeited.

(c) Delivery of Shares. Upon the lapse of the restrictions on Shares of
Restricted Stock, the Committee shall cause a stock certificate or evidence of
book entry Shares to be delivered to the Participant with respect to such Shares
of Restricted Stock, free of all restrictions hereunder.

(d) Treatment of Dividends. At the time an Award of Restricted Stock is granted,
the Committee may, in its discretion, determine that the payment to the
Participant of dividends, or a specified portion thereof, declared or paid on
such Shares by the Company shall be (i) deferred until the lapsing of the
restrictions imposed upon such Shares and (ii) held by the Company for the
account of the Participant until such time. In the event that dividends are to
be deferred, the Committee shall determine whether such dividends are to be
reinvested in Shares (which shall be held as additional Shares of Restricted
Stock) or held in cash. Payment of deferred dividends in respect of Shares of
Restricted Stock (whether held in cash or as additional Shares of Restricted
Stock), shall be made upon the lapsing of restrictions imposed on the Shares in
respect of which the deferred dividends were paid, and any dividends deferred in
respect of any Shares of Restricted Stock shall be forfeited upon the forfeiture
of such Shares.

(e) Effect of Change in Control. Any specific terms applicable to Restricted
Stock in the event of a Change in Control and not otherwise provided in the Plan
shall be set forth in the applicable Award Agreement.

8.2. Restricted Stock Unit Awards. The Committee may grant Awards of Restricted
Stock Units to Eligible Individuals in accordance with the Plan, the terms and
conditions of which shall be set forth in an Award Agreement. Each such Award
Agreement shall contain such restrictions, terms and conditions as the Committee
may, in its discretion, determine. Awards of Restricted Stock Units shall be
subject to the terms and provisions set forth below in this Section 8.2.

 

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(a) Payment of Awards. Each Restricted Stock Unit shall represent the right of
the Participant to receive a payment upon vesting of the Restricted Stock Unit
or on any later date specified by the Committee of an amount equal to the Fair
Market Value of a Share as of the date the Restricted Stock Unit becomes vested
or such other date as determined by the Committee at the time the Restricted
Stock Unit is granted. The Committee may, at the time a Restricted Stock Unit is
granted, provide a limitation on the amount payable in respect of each
Restricted Stock Unit. The Committee may provide for the settlement of
Restricted Stock Units in cash or with Shares having a Fair Market Value equal
to the amount to which the Participant has become entitled or a combination
thereof.

(b) Effect of Change in Control. Any specific terms applicable to Restricted
Stock Units in the event of a Change in Control and not otherwise provided in
the Plan shall be set forth in the applicable Award Agreement.

 

  9. Performance Awards.

9.1. Performance Units and Performance Share Units. The Committee may grant
Awards of Performance Units and/or Performance Share Units to Eligible
Individuals in accordance with the Plan, the terms and conditions of which shall
be set forth in an Award Agreement.

(a) Performance Units. Performance Units shall be denominated in a specified
dollar amount and, contingent upon the attainment of specified Performance
Objectives within the Performance Cycle and such other vesting conditions as may
be determined by the Committee (including without limitation, a continued
employment requirement following the end of the applicable Performance Period),
represent the right to receive payment as provided in Sections 9.1(c) and (d) of
the specified dollar amount or a percentage of the specified dollar amount
depending on the level of Performance Objective attained; provided, however,
that the Committee may at the time a Performance Unit is granted specify a
maximum amount payable in respect of a vested Performance Unit.

(b) Performance Share Units. Performance Share Units shall be denominated in
Shares and, contingent upon the attainment of specified Performance Objectives
within the Performance Cycle and such other vesting conditions as may be
determined by the Committee, (including without limitation, a continued
employment requirement following the end of the applicable Performance Period),
represent the right to receive payment as provided in Sections 9.1(c) and (d) of
the Fair Market Value of a Share on the date the Performance Share Unit was
granted, the date the Performance Share Unit became vested or any other date
specified by the Committee or a percentage of such amount depending on the level
of Performance Objective attained; provided, however, that the Committee may at
the time a Performance Share Unit is granted specify a maximum amount payable in
respect of a vested Performance Share Unit.

