Exhibit 10.1

 

AMENDED AND RESTATED

LITTELFUSE, INC. LONG-TERM INCENTIVE PLAN

(effective as of April 28, 2017)

 

SECTION 1.

ESTABLISHMENT, OBJECTIVES AND DURATION

 

1.1          ESTABLISHMENT. Littelfuse, Inc. (the “Corporation”) has established
the Littelfuse, Inc. Long-Term Incentive Plan (the “Plan”), as set forth herein.
The Plan became effective upon the ratification by the holders of the majority
of those shares present in person or by proxy at the Corporation’s 2010 annual
meeting of its stockholders on April 30, 2010, with an effective date of
February 3, 2010. The Plan was further amended on July 27, 2012. The Plan is
hereby further amended and restated in the form provided herein, effective as of
April 28, 2017, subject to approval by the Corporation’s stockholders.

 

The Plan superceded and replaced (subject to the last sentence of Section 1.4)
the Equity Incentive Compensation Plan, Littelfuse, Inc. Equity Incentive
Compensation Plan, adopted effective March 1, 2006, and the Littelfuse, Inc.
Outside Directors’ Equity Plan, adopted effective March 1, 2006 (the “Prior
Plans”), except that the Prior Plans shall remain in effect with respect to
awards granted under such Prior Plans until such awards have been exercised,
forfeited, canceled, expired or otherwise terminated in accordance with the
terms of such awards.

 

1.2         PURPOSE. The purpose of the Plan is to enhance stockholder value by
linking long- term incentive compensation to the financial performance of the
Corporation and to further align employees’ financial rewards with the financial
rewards realized by the Corporation and its stockholders. The Plan is also a
vehicle to attract and retain key personnel. To accomplish the foregoing, the
Plan provides that the Corporation may grant Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units, Performance Shares and/or Performance Units.

 

1.3          DURATION. The Plan shall remain in effect, subject to the right of
the Corporation’s Board of Directors to amend or terminate the Plan at any time
pursuant to Section 15, until all Shares subject to the Plan shall have been
purchased or granted according to the Plan’s provisions.

 

1.4         APPROVAL BY STOCKHOLDERS. This amendment and restatement of the Plan
has been adopted by the Board of Directors and approved by the stockholders of
the Corporation at the April 28, 2017 annual meeting of stockholders.

 

SECTION 2.

DEFINITIONS

 

Whenever used in the Plan, the following capitalized terms shall have the
meanings set forth below:

 

2.1          “AWARD” means, individually or collectively, a grant under the Plan
of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units, Performance Shares, or
Performance Units.

 

2.2           “AWARD AGREEMENT” means a written (or electronic) document setting
forth the terms and provisions applicable to an Award granted to the Participant
under the Plan which need not be executed unless required by the Committee, and
is a condition to the grant of an Award hereunder.

 

2.3           “BOARD” means the Board of Directors of the Corporation.

 

 
 

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2.4           “CHANGE IN CONTROL” means the first of the following events to
occur:

 

 

a)

The acquisition by any one person or more than one person acting as a group
(within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(v)(B)), other
than the Corporation, any Subsidiary, or any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any Subsidiary, (a
“Person”) of any of stock of the Corporation that, together with stock held by
such Person, constitutes more than 50% of the total fair market value or total
voting power of the stock of the Corporation. For purposes of this Paragraph
(a), the following acquisitions shall not constitute a Change in Control: (i)
the acquisition of additional stock by a Person who is considered to own more
than 50% of the total fair market value or total voting power of the stock of
the Corporation, (ii) any acquisition in which the Corporation does not remain
outstanding thereafter and (iii) any acquisition pursuant to a transaction which
complies with Paragraph (c) below. An increase in the percentage of stock owned
by any one Person as a result of a transaction in which the Corporation acquires
its stock in exchange for property will be treated as an acquisition of stock
for purposes of this Paragraph;

 

 

b)

The replacement of individuals who constitute a majority of the Board, during
any twelve (12) month period, by directors whose appointment or election is not
endorsed by a majority of the Board before the date of the appointment or
election, provided that, if the Corporation is not the relevant corporation for
which no other corporation is a majority shareholder for purposes of Treasury
Regulation Section 1.409A-3(i)(5)(iv)(A)(2), this Paragraph (b) shall be applied
instead with respect to the members of the board of the directors of such
relevant corporation for which no other corporation is a majority shareholder;

 

 

c)

The acquisition by any one person or more than one person acting as a group
(within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(vi)(D)), other
than the Corporation, a Subsidiary or any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any Subsidiary , during the
12-month period ending on the date of the most recent acquisition by such by
such person or persons, of ownership of stock of the Corporation possessing 30%
or more of the total voting power of the stock of the Corporation. For purposes
of this Paragraph (c), the following acquisitions shall not constitute a Change
in Control: (i) the acquisition of additional control by a person or more than
one person acting as a group who are considered to effectively control the
Corporation within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(vi)
and (ii) any acquisition pursuant to a transaction which complies with Paragraph
(a); or

 

 

d)

The acquisition by any individual person or more than one person acting as a
group (within the meaning of Treasury Regulation Section
1.409A-3(i)(5)(vii)(C)), other than a transfer to a related person within the
meaning of Treasury Regulation Section 1.409A-3(i)(5)(vii)(B), during the
12-month period ending on the date of the most recent acquisition by such by
such person or persons, of assets from the Corporation that have a total gross
fair market value equal to or more than 40% of the total gross fair market value
of all of the assets of the Corporation immediately prior to such
acquisition(s). For purposes of this Paragraph (d), “gross fair market value”
means the value of the assets of the Corporation, or the value of the assets
being disposed of, determined without regard to any liabilities associated with
such assets.

 

The above definition of “Change in Control” shall be interpreted by the Board,
in good faith, to apply in a similar manner to transactions involving
partnerships and partnership interests, and to comply with Code Section 409A.

 

2.5          “CODE” means the Internal Revenue Code of 1986, and all regulations
and formal guidance issued thereunder, as amended from time to time, or any
successor legislation thereto.

 

2.6           “COMMITTEE” means the Compensation Committee of the Board, or such
other committee as shall be appointed by the Board as provided in Section 3 to
administer the Plan, or in the absence of either, the Board.

 

 
 

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2.7           “CORPORATION” means Littelfuse, Inc., a Delaware corporation, and
any successor to all or substantially all of the assets or voting stock of such
entity as provided in Section 18.

 

2.8           “DIRECTOR” means any individual who is a member of the Board.

 

2.9           “DISABILITY” means, unless otherwise provided in the Award
Agreement or in an employment, change of control or similar agreement in effect
between the Participant and the Corporation or Subsidiary, the Participant is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months; or, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than 3 months under an accident and health
plan covering employees of the Corporation or a Subsidiary.

 

2.10         “EFFECTIVE DATE” means February 3, 2010.

 

2.11         “EMPLOYEE” means any Employee of the Corporation or any Subsidiary.

 

2.12        “EXCHANGE ACT” means the Securities Exchange Act of 1934, and all
rules and formal guidance issued thereunder, as amended from time to time, or
any successor act thereto.