(c) Terms and Conditions; Vesting and Forfeiture. Each Award Agreement shall
specify the number of Performance Units or Performance Share Units to which it
relates, the Performance Objectives and other conditions which must be satisfied
in order for the of Performance Units or Performance Share Units to vest and the
Performance Cycle within which such Performance Objectives must be satisfied and
the circumstances under which the Award will be forfeited; provided, however,
that no Performance Cycle for Performance Units or Performance Share Units shall
be less than one (1) year.

 

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(d) Payment of Awards. Subject to Section 9.3(c), payment to Participants in
respect of vested Performance Share Units and Performance Units shall be made as
soon as practicable after the last day of the Performance Cycle to which such
Award relates or at such other time or times as the Committee may determine that
the Award has become vested. Such payments may be made entirely in Shares valued
at their Fair Market Value, entirely in cash or in such combination of Shares
and cash as the Committee in its discretion shall determine at any time prior to
such payment; provided, however, that if the Committee in its discretion
determines to make such payment entirely or partially in Shares of Restricted
Stock, the Committee must determine the extent to which such payment will be in
Shares of Restricted Stock and the terms of such Restricted Stock at the time
the Award is granted.

9.2. Performance-Based Restricted Stock. The Committee, may grant Awards of
Performance-Based Restricted Stock to Eligible Individuals in accordance with
the Plan, the terms and conditions of which shall be set forth in an Award
Agreement. Each Award Agreement may require that an appropriate legend be placed
on Share certificates. Shares in a book entry account in Participant’s name may
have appropriate stop transfer instructions to the account custodian,
administrator or the Company’s corporate secretary as determined by the
Committee in its sole discretion. Awards of Performance-Based Restricted Stock
shall be subject to the following terms and provisions:

(a) Rights of Participant. Performance-Based Restricted Stock shall be issued in
the name of the Participant as soon as reasonably practicable after the Award is
granted or at such other time or times as the Committee may determine; provided,
however, that no Performance-Based Restricted Stock shall be issued until the
Participant has executed an Award Agreement evidencing the Award, and any other
documents which the Committee may require as a condition to the issuance of such
Performance-Based Restricted Stock. At the discretion of the Committee, Shares
issued in connection with an Award of Performance-Based Restricted Stock may be
held in escrow by an agent (which may be the Company) designated by the
Committee. Unless the Committee determines otherwise and as set forth in the
Award Agreement, upon issuance of the Shares, the Participant shall have all of
the rights of a shareholder with respect to such Shares, including the right to
vote the Shares and to receive all dividends or other distributions paid or made
with respect to the Shares.

(b) Terms and Conditions. Each Award Agreement shall specify the number of
Shares of Performance-Based Restricted Stock to which it relates, the
Performance Objectives and other conditions which must be satisfied in order for
the Performance-Based Restricted Stock to vest, the Performance Cycle within
which such Performance Objectives must be satisfied and the circumstances under
which the Award will be forfeited; provided, however, that no Performance Cycle
for Performance-Based Restricted Stock shall be less than one (1) year.

 

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(c) Treatment of Dividends. At the time the Award of Performance-Based
Restricted Stock is granted, the Committee may, in its discretion, determine
that the payment to the Participant of dividends, or a specified portion
thereof, declared or paid on Shares represented by such Award which have been
issued by the Company to the Participant shall be (i) deferred until the lapsing
of the restrictions imposed upon such Performance-Based Restricted Stock and
(ii) held by the Company for the account of the Participant until such time. In
the event that dividends are to be deferred, the Committee shall determine
whether such dividends are to be reinvested in Shares (which shall be held as
additional Shares of Performance-Based Restricted Stock) or held in cash. If
deferred dividends are to be held in cash, there may be credited interest on the
amount of the account at such times and at a rate per annum as the Committee, in
its discretion, may determine. Payment of deferred dividends in respect of
Shares of Performance-Based Restricted Stock (whether held in cash or in
additional Shares of Performance-Based Restricted Stock), together with interest
accrued thereon, if any, shall be made upon the lapsing of restrictions imposed
on the Performance-Based Restricted Stock in respect of which the deferred
dividends were paid, and any dividends deferred (together with any interest
accrued thereon) in respect of any Performance-Based Restricted Stock shall be
forfeited upon the forfeiture of such Performance-Based Restricted Stock.

(d) Delivery of Shares. Upon the lapse of the restrictions on Shares of
Performance-Based Restricted Stock awarded hereunder, the Committee shall cause
a stock certificate or evidence of book entry Shares to be delivered to the
Participant with respect to such Shares, free of all restrictions hereunder.

9.3. Performance Objectives.

(a) Establishment. With respect to any Performance Awards intended to constitute
Performance-Based Compensation, Performance Objectives for Performance Awards
may be expressed in terms of (i) earnings per share, (ii) operating income,
(iii) return on equity or assets, (iv) cash flow, (v) net cash flow, (vi) cash
flow from operations; (vii) EBITDA, (viii) increased revenues, (ix) revenue
ratios; (x) cost reductions; (xi) cost ratios; (xii) overall revenue or sales
growth, (xiii) expense reduction or management, (xiv) market position,
(xv) total shareholder return, (xvi) return on investment, (xvii) earnings
before interest and taxes (EBIT), (xviii) net income, (xix) return on net
assets, (xx) economic value added, (xxi) shareholder value added, (xxii) cash
flow return on investment, (xxiii) net operating profit, (xxiv) net operating
profit after tax, (xxv) return on capital, (xxvi) return on invested capital or
(xxvii) any combination of the foregoing. With respect to Performance Awards not
intended to constitute Performance-Based Compensation, Performance Objectives
may be based on any of the foregoing or any other performance criteria as may be
established by the Committee. Performance Objectives may be in respect of the
performance of the Company, any of its Subsidiaries, any of its Divisions or any
combination thereof. Performance Objectives may be absolute or relative (to
prior performance of the Company or to the performance of one or more other
entities or external indices) and may be expressed in terms of a progression
within a specified range. In the case of a Performance Award which is intended
to constitute Performance-Based Compensation,

 

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the Performance Objectives with respect to a Performance Cycle shall be
established in writing by the Committee by the earlier of (i) the date on which
a quarter of the Performance Cycle has elapsed and (ii) the date which is ninety
(90) days after the commencement of the Performance Cycle and in any event while
the performance relating to the Performance Objectives remain substantially
uncertain.

(b) Effect of Certain Events. The Committee may, at the time the Performance
Objectives in respect of a Performance Award are established, provide for the
manner in which performance will be measured against the Performance Objectives
to reflect the impact of specified events, including any one or more of the
following with respect to the Performance Period (i) the gain, loss, income or
expense resulting from changes in accounting principles or tax laws that become
effective during the Performance Period; (ii) the gain, loss, income or expense
reported publicly by the Company with respect to the Performance Period that are
extraordinary or unusual in nature or infrequent in occurrence; (iii) the gains
or losses resulting from and the direct expenses incurred in connection with,
the disposition of a business, or the sale of investments or non-core assets;
(iv) the gain or loss from all or certain claims and/or litigation and all or
certain insurance recoveries relating to claims or litigation; or (v) the impact
of investments or acquisitions made during the year or, to the extent provided
by the Committee, any prior year. The events may relate to the Company as a
whole or to any part of the Company’s business or operations, as determined by
the Committee at the time the Performance Objectives are established. Any
adjustments based on the effect of certain events are to be determined in
accordance with generally accepted accounting principles and standards, unless
another objective method of measurement is designated by the Committee and, in
respect of Performance Awards intended to constitute Performance-Based
Compensation, such adjustments shall be permitted only to the extent permitted
under Section 162(m) of the Code and the regulations promulgated thereunder
without adversely affecting the treatment of any Performance Award as
Performance-Based Compensation.