 

2.13         “FAIR MARKET VALUE” means, with respect to the relevant date, if
the Shares are duly listed on a national securities exchange or on The Nasdaq
Stock Market, the closing price of a Share on such date, or, if there are no
sales on such date, on the next preceding day on which there were sales, or if
the Shares are not so listed, the fair market value of the Shares for such date,
as determined by the Committee in good faith and in compliance with Code Section
409A. Such price shall be subject to adjustment as provided in Section 4.3.

 

2.14        “INCENTIVE STOCK OPTION” OR “ISO” means the right to purchase Shares
pursuant terms and conditions that are intended to qualify as, and that satisfy
the requirements applicable to, an incentive stock option within the meaning of
Code Section 422, as described in Section 6.

 

2.15         “NAMED EXECUTIVE OFFICER” means a Participant who is one of the
group of covered employees as defined in the regulations promulgated under Code
Section 162(m), or any successor provision or statute.

 

2.16         “NONQUALIFIED STOCK OPTION” OR “NQSO” means the right to purchase
Shares pursuant to terms and conditions that are not intended to be, or do not
qualify as, an Incentive Stock Option as described in Section 6.

 

2.17         “OPTION” means an Incentive Stock Option or a Nonqualified Stock
Option, as described in Section 6.

 

2.18         “OPTION PRICE” means the per Share purchase price of a Share
purchased pursuant to an Option.

 

2.19         “PARTICIPANT” means an Employee, prospective Employee, or Director
who has outstanding an Award granted under the Plan, and includes those former
Employees and former Directors who have certain post-termination rights under
the terms of an Award.

 

2.20         “PERFORMANCE-BASED EXCEPTION” means the exception for performance-
based compensation from the tax deductibility limitations of Code Section
162(m).

 

2.21        “PERFORMANCE PERIOD” means the time period during which performance
goals must be achieved with respect to an Award, as determined by the Committee.

 

2.22         “PERFORMANCE SHARE” means an Award granted to a Participant that
entitles the Participant to delivery of Shares upon achievement of performance
goals, as described in Section 9.

 

 
 

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2.23         “PERFORMANCE UNIT” means an Award that entitles the Participant to
a cash payment upon achievement of performance goals, as described in Section 9.

 

2.24         “PERIOD OF RESTRICTION” means the period during which the transfer
of an Award or the Shares is limited in some way (based on the passage of time,
the achievement of performance goals, or upon the occurrence of other events as
determined by the Committee, at its discretion), and the Award or Shares are
subject to a substantial risk of forfeiture, as provided in Sections 8 and 9.

 

2.25         “PLAN” means the Littelfuse, Inc. Long-Term Incentive Plan, as set
forth herein.

 

2.26         “RESTRICTED STOCK” means an Award of Shares subject to a Period of
Restriction granted to a Participant pursuant to Section 8.

 

2.27         “RESTRICTED STOCK UNIT” OR “RSUs” shall mean a right to receive
Shares or cash upon the lapse of the Period of Restriction pursuant to Section
8.

 

2.28        “SERVICE” shall mean the performance of services for the Corporation
(or any Subsidiary) within the meaning of Code Section 409A, except to the
extent otherwise specifically provided in the Award Agreement.

 

2.29         “SHARE” OR “SHARES” means Shares of common stock of the
Corporation.

 

2.30         “STOCK APPRECIATION RIGHT” OR “SAR” means a right, designated as an
SAR, to receive the appreciation in the Fair Market Value of Shares pursuant to
the terms of Section 7.

 

2.31        “SUBSIDIARY” means any affiliate of the Corporation; provided,
however, that with respect to any ISO “Subsidiary” means any Corporation during
any period in which it is a “parent corporation” (as that term is defined in
Code Section 424(e)) with respect to the corporation or a “subsidiary
corporation” (as that term is defined in Code Section 424(f)) with respect to
the Corporation.

 

SECTION 3.

ADMINISTRATION

 

3.1           PLAN ADMINISTRATION. The Committee shall administer the Plan. The
Committee shall consist of not fewer than two Directors who are non-Employee
Directors of the Corporation, within the meaning of Rule 16b-3 of the Exchange
Act; “outside directors”, as defined in Code Section 162(m)(4)(c)(i); and
“independent directors” for purposes of the rules of the exchange on which the
Shares are traded; provided, however, that if at any time any member of the
Committee is not an outside director, as so defined, the Committee may establish
a subcommittee, consisting of all members who are outside directors, to carry
out the duties of the Committee for all purposes relating to any Award to a
Named Executive Officer, unless the Committee determines that such an Award is
not intended to qualify for the Performance-Based Exception. The Board may, from
time to time, remove members from, or add members to, the Committee. Any
vacancies on the Committee shall be filled by members of the Board.

 

Acts of a majority of the Committee at which a quorum is present, or acts
reduced to or approved in writing by unanimous consent of the members of the
Committee, shall be valid acts of the Committee.

 

3.2          AUTHORITY OF THE COMMITTEE. Except as limited by law or by the
Certificate of Incorporation or Bylaws of the Corporation, and subject to the
provisions herein, the Committee shall have full power to select Employees,
prospective Employees and Directors who shall participate in the Plan; determine
the sizes and types of Awards; determine the terms and conditions of Awards in a
manner consistent with the Plan; decide whether and to what extent Awards shall
be structured to conform with Code Section 162(m) requirements for the
Performance-Based Exception; construe and interpret the Plan and any agreement
or instrument entered into under the Plan; establish, amend, or waive rules and
regulations consistent with the terms of the Plan for the Plan’s administration;
and amend the terms and conditions of any outstanding Award to the extent such
terms and conditions are within the sole discretion of the Committee as provided
in the Plan and subject to Section 15; provided that the Committee shall not
have the authority to amend any Option or SAR to reduce its Option Price or base
price except in accordance with Sections 4.3 and 4.4. Further, the Committee
shall make all other determinations which may be necessary or advisable for the
administration of the Plan, including establishing administrative methods for
the exercise of Options and SARs. The Committee’s determinations,
interpretations and actions under the Plan need not be uniform and may be made
selectively among Employees, prospective Employees, Directors and their
beneficiaries.

 

 
 

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3.3           DECISIONS BINDING. All determinations and decisions made by the
Committee (or its delegate) pursuant to the provisions of the Plan and all
related orders and resolutions of the Board shall be final, conclusive and
binding on all persons, including the Corporation, its stockholders, Employees,
Directors, Participants, and their estates and beneficiaries.

 

3.4           DELEGATION BY COMMITTEE. Unless prohibited by applicable law or
the applicable rules of a stock exchange, the Committee may delegate all or some
of its responsibilities and powers to any one or more of its members. The
Committee also may delegate some or all of it administrative duties and powers
to any Employee, including officers of the Corporation. The Committee may
delegate to an executive officer of the Corporation the authority to grant
Awards under the Plan to Employees who are not officers of the Corporation or
any Subsidiaries, provided that the terms and conditions of such Awards shall be
set forth in an Award Agreement approved by the Committee prior to the grant of
said Awards, the Committee in its delegation shall specify the maximum Shares
that may be awarded to one Participant pursuant to such delegation in any
calendar year, and the executive officer shall report any such grants to the
Committee at its next meeting. In the case of any such delegation, references in
this Plan to the “Committee” shall include any such delegate, as applicable. The
Committee hereby delegates to each of the Corporation’s Corporate Secretary and
General Counsel the authority to document any and all Awards made by the
Committee and/or an authorized executive officer under the Plan. The Committee
may revoke any such allocation or delegation at any time.