(c) Determination of Performance. Prior to the vesting, payment, settlement or
lapsing of any restrictions with respect to any Performance Award, the Committee
shall certify in writing that the applicable Performance Objectives have been
satisfied to the extent necessary for such Award to qualify as Performance-Based
Compensation. In respect of a Performance Award, the Committee may, in its sole
discretion, reduce the amount of cash paid or number of Shares to be issued or
that have been issued and that become vested or on which restrictions lapse. The
Committee shall not be entitled to exercise any discretion otherwise authorized
hereunder with respect to any Performance Award intended to constitute
Performance-Based Compensation if the ability to exercise such discretion or the
exercise of such discretion itself would cause the compensation attributable to
such Awards to fail to qualify as Performance-Based Compensation.

(d) Effect of Change in Control. Any specific terms applicable to a Performance
Award in the event of a Change in Control and not otherwise provided in the Plan
shall be set forth in the applicable Award Agreement.

 

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  10. Share Awards.

The Committee may grant a Share Award to any Eligible Individual on such terms
and conditions as the Committee may determine in its sole discretion. Share
Awards may be made as additional compensation for services rendered by the
Eligible Individual or may be in lieu of cash or other compensation to which the
Eligible Individual is entitled from the Company.

 

  11. Effect of Termination of Employment; Transferability.

11.1. Termination. The Award Agreement evidencing the grant of each Award shall
set forth the terms and conditions applicable to such Award upon Termination,
which shall be as the Committee may, in its discretion, determine at the time
the Award is granted or at anytime thereafter, and which terms and conditions
may include provisions regarding the treatment of an Award in the event of a
Termination by reason of a divestiture of any Subsidiary or Division or other
assets of the Company or any Subsidiary.

11.2. Transferability of Awards and Shares.

(a) Non-Transferability of Awards. Except as set forth in Section 11.2(c) or
(d) or as otherwise permitted by the Committee and as set forth in the
applicable Award Agreement, either at the time of grant or at anytime
thereafter, no Award shall be (i) sold, transferred or otherwise disposed of,
(ii) pledged or otherwise hypothecated or (iii) subject to attachment, execution
or levy of any kind; and any purported transfer, pledge, hypothecation,
attachment, execution or levy in violation of this Section 11.2 shall be null
and void.

(b) Restrictions on Shares. The Committee may impose such restrictions on any
Shares acquired by a Participant under the Plan as it may deem advisable,
including, without limitation, minimum holding period requirements, restrictions
under applicable federal securities laws, restrictions under the requirements of
any stock exchange or market upon which such Shares are then listed or traded
and restrictions under any blue sky or state securities laws applicable to such
Shares.

(c) Transfers By Will or by Laws of Descent or Distribution. Any Award may be
transferred by will or by the laws of descent or distribution; provided,
however, that (i) any transferred Award will be subject to all of the same terms
and conditions as provided in the Plan and the applicable Award Agreement; and
(ii) the Participant’s estate or beneficiary appointed in accordance with this
Section 11.2(c) will remain liable for any withholding tax that may be imposed
by any federal, state or local tax authority.

(d) Beneficiary Designation. Each Participant may, from time to time, name one
or more individuals (each, a “Beneficiary”) to whom any benefit under the Plan
is to be paid or who may exercise any rights of the Participant under any Award
granted under the Plan in the event of the Participant’s death before he or she
receives any or all of such benefit or exercises such Award. Each such
designation shall revoke all prior designations by the same Participant, shall
be in a form prescribed by the Company, and will be effective only when filed by
the Participant in writing with the Company during the Participant’s lifetime.
In the absence of any such designation, benefits under Awards remaining unpaid
at the Participant’s death and rights to be exercised following the
Participant’s death shall be paid to or exercised by the Participant’s estate.

 

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  12. Adjustment upon Changes in Capitalization.