 

3.5          INFORMATION TO BE FURNISHED TO COMMITTEE. The records of the
Corporation and Subsidiaries as to an Employee’s, Director’s or Participant’s
employment, termination of employment, performance of Services, termination of
Services, leave of absence, reemployment and compensation shall be conclusive on
all persons unless determined to be manifestly incorrect. Participants and other
persons entitled to benefits under the Plan must, as a condition to the receipt
or settlement of any Award hereunder, furnish the Committee with such evidence,
data or information as the Committee reasonably considers desirable to carry out
the terms of the Plan.

 

3.6          INDEMNIFICATION. In addition to such other rights of
indemnification that they have as members of the Board or the Committee, the
Corporation shall indemnify the members of the Committee (and any delegates of
the Committee, as permitted under Section 3.4, to the extent permitted by
applicable law, against reasonable expenses (including, without limitation,
attorney’s fees) actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any Award awarded
hereunder, and against all amounts paid by them in settlement thereof (provided
such settlement is approved to the extent required by and in the manner provided
by the Articles of Incorporation or the Bylaws of the Corporation relating to
indemnification of the members of the Board) or paid by them in satisfaction of
a judgment in any such action, suit or proceeding, except in relation to such
matters as to which it is adjudged in such action, suit or proceeding that such
Committee member or members (or their delegates) did not act in good faith and
in a manner reasonably believed to be in or not opposed to the best interests of
the Corporation.

 

 
 

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SECTION 4.

SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS

 

4.1           SHARES AVAILABLE FOR AWARDS.

 

 

a)

The Shares available for Awards may be either authorized and unissued Shares or
Shares held in or acquired for the treasury of the Corporation. The aggregate
number of Shares that may be issued or used for reference purposes under the
Plan or with respect to which Awards may be granted shall not exceed 2,250,000
Shares, all of which may be issued pursuant to Incentive Stock Options and are
subject to adjustment as provided in Section 4.3. The number of Shares reserved
for issuance under this Plan, as set forth above, shall be increased by reserved
but unissued shares under the Prior Plans, and no additional awards shall be
granted under the Prior Plans. In no event shall fractional Shares be issued
under the Plan.

 

 

b)

Upon:

 

 

(i)

a payout of a SAR, RSU, or Performance Unit Award under this Plan or comparable
awards under either of the Prior Plans in the form of cash; or

 

 

(ii)

a cancellation, termination, expiration without exercise, forfeiture, or lapse
for any reason, of any Award under this Plan or any award granted under either
of the Prior Plans; the number of Shares underlying any such Award (or Prior
Plan award) that were not issued as a result of any of the foregoing actions
shall again be available for the purposes of Awards under the Plan. In addition,
in the case of any Award granted in substitution for an award of a company or
business acquired by the Corporation or a Subsidiary, Shares issued or issuable
in connection with such substitute Award shall not be counted against the number
of Shares reserved under the Plan, but shall be available under the Plan by
virtue of the Corporation’s assumption of the plan or arrangement of the
acquired company or business.

 

All Restricted Shares which vest, and all Shares issued in settlement of an
Option, SAR, Restricted Stock Unit, or Performance Share Award, or withheld for
payment of the Option Price or any tax imposed upon the exercise or settlement
of the Award, shall reduce the total number of Shares available under the Plan
and shall not again be available for the grant of any Award hereunder.

 

Notwithstanding the foregoing, when a stock-settled SAR is exercised under the
Plan or either of the Prior Plans, the total number of Shares subject to the SAR
shall not be available for subsequent issuance under the Plan, regardless of the
number of Shares used the settle the SAR.

 

4.2           INDIVIDUAL PARTICIPANT LIMITATIONS. Unless and until the Committee
determines that an Award to a Named Executive Officer shall not be designed to
comply with the Performance-Based Exception, the following rules shall apply to
grants of such Awards under the Plan:

 

 

(a)

Subject to adjustment as provided in Section 4.3, the maximum aggregate number
of Shares (including Options, Restricted Stock, Restricted Stock Units and
Performance Shares) that may be granted to a Named Executive Officer in any year
shall be 200,000 Shares.

 

 

(b)

The maximum aggregate cash payout with respect to any Award to any Named
Executive Officer in any year shall be $3,000,000.

 

Notwithstanding anything in the Plan to the contrary, the maximum number of
shares of Stock subject to any Awards granted during any single calendar year to
any non-employee member of the Board shall not exceed 50,000 Shares.

 

 
 

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4.3           ADJUSTMENTS. (a) Recapitalization. Notwithstanding any other
provision of the Plan, if the Corporation is involved in a corporate transaction
or any other event which affects the Shares (including, without limitation, any
recapitalization, reclassification, reverse or forward stock split, stock
dividend, extraordinary cash dividend, split-up, spin-off, combination or
exchange of shares), then the Committee shall make or provide for such
adjustments to Awards to prevent the dilution or enlargement of rights of the
Awards as follows:

 

 

(i)

The Committee shall take action to adjust the number and kind of Shares that are
issuable under the Plan and the maximum limits for each type of Award;

 

 

(ii)

The Committee shall take action to adjust the number and kind of Shares subject
to outstanding Awards;

 

 

(iii)

The Committee shall take action to adjust the Option Price or base price of
outstanding Options and Stock Appreciation Rights; and

 

 

(iv)

The Committee shall make any other equitable adjustments.

 

Only whole Shares shall be issued in making the above adjustments. Further, the
number of Shares available under the Plan or the number of Shares subject to any
outstanding Awards shall be the next lower number of Shares, so that fractions
are rounded downward. Any adjustment to or assumption of ISOs under this Section
shall be made in accordance with Code Section 424. If the Corporation issues any
rights to subscribe for additional Shares pro rata to holders of outstanding
Shares of the class or classes of stock then set aside for the Plan, then each
Participant shall be entitled to the same rights on the same basis as holders of
outstanding Shares with respect to such portion of the Participant’s Award as is
exercised on or prior to the record date for determining stockholders entitled
to receive or exercise such rights.

 

 

(b)

Reorganization. If the Corporation is part of any reorganization involving
merger, consolidation, acquisition of the Stock or acquisition of the assets of
the Corporation, the Committee, in its discretion, may decide that:

 

 

(i)

any or all outstanding Awards shall pertain to and apply, with appropriate
adjustment as determined by the Committee, to the securities of the resulting
corporation to which a holder of the number of Shares subject to each such Award
would have been entitled;

 

 

(ii)

any or all outstanding Options or SARs shall become immediately fully
exercisable (to the extent permitted under federal or state securities laws) and
shall remain exercisable for the remaining term of the Options or SARs under the
terms of the Plan;

 

 

(iii)

any or all Options or SARs shall become immediately fully exercisable (to the
extent permitted under federal or state securities laws) and shall be terminated
after giving at least 30 days’ notice to the Participants to whom such Options
or SARs have been granted; and/or

 

 

(iv)

any or all unvested Restricted Stock Units and Restricted Stock on which
restrictions have not yet lapsed shall become immediately fully vested,
nonforfeitable and payable.

 

 

(c)

Limits on Adjustments. Any issuance by the Corporation of stock of any class
other than the Stock, or securities convertible into shares of stock of any
class, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to any Award, except as
specifically provided otherwise in this Plan. The grant of Awards under the Plan
shall not affect in any way the right or authority of the Corporation to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge, consolidate or dissolve, or to liquidate, sell
or transfer all or any part of its business or assets. All adjustments the
Committee makes under this Plan shall be conclusive.

 

 
 

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4.4           PROHIBITION ON REPRICING. Anything else contained herein to the
contrary notwithstanding, except as provided in Section 4.3, the Committee shall
not amend any Option or SAR to reduce its Option Price or base price, and shall
not issue to any Participant a new Award in exchange for the surrender and
cancellation of any other Award, if such new Award has an Option Price or base
price (as applicable) lower than that of the Award for which it is exchanged, or
take any other action that would have the effect of reducing the Option Price or
base price of an Option or SAR.

 

SECTION 5.

ELIGIBILITY AND PARTICIPATION

 

5.1           ELIGIBILITY. Persons eligible to participate in the Plan include
current and future U.S. and non-U.S. Employees (including officers), persons who
have been offered employment by the Corporation or a Subsidiary (provided that
such prospective Employee may not receive any payment or exercise any right
relating to an Award until such person begins employment with the Corporation or
Subsidiary), and Directors, as designated by the Committee; provided, however,
that ISOs may only be granted to U.S. Employees.

 

5.2          PARTICIPATION. Subject to the provisions of the Plan, the
Committee, shall determine and designate, from time to time, the Employees,
prospective Employees and Directors to whom Awards shall be granted, the terms
of such Awards, and the number of Shares subject to such Award.

 

SECTION 6.

STOCK OPTIONS

 

6.1           GRANT OF OPTIONS AND AWARD AGREEMENT.

 

 

(a)

Option Grant. Subject to the terms and provisions of the Plan, Options may be
granted to one or more Participants in such number, upon such terms and
provisions, and at any time and from time to time, as determined by the
Committee, in its sole discretion. The Committee may grant either Nonqualified
Stock Options or Incentive Stock Options, and shall have complete discretion in
determining the number of Options of each granted to each Participant, subject
to the limitations of Section 4.

 

 

(b)

Award Agreement. Each Award shall be evidenced by an Award Agreement, effective
as of the grant date, which shall specify the Option Price, the term of the
Option, the number of Shares subject to the Option, and such other provisions as
the Committee shall determine, and which are not inconsistent with the terms and
provisions of the Plan. The Award Agreement shall also specify whether the
Option is to be treated as an ISO within the meaning of Code Section 422. If
such Option is not designated as an ISO, such Option shall be deemed an NSO. No
ISO may be granted to any person more than 10 years after the Effective Date of
the Plan.

 

6.2           OPTION PRICE. The Committee shall designate the Option Price for
each Share subject to an Option under the Plan, provided that such Option Price
shall not be less than 100% of the Fair Market Value of Shares subject to an
Option on the date the Option is granted, and which Option Price may not be
subsequently decreased by the Committee except pursuant to Section 4.3 and in
compliance with Code Section 409A. With respect to a Participant who owns,
directly or indirectly, more than 10% of the total combined voting power of all
classes of the stock of the Corporation or any Subsidiary, the Option Price of
Shares subject to an ISO shall be at least 110% of the Fair Market Value of such
Shares on the ISO’s grant date.

 

6.3           TERM OF OPTIONS. Each Option granted to a Participant shall expire
at such time as the Committee shall determine at the time of grant, but in no
event shall be exercisable later than the 10th anniversary of the grant date.
Notwithstanding the foregoing, with respect to ISOs, in the case of a
Participant who owns, directly or indirectly, more than 10% of the total
combined voting power of all classes of the stock of the Corporation or any
Subsidiary, no such ISO shall be exercisable later than the fifth anniversary of
the grant date.

 

 
 

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6.4           EXERCISE OF OPTIONS. Options granted under this Section 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each Award or for each Participant, and shall be set forth in the applicable
Award Agreement, subject to Section 11. Notwithstanding the preceding sentence,
the Fair Market Value of Shares to which ISOs are exercisable for the first time
by any Participant during any calendar year may not exceed $100,000. Any ISOs
that become exercisable in excess of such amount shall be deemed NSOs to the
extent of such excess. The Committee, in its sole discretion and at any time,
may establish procedures setting a minimum number of Shares that must be
exercised at any one time.

 

6.5          EXERCISE AND PAYMENT. Options granted under this Section 6 shall be
exercised by the delivery of a written (or electronic) notice of exercise to the
Corporation, setting forth the number of Shares with respect to which the Option
is to be exercised, accompanied by full payment for the Shares and all
applicable tax withholding. The Option Price and applicable tax withholding upon
exercise of any Option shall be payable to the Corporation in full either:

 

 

(a)

in cash or its equivalent,

 

 

(b)

by tendering previously acquired Shares (held for any minimum period needed to
avoid adverse impacts to the Corporation’s earnings for financial reporting
purpose), valued at their Fair Market Value at the time of exercise, with such
documentation as the Committee may require, or

 

 

(c)

a combination (i) and (ii).

 

In addition, payment of the Option Price and applicable tax withholding may be
payable by one or more of the following methods either upon written consent from
the Committee or if one or more of the following methods will not result in a
charge to the Corporation’s earnings for financial reporting purposes:

 

 

(d)

by withholding Shares that otherwise would be acquired on exercise (valued at
their Fair Market Value at the time of exercise),

 

 

(e)

by tendering other Awards payable under the Plan, or

 

 

(f)

by cashless exercise through delivery of irrevocable instructions to a broker to
promptly deliver to the Corporation the amount of proceeds from a sale of all or
a portion of the Shares being exercised.

 

As soon as practicable after receipt of a written (or electronic) notification
of exercise and full payment, the Corporation shall deliver, electronically or
in paper form, the Shares to the Participant. No Participant shall have any
rights of a shareholder with respect to Shares subject to an Option, including
any right to receive dividends, to vote, or to participate in the equity of the
Company, until such Option has been exercised and payment made in full as
provided herein.

 

 
 

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SECTION 7.

STOCK APPRECIATION RIGHTS

 

7.1           GRANT OF SARS AND AWARD AGREEMENT.

 

 

(a)

SAR Grant. Subject to the terms and conditions of the Plan, SARs may be granted
to Participants and at any time and from time to time, as determined by the
Committee, in its sole discretion. The Committee shall have complete discretion
in determining the number of SARs granted to each Participant (subject to
Section 4) and, consistent with the provisions of the Plan, in determining the
terms and conditions pertaining to such SARs. The Committee shall designate, at
the time of grant, the base price of the SAR, which base price shall be at least
equal to the Fair Market Value of a Share on the grant date of the SAR. Base
prices of SARs shall not subsequently be decreased by the Committee, except
pursuant to Section 4.3. The Committee, in its sole discretion, may provide a
maximum dollar limit on the total aggregate payment due under a SAR.