12.1. In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to (a) the maximum
number and class of Shares or other stock or securities with respect to which
Awards may be granted under the Plan, (b) the maximum number and class of Shares
or other stock or securities that may be issued upon exercise of Incentive Stock
Options, (c) the maximum number and class of Shares or other stock or securities
with respect to which Awards may be granted to any Eligible Individual in any
calendar year, (d) the number and class of Shares or other stock or securities,
cash or other property which are subject to outstanding Awards granted under the
Plan and the exercise price therefore, if applicable, and (e) the Performance
Objectives.

12.2. Any such adjustment in the Shares or other stock or securities (a) subject
to outstanding Incentive Stock Options (including any adjustments in the
exercise price) shall be made in such manner as not to constitute a modification
as defined by Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code, (b) subject to outstanding Awards
that are intended to qualify as Performance-Based Compensation shall be made in
such a manner as not to adversely affect the treatment of the Awards as
Performance-Based Compensation and (c) with respect to any Award that is not
subject to Section 409A of the Code, in a manner that would not subject the
Award to Section 409A of the Code and, with respect to any Award that is subject
to Section 409A of the Code, in a manner that complies with Section 409A of the
Code and all regulations and other guidance issued thereunder.

12.3. If, by reason of a Change in Capitalization, pursuant to an Award, a
Participant shall be entitled to, or shall be entitled to exercise an Option
with respect to, new, additional or different shares of stock or securities of
the Company or any other corporation, such new, additional or different shares
shall thereupon be subject to all of the conditions, restrictions and
performance criteria which were applicable to the Shares subject to the Award,
prior to such Change in Capitalization.

 

  13. Effect of Certain Transactions.

13.1. Except as otherwise provided in the applicable Award Agreement, in
connection a Corporate Transaction, either:

(i) outstanding Awards shall, unless otherwise provided in connection with the
Corporate Transaction, continue following the Corporate Transaction and shall be
adjusted if and as provided for in the agreement or plan (in the case of a
liquidation or dissolution) entered into or adopted in connection with the
Corporate Transaction (the “Transaction Agreement”), which may include, in the
sole discretion of the Committee or the parties to the Corporate Transaction,
the assumption or continuation of such Awards by, or the

 

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substitution for such Awards of new awards of, the surviving, successor or
resulting entity, or a parent or subsidiary thereof, with such adjustments as to
the number and kind of shares or other securities or property subject to such
new awards, exercise prices and other terms of such new awards as the Committee
or the parties to the Corporate Transaction shall agree, or

(ii) outstanding Awards shall terminate upon the consummation of the Corporate
Transaction; provided, however, that vested Awards shall not be terminated
without:

(iii) (i) in the case of vested Options and Stock Appreciation Rights (including
those Options and Stock Appreciation Rights that would become vested upon the
consummation of the Corporate Transaction), (1) providing the holders of
affected Options and Stock Appreciation Rights a period of at least fifteen
(15) calendar days prior to the date of the consummation of the Corporate
Transaction to exercise the Options and Stock Appreciation Rights, or
(2) providing the holders of affected Options and Stock Appreciation Rights
payment (in cash or other consideration upon or immediately following the
consummation of the Corporate Transaction, or, to the extent permitted by
Section 409A of the Code, on a deferred basis) in respect of each Share covered
by the Option or Stock Appreciation Rights being cancelled an amount equal to
the excess, if any, of the per Share price to be paid or distributed to
stockholders in the Corporate Transaction (the value of any non-cash
consideration to be determined by the Committee in good faith) over the Option
Price of the Option or the Base Price of the Stock Appreciation Rights, or

(iv) (ii) in the case vested Awards other than Options or Stock Appreciation
Rights (including those Awards that would become vested upon the consummation of
the Corporate Transaction), providing the holders of affected Awards payment (in
cash or other consideration upon or immediately following the consummation of
the Corporate Transaction, or, to the extent permitted by Section 409A of the
Code, on a deferred basis) in respect of each Share covered by the Award being
cancelled of the per Share price to be paid or distributed to stockholders in
the Corporate Transaction, in each case with the value of any non-cash
consideration to be determined by the Committee in good faith.

(v) For the avoidance of doubt, if the amount determined pursuant to clause
(b)(i)(2) above is zero or less, the affected Option or Stock Appreciation
Rights may be cancelled without any payment therefor.