 

 

(b)

Award Agreement. Each Award shall be evidenced by an Award Agreement that shall
specify the base price, the term of the SAR, and such other provisions as the
Committee shall determine, and which are not inconsistent with the terms and
provisions of the Plan.

 

7.2          TERM OF SARS. The term of a SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
unless otherwise designated by the Committee, such term shall not exceed ten
years from the grant date.

 

7.3          EXERCISE OF SARS. SARs shall be exercisable at such times and be
subject to such restrictions and conditions as the Committee shall in each
instance approve, which need not be the same for each Award or for each
Participant, and shall be set forth in the applicable Award Agreement, subject
to Section 11. The Committee, in its sole discretion and at any time, may
establish procedures setting a minimum number of Shares with respect to which
the SAR must be exercised at any one time.

 

7.4          EXERCISE AND PAYMENT. SARs granted under this Section 7 shall be
exercised by the delivery of a written (or electronic) notice of exercise to the
Corporation, setting forth the number of Shares with respect to which the SAR is
to be exercised, accompanied by full payment for all applicable tax withholding.
The applicable tax withholding upon exercise of any SAR shall be payable to the
Corporation in full in the same manner as set forth in Section 6.5 above. As
soon as administratively practicable following exercise of a SAR, a Participant
shall be entitled to receive payment from the Corporation in an amount
determined by multiplying:

 

 

(a)

The excess of the Fair Market Value of a Share on the date of exercise over the
base price per Share; by

 

 

(b)

The number of Shares with respect to which the SAR is exercised.

 

At the sole discretion of the Committee, exercisable at any time, the payment
upon SAR exercise may be in cash, in Shares of equivalent value, or in some
combination thereof.

 

 
 

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SECTION 8.

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

 

8.1           GRANT OF RESTRICTED STOCK OR RSUS AND AWARD AGREEMENT.

 

 

(a)

Grant of Restricted Stock/Restricted Stock Units. Subject to the terms and
provisions of the Plan, the Committee, at any time and from time to time, may
grant Shares of Restricted Stock or RSUs to Participants in such amounts as the
Committee shall determine in its sole discretion. The Committee shall have
complete discretion in determining the number of Shares underlying each Award
(subject to Section 4) and, consistent with the provisions of the Plan, in
determining the terms and conditions, including the Period of Restriction or
vesting, pertaining to such Restricted Stock or RSU. The Committee may designate
an RSU as payable in cash, Stock, or a combination thereof.

 

 

(b)

Award Agreement. Each Award shall be evidenced by an Award Agreement that shall
specify the Period of Restriction or vesting, the number of Shares granted, and
such other provisions as the Committee shall determine pursuant to Section 8.3
or otherwise, and which shall not be inconsistent with the terms and provisions
of the Plan.

 

8.2          TRANSFERABILITY OF RESTRICTED STOCK. Except as provided in this
Section 8, the Shares of Restricted Stock granted herein may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated,
voluntarily or involuntarily, until the end of the applicable Period of
Restriction established by the Committee (subject to Section 11) and specified
in the Award Agreement, or upon earlier satisfaction of any other conditions, as
specified by the Committee in its sole discretion (subject to Section 11) and
set forth in the Award Agreement.

 

8.3           SETTLEMENT OF AWARD. Except as otherwise provided in Section 18.7
or in any Award Agreement, and subject to any deferral elected pursuant to
Section 13.2, the Corporation shall retain the certificates representing Shares
of Restricted Stock in the Corporation’s possession, or may deposit or transfer
such Shares electronically to a custodian designated by the Committee, until
such time as all conditions and/or restrictions applicable to such Shares have
been satisfied as soon as administratively practicable after the last day of the
applicable Period of Restriction on a Restricted Stock Award or following
vesting of an RSU Award, Shares covered by such Restricted Stock Award or, in
the case of RSUs, cash, Shares, or a combination thereof, shall be delivered (in
the case of Shares, electronically or in paper form) to the Participant.

 

8.4          SHAREHOLDER RIGHTS. Unless otherwise designated by the Committee in
the Award Agreement, the Participant shall have no shareholder rights with
respect to the Shares subject to the Restricted Stock or RSU Award, including
voting and cash dividend rights, until after the last day of the Period of
Restriction on the Restricted Stock or vesting of the RSU and the Participant
has received and become a holder of record of the Shares; provided, however,
that in the event that any dividend constitutes a derivative security or an
equity security pursuant to the rules under Section 16 of the Exchange Act, such
dividend shall be added to the Restricted Stock Award and subject to a Period of
Restriction equal to the remaining Period of Restriction applicable to the
Shares of Restricted Stock with respect to which the dividend is paid. As a
condition to receipt of Shares of Restricted Stock, the Participant shall
execute any voting proxies or other similar documents requested by the
Committee.

 

 
 

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SECTION 9.

PERFORMANCE UNITS AND PERFORMANCE SHARES

 

9.1           GRANT OF PERFORMANCE UNITS/SHARES AND AWARD AGREEMENT.

 

 

(a)

Grant of Performance Unit/Shares. Subject to the terms of the Plan, Performance
Units and/or Performance Shares may be granted to Participants in such amounts
and upon such terms, and at any time and from time to time, as shall be
determined by the Committee in its sole discretion, which shall not be
inconsistent with the terms and provisions of the Plan and shall be set forth in
an Award Agreement.

 

 

(b)

Award Agreement. Each Award shall be evidenced by an Award Agreement that shall
specify the initial value of the Award, the performance goals and the
Performance Period, as the Committee shall determine, and which are not
inconsistent with the terms and provisions of the Plan.

 

9.2           VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Share shall
represent the Participant’s right to receive a Share (subject to Section 9.4),
upon achievement of performance goals established by the Committee. Each
Performance Unit shall represent the Participant’s right to receive a cash
payment equal to the value of the Performance Unit (as determined by the
Committee on the grant date, and subject to Section 9.4), upon achievement of
the performance goals established by the Committee. The Committee shall set
performance goals in its sole discretion which, depending on the extent to which
they are met, will determine the number and/or value of Performance Shares
and/or Performance Units that will be paid out to the Participant. For purposes
of this Section 9, the time period during which the performance goals must be
met shall be called a Performance Period (which shall not be less than one (1)
year, except where such period is shortened due to a Change in Control or other
corporate event).

 

9.3          EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of the
Plan, after the applicable Performance Period has ended, the holder of
Performance Units and/or Performance Shares shall be entitled to receive payment
on his or her Performance Units and/or Performance Shares earned by the
Participant over the Performance Period, based on the extent to which the
corresponding performance goals have been achieved, as determined by the
Committee.

 

9.4          FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. Except as
provided below, and subject to any deferral elected pursuant to Section 13.2,
payment of earned Performance Units and/or Performance Shares shall be made in a
single lump sum as soon as reasonably practicable following the close of the
applicable Performance Period. Any Shares paid to a Participant may be subject
to any restrictions deemed appropriate by the Committee.