13.2. Without limiting the generality of the foregoing or being construed as
requiring any such action, in connection with any such Corporate Transaction the
Committee may, in its sole and absolute discretion, cause any of the following
actions to be taken effective upon or at any time prior to any Corporate
Transaction (and any such action may be made contingent upon the occurrence of
the Corporate Transaction):

 

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(a) cause any or all unvested Options and Stock Appreciation Rights to become
fully vested and immediately exercisable (as applicable) and/or provide the
holders of such Options and Stock Appreciation Rights a reasonable period of
time prior to the date of the consummation of the Corporate Transaction to
exercise the Options and Stock Appreciation Rights;

(b) with respect to unvested Options and Stock Appreciation Rights that are
terminated in connection with the Corporate Transaction, provide to the holders
thereof a payment (in cash and/or other consideration) in respect of each Share
covered by the Option or Stock Appreciation Right being terminated in an amount
equal to all or a portion of the excess, if any, of the per Share price to be
paid or distributed to stockholders in the Corporate Transaction (the value of
any non-cash consideration to be determined by the Committee in good faith) over
the exercise price of the Option or the Base Price of the Stock Appreciation
Right, which may be paid in accordance with the vesting schedule of the Award as
set forth in the applicable Award Agreement, upon the consummation of the
Corporate Transaction or, to the extent permitted by Section 409A of the Code,
at such other time or times as the Committee may determine;

(c) with respect to unvested Awards (other than Options or Stock Appreciation
Rights) that are terminated in connection with the Corporate Transaction,
provide to the holders thereof a payment (in cash and/or other consideration) in
respect of each Share covered by the Award being terminated in an amount equal
to all or a portion of the per Share price to be paid or distributed to
stockholders in the Corporate Transaction (the value of any non-cash
consideration to be determined by the Committee in good faith), which may be
paid in accordance with the vesting schedule of the Award as set forth in the
applicable Award Agreement, upon the consummation of the Corporate Transaction
or, to the extent permitted by Section 409A of the Code, at such other time or
times as the Committee may determine.

(i) 13.3(a) Notwithstanding anything to the contrary, the Committee may, in its
sole discretion, provide in the Transaction Agreement or otherwise for different
treatment for different Awards or Awards held by different Participants and,
where alternative treatment is available for a Participant’s Awards, may allow
the Participant to choose which treatment shall apply to such Participant’s
Awards.

(ii) (b) Any action permitted under this Section 13 may be taken without the
need for the consent of any Participant. To the extent a Corporate Transaction
also constitutes a Change in Capitalization and action is taken pursuant to this
Section 13 with respect to an outstanding Award, such action shall conclusively
determine the treatment of such Award in connection with such Corporate
Transaction notwithstanding any provision of the Plan to the contrary (including
Section 12).

 

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(iii) (c) To the extent the Committee chooses to make payments to affected
Participants pursuant to Section 13.1(b)(i)(2) or (ii) or Section 13.2(b) or
(c) above, any Participant who has not returned any letter of transmittal or
similar acknowledgment that the Committee requires be signed in connection with
such payment within the time period established by the Committee for returning
any such letter or similar acknowledgement shall forfeit his or her right to any
payment and his or her associated Awards may be cancelled without any payment
therefor.

 

  14. Interpretation.

14.1. Section 16 Compliance. The Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act and the Committee shall interpret and
administer the provisions of the Plan or any Award Agreement in a manner
consistent therewith. Any provisions inconsistent with such Rule shall be
inoperative and shall not affect the validity of the Plan.