 

9.5           SHAREHOLDER RIGHTS. Unless otherwise designated by the Committee
in the Award Agreement, the Participant shall have no shareholder rights with
respect to the Shares subject to the Performance Share Award, including voting
and cash dividend rights, until after the Award has vested and the Participant
has received and become a holder of record of the Shares; provided, however,
that in the event that any dividend constitutes a derivative security or an
equity security pursuant to the rules under Section 16 of the Exchange Act, such
dividend shall be added to the Award and subject to the same accrual,
forfeiture, and payout restrictions as apply to the underlying Award with
respect to which the dividend is paid.

 

 
 

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SECTION 10.

PERFORMANCE MEASURES

 

Unless and until the Committee proposes for stockholder vote and stockholders
approve a change in the general performance measures set forth in this Section
10, the attainment of which may determine the degree of payout and/or vesting
with respect to Awards to Named Executive Officers that are designed to qualify
for the Performance-Based Exception, the performance goals to be used for
purposes of such grants shall be established by the Committee in writing and
stated in terms of the attainment of specified levels of or percentage changes
in any one or more of the following measurements: revenue; primary or
fully-diluted earnings per Share; earnings before interest, taxes, depreciation,
and/or amortization; pretax income; operating income; cash flow from operations;
total cash flow; return on equity; return on capital; return on assets; net
operating profits after taxes; economic value added; capital expenditures;
expense levels; stock price; debt levels; market share; total stockholder return
or return on sales; or any individual performance objective which is measured
solely in terms of quantitative targets related to the Corporation or the
Corporation’s business; or any combination thereof. In addition, such
performance goals may be based in whole or in part upon the performance of the
Corporation, a Subsidiary, division and/or other operational unit under one or
more of such measures.

 

The degree of payout and/or vesting of such Awards designed to qualify for the
Performance-Based Exception shall be determined based upon the written
certification of the Committee as to the extent to which the performance goals
and any other material terms and conditions precedent to such payment and/or
vesting have been satisfied. The Committee shall have the sole discretion to
adjust the determinations of the degree of attainment of the preestablished
performance goals; provided, however, that the performance goals applicable to
Awards which are designed to qualify for the Performance-Based Exception, and
which are held by Named Executive Officers, may not be adjusted so as to
increase the payment under the Award (the Committee shall retain the sole
discretion to adjust such performance goals upward, or to otherwise reduce the
amount of the payment and/or vesting of the Award relative to the preestablished
performance goals).

 

In the event that applicable tax and/or securities laws change to permit
Committee sole discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining stockholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of the
Performance-Based Exception or Code Section 162(m) and, thus, using performance
measures other than those specified above.

 

 
 

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SECTION 11.

VESTING AND FORFEITURES

 

11.1         VESTING. As part of making any Award, the Committee may determine
the time and conditions under which the Award will vest or the Period of
Restriction will lapse; provided, however, that the minimum time-based vesting
schedule for any Award shall be one (1) year from the grant date, subject to the
ability of the Compensation Committee to apply a shorter period in limited
cases, not to exceed five percent (5%) of outstanding Awards. Vesting or the
lapse of the Period of Restriction may, in the Committee’s discretion, be based
solely upon continued employment or Service for a specified period of time, or
may be based upon the achievement of specific performance goals
(Corporation-wide, Subsidiary-wide, divisional, and/or individual) which are
established by the Committee in its discretion, subject to Section 10. For all
purposes of this Plan, “vesting” of an Award shall mean:

 

 

(a)

In the case of an Option or SAR, the time at which the Participant has the right
to exercise the Award.

 

 

(b)

In the case of Restricted Stock, the end of the Period of Restriction.

 

 

(c)

In the case of Restricted Stock Units, the end of the Period of Restriction.

 

 

(d)

In the case of Performance Shares or Performance Units, the time at which the
Participant has satisfied the requirements to receive payment on such
Performance Shares or Performance Units, which shall not be less than one year
from the grant date, except as otherwise provided in Section 11.2.

 

Vesting or lapse provisions need not be uniform among Awards granted at the same
time or to persons similarly-situated. Vesting and lapse requirements shall be
set forth in the applicable Award Agreement.

 

11.2        VESTING ON TERMINATION OF EMPLOYMENT. Unless otherwise approved by
the Committee either at the time of grant or at some later date in accordance
with Code Sections 409A and 422, upon the termination of the Participant’s
employment or Service with the Corporation and its Subsidiaries, all outstanding
Awards shall be cancelled and no longer exercisable on the date of the
termination. To the extent that the Committee approves extended vesting or
exercise provisions, such provisions need not be uniform among all Awards issued
pursuant to the Plan, and may reflect distinctions based on the reasons for such
termination.

 

11.3         ACCELERATION OF VESTING. The Committee may, in its sole discretion,
accelerate the vesting or lapse of the Period of Restriction, in whole or in
part, with respect to any Award, but no such acceleration shall be effective
unless evidenced by a writing signed by a duly authorized officer of the
Corporation. In addition, the Committee may impose additional conditions on
Awards, by inclusion of appropriate provisions in the document evidencing or
governing any such Award.

 

11.4        EXTENSION OF EXERCISE PERIOD. The Committee may, in its sole
discretion, subject to the terms of the Plan, exercisable either at the time an
Award is granted or at any time while the Award remains outstanding, to extend
the period of time for which the Option or SAR is to remain exercisable
following the Participant's termination of Service from the limited exercise
period otherwise in effect for that Option or SAR to such greater period of time
as the Committee shall deem appropriate, but in no event beyond the expiration
of the Option or SAR term, and/or to permit the Option or SAR to be exercised,
during the applicable post-termination exercise period, not only with respect to
the number of vested Shares for which such Option or SAR is exercisable at the
time of the Participant's termination of Service but also with respect to one or
more additional installments in which the Participant would have vested had the
Participant continued in Service. Such an extension may result in
recharacterization of an ISO as a NSO.

 

 
 

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SECTION 12.

TRANSFERABILITY OF AWARDS; BENEFICIARY DESIGNATION

 

12.1         LIMITS ON TRANSFERABILITY OF AWARDS.

 

 

(a)

Except as otherwise provided below, Awards may be exercisable only by the
Participant during the Participant’s lifetime, and Awards shall not be
transferable other than by will or the laws of descent and distribution. Any
purported transfer of any Award or any interest therein that does not comply
with the terms of this Plan shall be null and void and confer no rights of any
kind upon the purported transferee.

 

 

(b)

The Committee may, in its discretion, permit a Participant to transfer any Award
other than an ISO to any family member of such Participant, subject to such
restrictions and limitations as the Committee may provide; provided, however,
that any such Award shall remain subject to all vesting, forfeiture, and other
restrictions provided herein and in the Award Agreement to the same extent as if
it had not been transferred; and provided further that in no event shall any
transfer for value be permitted. For purposes of this Section 12.1(b), the terms
“family member” and “transfer for value” have the same meaning as in the General
Instructions to SEC Form S-8, or such other form as the SEC may promulgate in
replacement thereof.

 

 

(c)

To the maximum extent permitted by law, no Award shall be subject, in whole or
in part, to attachment, execution or levy of any kind; provided, however, that
nothing contained herein shall affect the right of setoff set forth in Section
14.3.

 

 

(d)

Nothing contained in this Section 12.1 shall preclude a Participant from
transferring Restricted Shares that have vested, or Shares that are issued in
settlement of an Option, SAR, RSU, or Award of Performance Shares or Performance
Units, subject to the remaining provisions of this Plan and applicable law.

 

12.2        DESIGNATION OF BENEFICIARY. Each Participant under the Plan may,
from time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of his or her death before he or she receives any or all of such
benefit. Each such designation shall revoke all prior designations by the same
Participant, shall be in a form prescribed by the Corporation, and will be
effective only when filed by the Participant in writing (or electronically, if
permitted by the Committee) with the Secretary of the Corporation (or its
designee) during the Participant’s lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant’s death shall be paid
to the Participant’s estate.

 

SECTION 13.

DEFERRALS; COMPLIANCE WITH SECTION 409A

 

13.1         PROHIBITION ON DEFERRALS OF OPTIONS, SARS, AND RESTRICTED STOCK. No
Participant shall have the right to defer the amount of Shares or cash payable
upon the exercise or settlement of any Option or SAR, or the transfer of any
Restricted Stock upon the vesting thereof.

 

 
 

--------------------------------------------------------------------------------

 

 

13.2        DEFERRALS OF RESTRICTED STOCK UNITS, PERFORMANCE UNITS AND
PERFORMANCE SHARES. The Committee may permit a Participant to defer such
Participant’s receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant upon the satisfaction of any
requirements or goals with respect to Restricted Stock Units, Performance Units
or Performance Shares. If any such deferral election is required or permitted,
the Committee shall, in its sole discretion, establish rules and procedures for
such payment deferrals, subject to the following:

 

 

(a)

A deferral election may be made only at one of the following two times:

 

 

(i)

In the case of an Award that cannot vest (other than by reason of death,
Disability, or a Change in Control) earlier than the first anniversary of the
date of grant, not later than the earlier of thirty days after the date of grant
or one year prior to the earliest date on which the Award may vest.

 

 

(ii)

In the case of an Award that is subject to a Performance Period of not less than
one year, and the vesting of which is subject to the attainment of Performance
Criteria that are established within the first 90 days of the Performance Period
and that are not substantially certain of being achieved at the time of grant,
not later than six months prior to the end of the Performance Period.

 

 

(b)

A deferral election shall state the time and manner of payment. Payment must
either be on a specified date, at the time of the Participant’s separation from
Service with the Corporation and its Subsidiaries as defined in Code Section
409A, death, or Disability, or upon the occurrence of a Change in Control.
Notwithstanding the foregoing:

 

 

(i)

An amount payable by reason of a separation from Service to an Employee who is a
“key employee” of the Corporation, as defined in Code Section 409A, shall not be
paid until six months after the separation from service, and any portion of such
amount that would otherwise be payable during such six month period shall be
paid instead at the end of such period.

 

 

(ii)

Payment of any amount that the Corporation reasonably determines would not be
deductible by reason of Code Section 162(m) shall be deferred until the earlier
of the earliest date on which the Corporation reasonably determines that the
deductibility of the payment will not be so limited, or the year following the
termination of employment.

 

 

(iii)

Any payment that the Corporation reasonably determines will violate a term of a
loan agreement to which the Corporation is a party, or other similar contract to
which the Corporation is a party, and such violation will cause material harm to
the Corporation shall be deferred until the earliest date at which the
Corporation reasonably anticipates that the making of the payment will not cause
such violation, or such violation will not cause material harm to the
Corporation.

 

 

(iv)

Any payment that the Corporation reasonably anticipates that will violate
Federal securities laws or other applicable law will be deferred until the
earliest date at which the Corporation reasonably anticipates that the making of
the payment will not cause such violation.

 

 

(v)

The Committee may permit Participants to elect to further defer payments,
provided that any such election is made not less than one year prior to the date
on which the payment would otherwise be made, and that the deferral is for a
period of at least five years.

 

 

(c)

No payment that a Participant has elected to defer pursuant to this Section 13.2
may be paid at any earlier date, except in accordance with procedures adopted by
the Committee in compliance with Code Section 409A.

 

13.3         COMPLIANCE WITH SECTION 409A. The provisions of this Plan,
including but not limited to this Section 13, are intended to comply with the
restrictions of Code Section 409A, and, notwithstanding the Participant consent
requirements of Section 15.1, the Committee reserves the right to amend any
provision of this Plan, or any outstanding Award, to the extent necessary to
comply with Section 409A.

 

 
 

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SECTION 14.

RIGHTS AND OBLIGATIONS OF PARTIES

 

14.1        NO GUARANTEE OF EMPLOYMENT OR SERVICE RIGHTS. Nothing in the Plan
shall interfere with or limit in any way the right of the Corporation to
terminate any Participant’s employment or service at any time, nor confer upon
any Participant any right to continue in the employ or service of the
Corporation or any Subsidiary.

 

For purposes of the Plan, temporary absence from employment or Service because
of illness, vacation, approved leaves of absence, and transfers of employment or
Service among the Corporation and its Subsidiaries, shall not be considered to
terminate employment or Service or to interrupt continuous employment or
Service. Conversion of a Participant’s employment relationship to a Service
arrangement, and vice versa, shall not result in termination of previously
granted Awards.

 

14.2         PARTICIPATION. No Employee or Director shall have the right to be
selected to receive an Award under the Plan, or, having been so selected, to be
selected to receive a future Award.

 

14.3        RIGHT OF SETOFF. The Corporation or any Subsidiary may, to the
extent permitted by applicable law, deduct from and set off against any amounts
the Corporation or Subsidiary may owe to the Participant from time to time,
including amounts payable in connection with any Award, owed as wages, fringe
benefits, or other compensation owed to the Participant, such amounts as may be
owed by the Participant to the Corporation, although the Participant shall
remain liable for any part of the Participant’s payment obligation not satisfied
through such deduction and setoff. By accepting any Award granted hereunder, the
Participant agrees to any deduction or setoff under this Section 14.

 

14.4         SECTION 83(B) ELECTION. No election under Section 83(b) of the Code
(to include in gross income in the year of transfer the amounts specified in
Code Section 83(b)) or under a similar provision of the laws of a jurisdiction
outside the U.S. may be made, unless expressly permitted by the terms of the
Award Agreement or by action of the Committee in writing before the making of
such election. In any case in which a Participant is permitted to make such an
election in connection with an Award, the Participant shall notify the
Corporation of such election within ten days of filing notice of the election
with the Internal Revenue Service or other governmental authority, in addition
to any filing and notification required pursuant to regulations issued under
Code Section 83(b) or other applicable provision.

 

14.5         DISQUALIFYING DISPOSITION NOTIFICATION. If any Participant shall
make any disposition of Shares delivered pursuant to the exercise of an
Incentive Stock Option under the circumstances described in Code Section 421(b)
(relating to certain disqualifying dispositions), such Participant shall notify
the Corporation of such disposition within ten days thereof.

 

SECTION 15.