14.2. Compliance with Section 409A. All Awards granted under the Plan are
intended either not to be subject to Section 409A of the Code or, if subject to
Section 409A of the Code, to be administered, operated and construed in
compliance with Section 409A of the Code and all regulations and other guidance
issued thereunder. Notwithstanding this or any other provision of the Plan to
the contrary, the Committee may amend the Plan or any Award granted hereunder in
any manner or take any other action that it determines, in its sole discretion,
is necessary, appropriate or advisable (including replacing any Award) to cause
the Plan or any Award granted hereunder to comply with Section 409A of the Code
and all regulations and other guidance issued thereunder or to not be subject to
Section 409A of the Code. Any such action, once taken, shall be deemed to be
effective from the earliest date necessary to avoid a violation of Section 409A
of the Code and shall be final, binding and conclusive on all Eligible
Individuals and other individuals having or claiming any right or interest under
the Plan.

14.3. Section 162(m). Unless otherwise determined by the Committee at the time
of grant, each Option, Stock Appreciation Right and Performance Award granted to
an Eligible Individual who is also a Covered Employee is intended to be
Performance Based Compensation. Unless otherwise determined by the Committee, if
any provision of the Plan or any Award Agreement relating to an Award that is
intended to be Performance-Based Compensation does not comply or is inconsistent
with Section 162(m) of the Code or the regulations promulgated thereunder
(including IRS Regulation § 1.162-27), such provision shall be construed or
deemed amended to the extent necessary to conform to such requirements, and no
provision shall be deemed to confer upon the Committee discretion to increase
the amount of compensation otherwise payable in connection with any such Award
upon the attainment of the Performance Objectives.

 

  15. Term; Plan Termination and Amendment of the Plan; Modification of Awards.

15.1. Term. The Plan shall terminate on the Plan Termination Date and no Award
shall be granted after that date. The applicable terms of the Plan and any terms
and conditions applicable to Awards granted prior to the Plan Termination Date
shall survive the termination of the Plan and continue to apply to such Awards.

 

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15.2. Plan Amendment or Plan Termination. The Board may earlier terminate the
Plan and the Board may at any time and from time to time amend, modify or
suspend the Plan; provided, however, that:

(a) no such amendment, modification, suspension or termination shall impair or
adversely alter any Awards theretofore granted under the Plan, except with the
consent of the Participant, nor shall any amendment, modification, suspension or
termination deprive any Participant of any Shares which he or she may have
acquired through or as a result of the Plan; and

(b) to the extent necessary under any applicable law, regulation or exchange
requirement, no other amendment shall be effective unless approved by the
stockholders of the Company in accordance with applicable law, regulation or
exchange requirement.

15.3. Modification of Awards. No modification of an Award shall adversely alter
or impair any rights or obligations under the Award without the consent of the
Participant.

 

  16. Non-Exclusivity of the Plan.

The adoption of the Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive arrangement or as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.

 

  17. Limitation of Liability.

As illustrative of the limitations of liability of the Company, but not intended
to be exhaustive thereof, nothing in the Plan shall be construed to:

(a) give any person any right to be granted an Award other than at the sole
discretion of the Committee;

(b) limit in any way the right of the Company or any of its Subsidiaries to
terminate the employment of or the provision of services by any person at any
time;

(c) be evidence of any agreement or understanding, express or implied, that the
Company will pay any person at any particular rate of compensation or for any
particular period of time; or

(d) be evidence of any agreement or understanding, express or implied, that the
Company will employ any person at any particular rate of compensation or for any
particular period of time.

 

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  18. Regulations and Other Approvals; Governing Law.

18.1. Governing Law. Except as to matters of federal law, the Plan and the
rights of all persons claiming hereunder shall be construed and determined in
accordance with the laws of the State of Delaware without giving effect to
conflicts of laws principles thereof.

18.2. Compliance with Law.

(a) The obligation of the Company to sell or deliver Shares with respect to
Awards granted under the Plan shall be subject to all applicable laws, rules and
regulations, including all applicable federal and state securities laws, and the
obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.

(b) The Board may make such changes as may be necessary or appropriate to comply
with the rules and regulations of any government authority or to obtain for
Eligible Individuals granted Incentive Stock Options the tax benefits under the
applicable provisions of the Code and regulations promulgated thereunder.

(c) Each grant of an Award and the issuance of Shares or other settlement of the
Award is subject to compliance with all applicable federal, state and foreign
law. Further, if at any time the Committee determines, in its discretion, that
the listing, registration or qualification of Shares issuable pursuant to the
Plan is required by any securities exchange or under any federal, state or
foreign law, or that the consent or approval of any governmental regulatory body
is necessary or desirable as a condition of, or in connection with, the grant of
an Award or the issuance of Shares, no Awards shall be or shall be deemed to be
granted or payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions that are not acceptable to the Committee. Any person
exercising an Option or receiving Shares in connection with any other Award
shall make such representations and agreements and furnish such information as
the Board or Committee may request to assure compliance with the foregoing or
any other applicable legal requirements.

18.3. Transfers of Plan Acquired Shares. Notwithstanding anything contained in
the Plan or any Award Agreement to the contrary, in the event that the
disposition of Shares acquired pursuant to the Plan is not covered by a then
current registration statement under the Securities Act and is not otherwise
exempt from such registration, such Shares shall be restricted against transfer
to the extent required by the Securities Act and Rule 144 or other regulations
promulgated thereunder. The Committee may require any individual receiving
Shares pursuant to an Award granted under the Plan, as a condition precedent to
receipt of such Shares, to represent and warrant to the Company in writing that
the Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than pursuant to
an effective registration thereof under the Securities Act or pursuant to an
exemption applicable under the Securities Act or the rules and regulations
promulgated thereunder. The certificates evidencing any of such Shares shall be
appropriately amended or have an appropriate legend placed thereon to reflect
their status as restricted securities as aforesaid.

 

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  19. Miscellaneous.

19.1. Forfeiture Events; Clawback. The Committee may specify in an Award
Agreement that the Participant’s rights, payments and benefits with respect to
an Award shall be subject to reduction, cancellation, forfeiture, clawback or
recoupment upon the occurrence of certain specified events or as required by
law, in addition to any otherwise applicable forfeiture provisions that apply to
the Award.

19.2. Multiple Agreements. The terms of each Award may differ from other Awards
granted under the Plan at the same time or at some other time. The Committee may
also grant more than one Award to a given Eligible Individual during the term of
the Plan, either in addition to or, subject to Section 3.5, in substitution for
one or more Awards previously granted to that Eligible Individual.

19.3. Withholding of Taxes.

(a) The Company or any of its Subsidiaries may withhold from any payment of cash
or Shares to a Participant or other person under the Plan an amount sufficient
to cover any withholding taxes which may become required with respect to such
payment or take any other action it deems necessary to satisfy any income or
other tax withholding requirements as a result of the grant or exercise of any
Award under the Plan. The Company or any of its Subsidiaries shall have the
right to require the payment of any such taxes and require that any person
furnish information deemed necessary by the Company or any of its Subsidiaries
to meet any tax reporting obligation as a condition to exercise or before making
any payment or the issuance or release of any Shares pursuant to an Award. If
specified in an Award Agreement at the time of grant or otherwise approved by
the Committee, a Participant may, in satisfaction of his or her obligation to
pay withholding taxes in connection with the exercise, vesting or other
settlement of an Award, elect to (i) make a cash payment to the Company,
(ii) have withheld a portion of the Shares then issuable to him or her or
(iii) surrender Shares owned by the Participant prior to the exercise, vesting
or other settlement of an Award, in each case having an aggregate Fair Market
Value equal to the withholding taxes.

(b) If a Participant makes a disposition, within the meaning of Section 424(c)
of the Code and regulations promulgated thereunder, of any Share or Shares
issued to such Participant pursuant to the exercise of an Incentive Stock Option
within the two-year period commencing on the day after the date of the grant or
within the one-year period commencing on the day after the date of transfer of
such Share or Shares to the Participant pursuant to such exercise, the
Participant shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Company at its principal executive
office.

19.4. Plan Unfunded. The Plan shall be unfunded. Except for reserving a
sufficient number of authorized Shares to the extent required by law to meet the
requirements of the Plan, the Company shall not be required to establish any
special or separate fund or to make any other segregation of assets to assure
payment of any Award granted under the Plan.

 

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