AMENDMENT, MODIFICATION, AND TERMINATION

 

15.1        AMENDMENT, MODIFICATION, AND TERMINATION. The Board may amend,
suspend or terminate the Plan or the Committee’s authority to grant Awards under
the Plan without the consent of stockholders or Participants; provided, however,
that any amendment to the Plan shall be submitted to the Corporation’s
stockholders for approval not later than the earliest annual meeting for which
the record date is after the date of such Board action if such stockholder
approval is required by any federal or state law or regulation 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 sole discretion, determine
to submit other amendments to the Plan to stockholders for approval; and
provided further, that, without the consent of an affected Participant, no Board
action, other than to the extent necessary to comply with applicable U.S. or
foreign laws, may materially and adversely affect the rights of such Participant
under any outstanding Award. The Committee shall have no authority to waive or
modify any other Award term after the Award has been granted to the extent that
the waived or modified term was mandatory under the Plan.

 

 
 

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15.2         AWARDS PREVIOUSLY GRANTED. No termination, amendment, or
modification of the Plan, other than to the extent necessary to comply with
applicable U.S. or foreign laws, shall adversely affect in any material way any
Award previously granted under the Plan, without the written (or electronic)
consent of the Participant holding such Award.

 

SECTION 16.

WITHHOLDING

 

Except where otherwise approved by the Committee with respect to an Award, the
Corporation shall automatically withhold Shares that would otherwise be acquired
on exercise or vesting of an Award (valued at their Fair Market Value as of such
withholding date) equal to the maximum individual income tax rate for Federal,
State and local taxes, domestic or foreign, permitted by law or regulation to be
withheld in the applicable jurisdiction with respect to any taxable event
arising as a result of the Plan. Only whole Shares shall be withheld (rounded
down so as not to exceed such limit). Any remaining amount determined by the
Corporation to be due shall be withheld from other compensation due to the
Participant by the Corporation or by the Participant remitting payment to the
Corporation of such amount. Notwithstanding the above, in the case of Options or
SARs, such tax withholding shall be accomplished based on the Participant's
election as set forth in Section 6.5 and 7.4.

 

SECTION 17.

SUCCESSORS

 

All obligations of the Corporation under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Corporation, whether the
existence of such successor is the result of a direct or indirect merger,
consolidation, purchase of all or substantially all of the business and/or
assets of the Corporation or otherwise.

 

SECTION 18.

MISCELLANEOUS

 

18.1         UNFUNDED PLAN. The Plan is intended to constitute an “unfunded”
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Participant or the obligation to deliver Shares pursuant to an
Award, nothing contained in the Plan or any Award shall give any such
Participant any rights that are greater than those of a general creditor of the
Corporation; provided that the Committee may authorize the creation of trusts
and deposit therein cash, Shares, other Awards or other property, or make other
arrangements to meet the Corporation’s obligations under the Plan. Such trusts
or other arrangements shall be consistent with the “unfunded” status of the Plan
unless the Committee otherwise determines with the consent of each affected
Participant.

 

18.2         COMPLIANCE WITH CODE SECTION 162(M). The Corporation intends that
Awards designated as Awards to Named Executive Officers shall constitute
qualified “performance-based compensation” within the meaning of Code Section
162(m), unless otherwise determined by the Committee at the time of allocation
of an Award. Accordingly, the terms of Sections 4.2, 6, 7, 8.5, 8.6, 9 and 10,
including the definitions of Named Executive Officer and other terms used
therein, shall be interpreted in a manner consistent with Code Section 162(m).
The foregoing notwithstanding, because the Committee cannot determine with
certainty whether a given Participant will be a Named Executive Officer with
respect to a fiscal year that has not yet been completed, the term Named
Executive Officer as used herein shall mean only a person designated by the
Committee as likely to be a Named Executive Officer with respect to a specified
fiscal year. If any provision of the Plan or any Award Agreement relating to a
Performance Award that is designated as intended to comply with Code Section
162(m) does not comply or is inconsistent with the requirements of Code Section
162(m), 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 or any other person sole discretion to increase the
amount of compensation otherwise payable in connection with any such Award upon
attainment of the applicable performance objectives.

 

 
 

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18.3        AWARDS TO PARTICIPANTS OUTSIDE THE UNITED STATES. The Committee may
modify the terms of any Award under the Plan made to or held by a Participant
who is then resident or primarily employed outside the U.S. in any manner deemed
by the Committee to be necessary or appropriate in order that the Award shall
conform to laws, regulations, and customs of the country in which the
Participant is then resident or primarily employed, or so that the value and
other benefits of the Award to the Participant, as affected by foreign tax laws
and other restrictions applicable as a result of the Participant’s residence or
employment abroad, shall be comparable to the value of such an Award to a
Participant who is resident or primarily employed in the U.S.. Such
authorization shall extend to and include establishing one or more separate
sub-plans which include provisions not inconsistent with the Plan that comply
with statutory or regulatory requirements imposed by the foreign country or
countries in which the Participant resides. If determined advisable by the
Committee, an Award may be modified under this Section in a manner that is
inconsistent with the express terms of the Plan, so long as such modifications
will not contravene any applicable law or result in actual liability under
Section 16(b) of the Exchange Act for the Participant whose Award is modified.

 

18.4         GENDER AND NUMBER; HEADINGS. Except where otherwise indicated by
the context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
Headings are included for the convenience of reference only and shall not be
used in the interpretation or construction of any such provision contained in
the Plan.

 

18.5         SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

 

18.6         REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required. If at any time on or after the
Effective Date, the Committee, in its discretion, shall determine that the
requirements of any applicable federal or state securities laws should fail to
be met, no Shares issuable under Awards and no Options or SARs shall be
exercisable until the Committee has determined that these requirements have
again been met. The Committee may suspend the right to exercise an Options or
SAR at any time when it determines that allowing the exercise and issuance of
Shares would violate any federal or state securities or other laws, and may
provide that any time periods to exercise the Option or SAR are extended during
a period of suspension. With respect to “Insiders,” transactions under this Plan
are intended to comply with all applicable conditions of Rule 16b-3 under the
Securities Exchange Act of 1934. To the extent any provision of the Plan or
action by the Committee fails to so comply, it shall be deemed null and void, to
the extent permitted by law and deemed advisable by the Committee. Each Award
Agreement and each certificate representing securities granted pursuant to the
Plan (including securities issuable pursuant to the terms of derivative
securities) may bear such restrictive legend(s) as the Corporation deems
necessary or advisable under applicable law, including Federal and state
securities laws. If the date of the vesting or lapse of the Period of
Restriction with respect to any Award, other than an Option or SAR, held by
Participant who is subject to the Corporation’s policy regarding trading of its
Stock by its officers and directors and Shares (the “original vesting date”) is
not within a “window period” applicable to the Participant, as determined by the
Corporation in accordance with such policy, then the vesting or lapse of the
Period of Restriction with respect to such Award shall not occur on such
original vesting date and shall instead occur on the first day of the next
“window period” applicable to the Participant pursuant to such policy.

 

18.7        ADDITIONAL RESTRICTIONS ON TRANSFERS. The Committee may impose such
restrictions on any Shares acquired pursuant to an Award, including Restricted
Shares, Performance Shares, or Shares received upon exercise of an Option or SAR
or under an RSU, as it may deem advisable.

 

18.8         GOVERNING LAW. To the extent not preempted by Federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware.