Exhibit 10.1

 

 

ev3 Inc.

 

AMENDED AND RESTATED
2005 INCENTIVE STOCK PLAN

 

(as amended through May 9, 2006)

 

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TABLE OF CONTENTS

 

 

Page

 

 

§ 1. BACKGROUND AND PURPOSE

1

 

 

§ 2. DEFINITIONS

1

 

 

 

2.1

Affiliate

1

2.2

Board

1

2.3

Change Effective Date

1

2.4

Change in Control

2

2.5

Code

3

2.6

Committee

3

2.7

Company

3

2.8

Director

3

2.9

Eligible Employee

4

2.10

Fair Market Value

4

2.11

ISO

4

2.12

1933 Act

4

2.13

1934 Act

4

2.14

Non-ISO

4

2.15

Option

4

2.16

Option Certificate

5

2.17

Option Price

5

2.18

Parent

5

2.19

Plan

5

2.20

Rule 16b-3

5

2.21

SAR Value

5

2.22

Stock

5

2.23

Stock Appreciation Right

5

2.24

Stock Appreciation Right Certificate

6

2.25

Stock Grant

6

2.26

Stock Grant Certificate

6

2.27

Stock Unit Grant

6

2.28

Subsidiary

6

2.29

Ten Percent Shareholder

6

 

 

 

§ 3. SHARES AND GRANT LIMITS

7

 

 

 

3.1

Shares Reserved

7

3.2

Source of Shares

7

3.3

Use of Proceeds

7

3.4

Grant Limits

7

 

 

 

§ 4. EFFECTIVE DATE

8

 

 

 

§ 5. COMMITTEE

8

 

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§ 6. ELIGIBILITY

9

 

 

 

§ 7. OPTIONS

9

 

 

 

7.1

Committee Action

9

7.2

$100,000 Limit

10

7.3

Option Price

10

7.4

Payment

10

7.5

Exercise

11

 

 

 

§ 8. STOCK APPRECIATION RIGHTS

12

 

 

 

8.1

Committee Action

12

8.2

Terms and Conditions

12

8.3

Exercise

14

 

 

 

§ 9. STOCK GRANTS

14

 

 

 

9.1

Committee Action

14

9.2

Conditions

15

9.3

Dividends, Voting Rights and Creditor Status

17

9.4

Satisfaction of Forfeiture Conditions.

19

9.5

Income Tax Deduction

19

 

 

 

§ 10. NON-TRANSFERABILITY

21

 

 

 

10.1

General Rule

21

10.2

Transfers to Family Members

21

 

 

 

§ 11. SECURITIES REGISTRATION

22

 

 

 

§ 12. LIFE OF PLAN

23

 

 

 

§ 13. ADJUSTMENT

24

 

 

 

13.1

Capital Structure

24

13.2

Available Shares

24

13.3

Transactions Described in § 424 of the Code

25

13.4

Fractional Shares

26

 

 

 

§ 14. CHANGE IN CONTROL

26

 

 

 

§ 15. AMENDMENT OR TERMINATION

27

 

 

 

§ 16. MISCELLANEOUS

28

 

 

 

16.1

Shareholder Rights

28

16.2

No Contract of Employment

28

16.3

Withholding

28

16.4

Construction

29

16.5

Other Conditions

29

16.6

Rule 16b-3

29

16.7

Coordination with Employment Agreements and Other Agreements

30

 

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§ 1.
BACKGROUND AND PURPOSE

 

The purpose of this Plan is to promote the interest of the Company by
authorizing the Committee to grant Options and Stock Appreciation Rights and to
make Stock Grants and Stock Unit Grants to Eligible Employees and Directors or
consultants in order (1) to attract and retain Eligible Employees, Directors or
consultants, (2) to provide an additional incentive to each Eligible Employee,
Director or consultant to work to increase the value of Stock and (3) to provide
each Eligible Employee, Director or consultant with a stake in the future of the
Company which corresponds to the stake of each of the Company’s shareholders.

 

§ 2.
DEFINITIONS

 

2.1           Affiliate — means any organization (other than a Subsidiary) that
would be treated as under common control with the Company under § 414(c) of the
Code if “50 percent” were substituted for “80 percent” in the income tax
regulations under § 414(c) of the Code.

 

2.2           Board — means the Board of Directors of the Company.

 

2.3           Change Effective Date — means either the date which includes the
“closing” of the transaction which makes a Change in Control effective if the
Change in Control is made effective through a transaction which has a “closing”
or the date a Change in Control is reported in accordance with applicable law as
effective to the Securities and Exchange Commission if the Change in Control is
made effective other than through a transaction which has a “closing”.

 

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2.4           Change in Control — means a change in control of the Company
occurring after the effective date of this Plan of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar schedule or
form) promulgated under the 1934 Act, whether or not the Company is then subject
to such reporting requirement; provided, however, that, without limitation, a
Change in Control shall include: (i) the acquisition (other than from the
Company) after the date hereof by any person, entity or “group” within the
meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act (excluding, for this
purpose, the Company or its subsidiaries, any employee benefit plan of the
Company or its subsidiaries which acquires beneficial ownership of voting
securities of the Company, any qualified institutional investor who meets the
requirements of Rule 13d-1(b)(1) promulgated under the 1934 Act, Warburg Pincus
LLC and its affiliates, and The Vertical Group, L.P. and its affiliates) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
1934 Act) of 20% or more of either the then-outstanding shares of common stock
or the combined voting power of the Company’s then-outstanding capital stock
entitled to vote generally in the election of directors; (ii) individuals who,
as of the date hereof, constitute the Board (the “Incumbent Board”) ceasing for
any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s stockholders was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board (other
than an

 

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election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Company) shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board; or (iii) approval by the stockholders of the Company of (A) a
reorganization, merger, or consolidation, in each case, with respect to which
persons who were the stockholders of the Company immediately prior to such
reorganization, merger, or consolidation do not, immediately thereafter, own
more than 50% of the combined voting power entitled to vote generally in the
election of directors of the reorganized, merged, consolidated or other
surviving corporation’s then-outstanding voting securities, (B) a liquidation or
dissolution of the Company, or (C) the sale of all or substantially all of the
assets of the Company.

 

2.5           Code — means the Internal Revenue Code of 1986, as amended.

 

2.6           Committee — means a committee of the Board which shall have at
least 2 members, each of whom shall be appointed by and shall serve at the
pleasure of the Board and at least 2 of whom shall come within the definition of
a “non-employee director” under Rule 16b-3, or if no such committee of the Board
has been appointed, the Board as a whole.

 

2.7           Company — means ev3 Inc. and any successor to ev3 Inc.

 

2.8           Director — means any member of the Board who is not an employee of
the Company or a Parent or Subsidiary or affiliate (as such term is defined in
Rule 405 of the 1933 Act) of the Company.

 

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2.9           Eligible Employee — means an employee of the Company or any
Subsidiary or Parent or Affiliate to whom the Committee decides for reasons
sufficient to the Committee to make a grant under this Plan.

 

2.10         Fair Market Value — means either (a) the closing price on any date
for a share of Stock as reported by The Wall Street Journal or, if The Wall
Street Journal no longer reports such closing price, such closing price as
reported by a newspaper or trade journal selected by the Committee or, if no
such closing price is available on such date, (b) such closing price as so
reported in accordance with § 2.10(a) for the immediately preceding business
day, or, if no newspaper or trade journal reports such closing price or if no
such price quotation is available, (c) the price which the Committee acting in
good faith determines through any reasonable valuation method that a share of
Stock might change hands between a willing buyer and a willing seller, neither
being under any compulsion to buy or to sell and both having reasonable
knowledge of the relevant facts.

 

2.11         ISO — means an option granted under this Plan to purchase Stock
which is intended to satisfy the requirements of § 422 of the Code.

 

2.12         1933 Act — means the Securities Act of 1933, as amended.

 

2.13         1934 Act — means the Securities Exchange Act of 1934, as amended.

 

2.14         Non-ISO — means an option granted under this Plan to purchase Stock
which is intended to fail to satisfy the requirements of § 422 of the Code.

 

2.15         Option — means an ISO or a Non-ISO which is granted under § 7.

 

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2.16         Option Certificate — means the certificate (whether in electronic
or written form) which sets forth the terms and conditions of an Option granted
under this Plan.

 

2.17         Option Price — means the price which shall be paid to purchase one
share of Stock upon the exercise of an Option granted under this Plan.

 

2.18         Parent — means any corporation which is a parent corporation
(within the meaning of § 424(e) of the Code) of the Company.

 

2.19         Plan — means this ev3 Inc. 2005 Incentive Stock Plan as effective
as of the date approved by the shareholders of the Company and as amended from
time to time thereafter. For each grant of an Option to an Eligible Employee,
Director or consultant who is a resident of France, the Plan shall include the
terms of the addendum titled, “Terms and Conditions for French Option Grants”,
which shall supercede the terms of the Plan to the extent that the terms of such
addendum conflict with the terms of the Plan.

 

2.20         Rule 16b-3 — means the exemption under Rule 16b-3 to Section 16(b)
of the 1934 Act or any successor to such rule.

 

2.21         SAR Value — means the value assigned by the Committee to a share of
Stock in connection with the grant of a Stock Appreciation Right under § 8.

 

2.22         Stock — means the common stock of the Company.

 

2.23         Stock Appreciation Right — means a right which is granted under § 8
to receive the appreciation in a share of Stock.

 

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2.24         Stock Appreciation Right Certificate — means the certificate
(whether in electronic or written form) which sets forth the terms and
conditions of a Stock Appreciation Right which is not granted as part of an
Option.

 

2.25         Stock Grant — means a grant under § 9 which is designed to result
in the issuance of the number of shares of Stock described in such grant rather
than a payment in cash based on the Fair Market Value of such shares of Stock.

 

2.26         Stock Grant Certificate — means the certificate (whether in
electronic or written form) which sets forth the terms and conditions of a Stock
Grant or a Stock Unit Grant.

 

2.27         Stock Unit Grant — means a grant under § 9 which is designed to
result in the payment of cash based on the Fair Market Value of the number of
shares of Stock described in such grant rather than the issuance of the number
of shares of Stock described in such grant.

 

2.28         Subsidiary — means a corporation which is a subsidiary corporation
(within the meaning of § 424(f) of the Code) of the Company.

 

2.29         Ten Percent Shareholder — means a person who owns (after taking
into account the attribution rules of § 424(d) of the Code) more than ten
percent of the total combined voting power of all classes of stock of either the
Company, a Subsidiary or Parent.

 

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§ 3.
SHARES AND GRANT LIMITS

 

3.1           Shares Reserved. There shall (subject to § 13) be reserved for
issuance under this Plan 6,000,000 shares of Stock; provided, however that no
more than 2,000,000 shares of Stock may be issued in connection with the
exercise of ISOs.

 

3.2           Source of Shares. The shares of Stock described in § 3.1 shall be
reserved to the extent that the Company deems appropriate from authorized but
unissued shares of Stock and from shares of Stock which have been reacquired by
the Company. All shares of Stock described in § 3.1 shall remain available for
issuance under this Plan until issued pursuant to the exercise of an Option or a
Stock Appreciation Right or issued pursuant to a Stock Grant, and any such
shares of stock which are issued pursuant to an Option, a Stock Appreciation
Right or a Stock Grant which are forfeited thereafter shall again become
available for issuance under this Plan. Finally, if the Option Price under an
Option is paid in whole or in part in shares of Stock or if shares of Stock are
tendered to the Company in satisfaction of any condition to a Stock Grant, such
shares thereafter shall become available for issuance under this Plan and shall
be treated the same as any other shares available for issuance under this Plan.

 

3.3           Use of Proceeds. The proceeds which the Company receives from the
sale of any shares of Stock under this Plan shall be used for general corporate
purposes and shall be added to the general funds of the Company.

 

3.4           Grant Limits. No Eligible Employee, Director or consultant in any
calendar year shall be granted an Option to purchase (subject to § 13) more than

 

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300,000 shares of Stock or a Stock Appreciation Right based on the appreciation
with respect to (subject to § 13) more than 300,000 shares of Stock, and no
Stock Grant or Stock Unit Grant shall be made to any Eligible Employee, Director
or consultant in any calendar year where the Fair Market Value of the Stock
subject to such grant on the date of the grant exceeds $10,000,000. No more than
500,000 non-forfeitable shares of Stock shall (subject to § 13) be issued
pursuant to Stock Grants under § 9.

 

§ 4.
EFFECTIVE DATE

 

The effective date of this Plan shall be the date the shareholders of the
Company (acting at a duly called meeting of such shareholders) approve the
adoption of this Plan.

 

§ 5.
COMMITTEE

 

This Plan shall be administered by the Committee. The Committee acting in its
absolute discretion shall exercise such powers and take such action as expressly
called for under this Plan and, further, the Committee shall have the power to
interpret this Plan and (subject to § 14 and § 15 and Rule 16b-3) to take such
other action in the administration and operation of this Plan as the Committee
deems equitable under the circumstances, which action shall be binding on the
Company, on each affected Eligible Employee, Director or consultant and on each
other person directly or indirectly affected by such action. Furthermore, the
Committee as a condition to making any grant under this Plan to any Eligible
Employee, Director or consultant shall have the right to require him or her to
execute an agreement which makes the Eligible Employee, Director or

 

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consultant subject to non-competition provisions and other restrictive covenants
which run in favor of the Company.

 

§ 6.
ELIGIBILITY

 

Only Eligible Employees who are employed by the Company or a Subsidiary or
Parent shall be eligible for the grant of ISOs under this Plan. All Eligible
Employees, Directors and consultants shall be eligible for the grant of Non-ISOs
and Stock Appreciation Rights and for Stock Grants and Stock Unit Grants under
this Plan.

 

§ 7.
OPTIONS

 

7.1           Committee Action. The Committee acting in its absolute discretion
shall have the right to grant Options to Eligible Employees, Directors and
consultants under this Plan from time to time to purchase shares of Stock, but
the Committee shall not (subject to § 13) take any action, whether through
amendment, cancellation, replacement grants, or any other means, to reduce the
Option Price of any outstanding Options absent the approval of the Company’s
shareholders. Each grant of an Option to an Eligible Employee, Director or
consultant shall be evidenced by an Option Certificate, and each Option
Certificate shall set forth whether the Option is an ISO or a Non-ISO and shall
set forth such other terms and conditions of such grant as the Committee acting
in its absolute discretion deems consistent with the terms of this Plan;
however, (a) if the Committee grants an ISO and a Non-ISO to an Eligible
Employee on the same date, the right of the Eligible Employee to exercise the
ISO shall not be conditioned on his or her failure to exercise the Non-ISO and
(b) if the only condition to

 

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exercise of the Option is the completion of a period of service, such period of
service shall be no less than the one (1) year period which starts on the date
as of which the Option is granted unless the Committee determines that a shorter
period of service (or no period of service) better serves the Company’s
interest.

 

7.2           $100,000 Limit. No Option shall be treated as an ISO to the extent
that the aggregate Fair Market Value of the Stock subject to the Option which
would first become exercisable in any calendar year exceeds $100,000. Any such
excess shall instead automatically be treated as a Non-ISO. The Committee shall
interpret and administer the ISO limitation set forth in this § 7.2 in
accordance with § 422(d) of the Code, and the Committee shall treat this § 7.2
as in effect only for those periods for which § 422(d) of the Code is in effect.

 

7.3           Option Price. The Option Price for each share of Stock subject to
an Option shall be no less than the Fair Market Value of a share of Stock on the
date the Option is granted; provided, however, if the Option is an ISO granted
to an Eligible Employee who is a Ten Percent Shareholder, the Option Price for
each share of Stock subject to such ISO shall be no less than 110% of the Fair
Market Value of a share of Stock on the date such ISO is granted.

 

7.4           Payment. The Option Price shall be payable in full upon the
exercise of any Option and, at the discretion of the Committee, an Option
Certificate can provide for the payment of the Option Price either in cash, by
check or in Stock which has been held for at least 6 months and which is
acceptable to the Committee, or through any cashless exercise procedure which is
effected by an unrelated broker through a sale of Stock in the open market and
which is acceptable to the Committee,

 

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or in any combination of such forms of payment. Any payment made in Stock shall
be treated as equal to the Fair Market Value of such Stock on the date the
certificate for such Stock (or proper evidence of such certificate) is presented
to the Committee or its delegate in such form as acceptable to the Committee.

 

7.5           Exercise.

 

(a)                                  Exercise Period. Each Option granted under
this Plan shall be exercisable in whole or in part at such time or times as set
forth in the related Option Certificate, but no Option Certificate shall make an
Option exercisable on or after the earlier of

 

(1)                                  the date which is the fifth anniversary of
the date the Option is granted, if the Option is an ISO and the Eligible
Employee is a Ten Percent Shareholder on the date the Option is granted, or

(2)                                  the date which is the tenth anniversary of
the date the Option is granted, if the Option is (a) a Non-ISO or (b) an ISO
which is granted to an Eligible Employee who is not a Ten Percent Shareholder on
the date the Option is granted.

 

(b)                                 Termination of Status as Eligible Employee
or Director. Subject to § 7.5(a), an Option Certificate may provide for the
exercise of an Option after an Eligible Employee’s, Director’s

 

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or consultant’s status as such has terminated for any reason whatsoever,
including death or disability.

 

§ 8.
STOCK APPRECIATION RIGHTS

 

8.1           Committee Action. The Committee acting in its absolute discretion
shall have the right to grant Stock Appreciation Rights to Eligible Employees,
Directors and consultants under this Plan from time to time, and each Stock
Appreciation Right grant shall be evidenced by a Stock Appreciation Right
Certificate or, if such Stock Appreciation Right is granted as part of an
Option, shall be evidenced by the Option Certificate for the related Option.

 

8.2           Terms and Conditions.

 

(a)                                  Stock Appreciation Right Certificate. If a
Stock Appreciation Right is granted independent of an Option, such Stock
Appreciation Right shall be evidenced by a Stock Appreciation Right Certificate,
and such certificate shall set forth the number of shares of Stock on which the
Eligible Employee’s, Director’s or consultant’s right to appreciation shall be
based and the SAR Value of each share of Stock. Such SAR Value shall be no less
than the Fair Market Value of a share of Stock on the date that the Stock
Appreciation Right is granted. The Stock Appreciation Right Certificate shall
set forth such other terms and conditions for the exercise of the Stock
Appreciation Right as the Committee deems appropriate under the circumstances,
but no Stock Appreciation Right Certificate shall

 

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make a Stock Appreciation Right exercisable on or after the date which is the
tenth anniversary of the date such Stock Appreciation Right is granted.

 

(b)                                 Option Certificate. If a Stock Appreciation
Right is granted together with an Option, such Stock Appreciation Right shall be
evidenced by an Option Certificate, the number of shares of Stock on which the
Eligible Employee’s, Director’s or consultant’s right to appreciation shall be
based shall be the same as the number of shares of Stock subject to the related
Option, and the SAR Value for each such share of Stock shall be no less than the
Option Price under the related Option. Each such Option Certificate shall
provide that the exercise of the Stock Appreciation Right with respect to any
share of Stock shall cancel the Eligible Employee’s, Director’s or consultant’s
right to exercise his or her Option with respect to such share and, conversely,
that the exercise of the Option with respect to any share of Stock shall cancel
the Eligible Employee’s, Director’s or consultant’s right to exercise his or her
Stock Appreciation Right with respect to such share. A Stock Appreciation Right
which is granted as part of an Option shall be exercisable only while the
related Option is exercisable. The Option Certificate shall set forth such other
terms and conditions for the exercise of the Stock Appreciation Right as the
Committee deems appropriate under the circumstances.

 

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(c)                                  Minimum Period of Service. If the only
condition to exercise of a Stock Appreciation Right is the completion of a
period of service, such period of service shall be no less than the one (1) year
period which starts on the date as of which the Stock Appreciation Right is
granted unless the Committee determines that a shorter period of service (or no
period of service) better serves the Company’s interest.

 

8.3           Exercise. A Stock Appreciation Right shall be exercisable only
when the Fair Market Value of a share of Stock on which the right to
appreciation is based exceeds the SAR Value for such share, and the payment due
on exercise shall be based on such excess with respect to the number of shares
of Stock to which the exercise relates. An Eligible Employee, Director or
consultant upon the exercise of his or her Stock Appreciation Right shall
receive a payment from the Company in cash or in Stock issued under this Plan,
or in a combination of cash and Stock, and the number of shares of Stock issued
shall be based on the Fair Market Value of a share of Stock on the date the
Stock Appreciation Right is exercised. The Committee acting in its absolute
discretion shall have the right to determine the form and time of any payment
under this § 8.3.

 

§ 9.
STOCK GRANTS

 

9.1           Committee Action. The Committee acting in its absolute discretion
shall have the right to make Stock Grants and Stock Unit Grants to Eligible
Employees, Directors or consultants. Each Stock Grant and each Stock Unit Grant
shall be

 

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evidenced by a Stock Grant Certificate, and each Stock Grant Certificate shall
set forth the conditions, if any, under which Stock will be issued under the
Stock Grant or cash will be paid under the Stock Unit Grant and the conditions
under which the Eligible Employee’s, Director’s or consultant’s interest in any
Stock which has been issued will become non-forfeitable.

 

9.2           Conditions.

 

(a)                                  Conditions to Issuance of Stock. The
Committee acting in its absolute discretion may make the issuance of Stock under
a Stock Grant subject to the satisfaction of one, or more than one, condition
which the Committee deems appropriate under the circumstances for Eligible
Employees, Directors or consultants generally or for an Eligible Employee, a
Director or a consultant in particular, and the related Stock Grant Certificate
shall set forth each such condition and the deadline for satisfying each such
condition. Stock subject to a Stock Grant shall be issued in the name of an
Eligible Employee, Director or consultant only after each such condition, if
any, has been timely satisfied, and any Stock which is so issued shall be held
by the Company pending the satisfaction of the forfeiture conditions, if any,
under § 9.2(b) for the related Stock Grant.

 

(b)                                 Conditions on Forfeiture of Stock or Cash
Payment. The Committee acting in its absolute discretion may make any cash
payment due under a Stock Unit Grant or Stock issued in the

 

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name of an Eligible Employee, Director or consultant under a Stock Grant
non-forfeitable subject to the satisfaction of one, or more than one, objective
employment, performance or other condition that the Committee acting in its
absolute discretion deems appropriate under the circumstances for Eligible
Employees, Directors or consultants generally or for an Eligible Employee, a
Director or a consultant in particular, and the related Stock Grant Certificate
shall set forth each such condition, if any, and the deadline, if any, for
satisfying each such condition. An Eligible Employee’s, Director’s or
consultant’s non-forfeitable interest in the shares of Stock underlying a Stock
Grant or the cash payable under a Stock Unit Grant shall depend on the extent to
which he or she timely satisfies each such condition. If a share of Stock is
issued under this § 9.2(b) before an Eligible Employee’s, Director’s or
consultant’s interest in such share of Stock is non-forfeitable, (1) such share
of Stock shall not be available for re-issuance under § 3 until such time, if
any, as such share of Stock thereafter is forfeited as a result of a failure to
timely satisfy a forfeiture condition and (2) the Company shall have the right
to condition any such issuance on the Eligible Employee, Director or consultant
first signing an irrevocable stock power in favor of the Company with respect to
the forfeitable shares of Stock issued to such Eligible Employee, Director or
consultant in

 

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order for the Company to effect any forfeiture called for under the related
Stock Grant Certificate.

 

(c)                                  Minimum Period of Service. If the only
condition to the forfeiture of a Stock Grant or a Stock Unit Grant is the
completion of a period of service, such period of service shall be no less than
the three (3) year period which starts on the date as of which the Stock Grant
or Stock Unit Grant is made unless the Committee determines that a shorter
period of service (or no period of service) better serves the Company’s
interest.

 

9.3           Dividends, Voting Rights and Creditor Status.

 

(a)                                  Cash Dividends. Except as otherwise set
forth in a Stock Grant Certificate, if a dividend is paid in cash on a share of
Stock after such Stock has been issued under a Stock Grant but before the first
date that an Eligible Employee’s, Director’s or consultant’s interest in such
Stock (1) is forfeited completely or (2) becomes completely non-forfeitable, the
Company shall pay such cash dividend directly to such Eligible Employee,
Director or consultant.

 

(b)                                 Stock Dividends. If a dividend is paid on a
share of Stock in Stock after such Stock has been issued under a Stock Grant but
before the first date that an Eligible Employee’s, Director’s or consultant’s
interest in such Stock (1) is forfeited completely or (2) becomes completely
non-forfeitable, the Company shall hold such dividend

 

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Stock subject to the same conditions under § 9.2(b) as the related Stock Grant.

 

(c)                                  Other. If a dividend (other than a dividend
described in § 9.3(a) or § 9.3(b)) is paid with respect to a share of Stock
after such Stock has been issued under a Stock Grant but before the first date
that an Eligible Employee’s, Director’s or consultant’s interest in such Stock
(1) is forfeited completely or (2) becomes completely non-forfeitable, the
Company shall distribute or hold such dividend in accordance with such rules as
the Committee shall adopt with respect to each such dividend.

 

(d)                                 Voting. Except as otherwise set forth in a
Stock Grant Certificate, an Eligible Employee, Director or consultant shall have
the right to vote the Stock issued under his or her Stock Grant during the
period which comes after such Stock has been issued under a Stock Grant but
before the first date that an Eligible Employee’s, Director’s or consultant’s
interest in such Stock (1) is forfeited completely or (2) becomes completely
non-forfeitable.

 

(e)                                  General Creditor Status. Each Eligible
Employee and each Director and each consultant to whom a Stock Unit grant is
made shall be no more than a general and unsecured creditor of the Company with
respect to any cash payable under such Stock Unit Grant.

 

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9.4           Satisfaction of Forfeiture Conditions. A share of Stock shall
cease to be subject to a Stock Grant at such time as an Eligible Employee’s,
Director’s or consultant’s interest in such Stock becomes non-forfeitable under
this Plan, and the certificate or other evidence of ownership representing such
share shall be transferred to the Eligible Employee, Director or consultant as
soon as practicable thereafter.

 

9.5           Income Tax Deduction.

 

(a)                                  General. The Committee shall (where the
Committee under the circumstances deems in the Company’s best interest) either
(1) make Stock Grants and Stock Unit Grants to Eligible Employees subject to at
least one condition related to one, or more than one, performance goal based on
the performance goals described in § 9.5(b) which seems likely to result in the
Stock Grant or Stock Unit Grant qualifying as “performance-based compensation”
under § 162(m) of the Code or (2) make Stock Grants and Stock Unit Grants to
Eligible Employees under such other circumstances as the Committee deems likely
to result in an income tax deduction for the Company with respect such Stock
Grant or Stock Unit Grant. A performance goal may be set in any manner
determined by the Committee, including looking to achievement on an absolute or
relative basis in relation to peer groups or indexes.

 

(b)                                 Performance Goals. A performance goal is
described in this § 9.5(b) if such goal relates to (1) the Company’s return over
capital costs or increases in return over capital costs, (2) the Company’s

 

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total earnings or the growth in such earnings, (3) the Company’s consolidated
earnings or the growth in such earnings, (4) the Company’s earnings per share or
the growth in such earnings, (5) the Company’s net earnings or the growth in
such earnings, (6) the Company’s earnings before interest expense, taxes,
depreciation, amortization and other non-cash items or the growth in such
earnings, (7) the Company’s earnings before interest and taxes or the growth in
such earnings, (8) the Company’s consolidated net income or the growth in such
income, (9) the value of the Company’s common stock or the growth in such value,
(10) the Company’s stock price or the growth in such price, (11) the Company’s
return on assets or the growth on such return, (12) the Company’s cash flow or
the growth in such cash flow, (13) the Company’s total shareholder return or the
growth in such return, (14) the Company’s expenses or the reduction of such
expenses, (15) the Company’s sales growth, (16) the Company’s overhead ratios or
changes in such ratios, (17) the Company’s expense-to-sales ratios or the
changes in such ratios, or (18) the Company’s economic value added or changes in
such value added.

 

(c)                                  Adjustments. When the Committee determines
whether a performance goal has been satisfied for any period, the Committee may
exclude any or all “extraordinary items” as determined under U.S. generally
accepted accounting principles and any other

 

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unusual or non-recurring items, including, without limitation, the charges or
costs associated with restructurings of the Company, discontinued operations,
and the cumulative effects of accounting changes. The Committee may also adjust
any performance goal for a period as it deems equitable in recognition of
unusual or non-recurring events affecting the Company, changes in applicable tax
laws or accounting principles, or such other factors as the Committee may
determine (including, without limitation, any adjustments that would result in
the Company’s paying non-deductible compensation to an Eligible Employee).

 

§ 10.
NON-TRANSFERABILITY

 

10.1         General Rule. Except as provided in § 10.2, no Option, Stock Grant,
Stock Unit Grant or Stock Appreciation Right shall be transferable by an
Eligible Employee, Director or consultant other than by will or by the laws of
descent and distribution, and any Option or Stock Appreciation Right shall be
exercisable during an Eligible Employee’s, Director’s or consultant’s lifetime
only by the Eligible Employee, Director or consultant. The person or persons to
whom an Option or Stock Grant or Stock Unit Grant or Stock Appreciation Right is
transferred by will or by the laws of descent and distribution or pursuant to
§ 10.2, thereafter shall be treated as the Eligible Employee, Director or
consultant.

 

10.2         Transfers to Family Members. An Option or Stock Grant, Stock Unit
Grant or Stock Appreciation Right may be transferred by an Eligible Employee,

 

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Director or consultant to a “family member” (as defined for purposes of Form S-8
under the 1933 Act) of such Eligible Employee, Director or consultant or to a
trust exclusively for the benefit of one or more of such family members of such
Eligible Employee, Director or consultant; provided such transfer is made as a
gift without consideration, and such transfer complies with applicable
securities laws.

 

§ 11.
SECURITIES REGISTRATION

 

As a condition to the receipt of shares of Stock under this Plan, the Eligible
Employee, Director or consultant shall, if so requested by the Company, agree to
hold such shares of Stock for investment and not with a view of resale or
distribution to the public and, if so requested by the Company, shall deliver to
the Company a written statement satisfactory to the Company to that effect.
Furthermore, if so requested by the Company, the Eligible Employee, Director or
consultant shall make a written representation to the Company that he or she
will not sell or offer for sale any of such Stock unless a registration
statement shall be in effect with respect to such Stock under the 1933 Act and
any applicable state securities law or he or she shall have furnished to the
Company an opinion in form and substance satisfactory to the Company of legal
counsel satisfactory to the Company that such registration is not required.
Certificates or other evidence of ownership representing the Stock transferred
upon the exercise of an Option or Stock Appreciation Right or upon the lapse of
the forfeiture conditions, if any, on any Stock Grant may at the discretion of
the Company bear a legend to the effect that such Stock has not been registered
under the 1933 Act or any applicable state securities law and that such Stock
cannot be sold or offered for

 

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sale in the absence of an effective registration statement as to such Stock
under the 1933 Act and any applicable state securities law or an opinion in form
and substance satisfactory to the Company of legal counsel satisfactory to the
Company that such registration is not required.

 

§ 12.
LIFE OF PLAN

 

No Option or Stock Appreciation Right shall be granted or Stock Grant or Stock
Unit Grant made under this Plan on or after the earlier of:

 

(1)                                  the tenth anniversary of the effective date
of this Plan (as determined under § 4), in which event this Plan otherwise
thereafter shall continue in effect until all outstanding Options and Stock
Appreciation Rights have been exercised in full or no longer are exercisable and
all Stock issued under any Stock Grants under this Plan have been forfeited or
have become non-forfeitable, or

(2)                                  the date on which all of the Stock reserved
under § 3 has (as a result of the exercise of Options or Stock Appreciation
Rights granted under this Plan or the satisfaction of the forfeiture conditions,
if any, on Stock Grants) been issued or no longer is available for use under
this Plan, in which event this Plan also shall terminate on such date.

 

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§ 13.
ADJUSTMENT

 

13.1         Capital Structure. The grant caps described in § 3.4, the number,
kind or class (or any combination thereof) of shares of Stock subject to
outstanding Options and Stock Appreciation Rights granted under this Plan and
the Option Price of such Options and the SAR Value of such Stock Appreciation
Rights as well as the number, kind or class (or any combination thereof) of
shares of Stock subject to outstanding Stock Grants and Stock Unit Grants made
under this Plan shall be adjusted by the Committee in a reasonable and equitable
manner to preserve immediately after

 

(a)                                  any equity restructuring or change in the
capitalization of the Company, including, but not limited to, spin offs, stock
dividends, large non-reoccurring dividends, rights offerings or stock splits, or

(b)                                 any other transaction described in § 424(a)
of the Code which does not constitute a Change in Control of the Company

 

the aggregate intrinsic value of each such outstanding Option, Stock
Appreciation Right, Stock Grant and Stock Unit Grant immediately before such
restructuring or recapitalization or other transaction.

 

13.2         Available Shares. If any adjustment is made with respect to any
outstanding Option, Stock Appreciation Right, Stock Grant or Stock Unit Grant
under § 13.1, then the Committee shall adjust the number, kind or class (or any
combination thereof) of shares of Stock reserved under § 3.1 so that there is a
sufficient number, kind and class of shares of Stock available for issuance
pursuant to each such Option, Stock Appreciation Right, Stock Grant and Stock
Unit Grant as adjusted under § 13.1

 

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without seeking the approval of the Company’s shareholders for such adjustment
unless such approval is required under applicable law or the rules of the stock
exchange on which shares of Stock are traded. Furthermore, the Committee shall
have the absolute discretion to further adjust such number, kind or class (or
any combination thereof) of shares of Stock reserved under § 3.1 in light of any
of the events described in § 13.1(a) and § 13.1(b) to the extent the Committee
acting in good faith determines that a further adjustment would be appropriate
and proper under the circumstances and in keeping with the purposes of this Plan
without seeking the approval of the Company’s shareholders for such adjustment
unless such approval is required under applicable law or the rules of the stock
exchange on which shares of Stock are traded.

 

13.3         Transactions Described in § 424 of the Code. If there is a
corporate transaction described in § 424(a) of the Code which does not
constitute a Change in Control of the Company, the Committee as part of any such
transaction shall have the right to make Stock Grants, Stock Unit Grants and
Option and Stock Appreciation Right grants (without regard to any limitations
set forth under 3.4 of this Plan) to effect the assumption of, or the
substitution for, outstanding stock grants, stock unit grants and option and
stock appreciation right grants previously made by any other corporation to the
extent that such corporate transaction calls for such substitution or assumption
of such outstanding stock grants, stock unit grants and stock option and stock
appreciation right grants. Furthermore, if the Committee makes any such grants
as part of any such transaction, the Committee shall have the right to increase
the number of shares of Stock available for issuance under § 3.1 by the number
of shares of Stock subject to such grants without seeking the approval of the
Company’s

 

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shareholders for such adjustment unless such approval is required under
applicable law or the rules of the stock exchange on which shares of Stock are
traded.

 

13.4         Fractional Shares. If any adjustment under this § 13 would create a
fractional share of Stock or a right to acquire a fractional share of Stock
under any Option, Stock Appreciation Right or Stock Grant, such fractional share
shall be disregarded and the number of shares of Stock reserved under this Plan
and the number subject to any Options or Stock Appreciation Right grants and
Stock Grants shall be the next lower number of shares of Stock, rounding all
fractions downward. An adjustment made under this § 13 by the Committee shall be
conclusive and binding on all affected persons.

 

§ 14.
CHANGE IN CONTROL

 

If there is a Change in Control of the Company, then as of the Change Effective
Date for such Change in Control any and all conditions to the exercise of all
outstanding Options and Stock Appreciation Rights on such date and any and all
outstanding issuance and forfeiture conditions on any Stock Grants and Stock
Unit Grants on such date automatically shall be deemed 100% satisfied as of such
Change Effective Date, and the Board shall have the right (to the extent
expressly required as part of such transaction) to cancel such Options, Stock
Appreciation Rights, Stock Grants and Stock Unit Grants after providing each
Eligible Employee, Director and consultant a reasonable period to exercise his
or her Options and Stock Appreciation Rights and to take such other action as
necessary or appropriate to receive the Stock subject to any Stock Grants and
the cash payable under any Stock Unit Grants;

 

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provided, if any issuance or forfeiture condition described in this § 14 relates
to satisfying any performance goal and there is a target for such goal, such
issuance or forfeiture condition shall be deemed satisfied under this § 14 only
to the extent of such target unless such target has been exceeded before the
Change Effective Date, in which event such issuance or forfeiture condition
shall be deemed satisfied to the extent such target had been so exceeded. A
Change in Control shall affect a Stock Appreciation Right or a Stock Unit Grant
which is subject to § 409A of the Code only if the Change in Control meets the
requirements for a Change in Control under § 409A of the Code.

 

§ 15.
AMENDMENT OR TERMINATION

 

This Plan may be amended by the Board from time to time to the extent that the
Board deems necessary or appropriate; provided, however, (a) no amendment shall
be made absent the approval of the shareholders of the Company to the extent
such approval is required under applicable law or the rules of the stock
exchange on which shares of Stock are listed and (b) no amendment shall be made
to § 14 on or after the date of any Change in Control which might adversely
affect any rights which otherwise would vest on the related Change Effective
Date. The Board also may suspend granting Options or Stock Appreciation Rights
or making Stock Grants or Stock Unit Grants under this Plan at any time and may
terminate this Plan at any time; provided, however, the Board shall not have the
right unilaterally to modify, amend or cancel any Option or Stock Appreciation
Right granted or Stock Grant made before such suspension or termination unless
(1) the Eligible Employee, Director or consultant

 

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consents in writing to such modification, amendment or cancellation or (2) there
is a dissolution or liquidation of the Company or a transaction described in
§ 13.1 or § 14.

 

§ 16.
MISCELLANEOUS

 

16.1         Shareholder Rights. No Eligible Employee, Director or consultant
shall have any rights as a shareholder of the Company as a result of the grant
of an Option or a Stock Appreciation Right pending the actual delivery of the
Stock subject to such Option or Stock Appreciation Right to such Eligible
Employee, Director or consultant. An Eligible Employee’s, Director’s or
consultant’s rights as a shareholder in the shares of Stock which remain subject
to forfeiture under § 9.2(b) shall be set forth in the related Stock Grant
Certificate.

 

16.2         No Contract of Employment. The grant of an Option or a Stock
Appreciation Right or a Stock Grant or Stock Unit Grant to an Eligible Employee,
Director or consultant under this Plan shall not constitute a contract of
employment or a right to continue to serve on the Board and shall not confer on
an Eligible Employee, Director or consultant any rights upon his or her
termination of employment or service in addition to those rights, if any,
expressly set forth in this Plan or the related Option Certificate, Stock
Appreciation Right Certificate, or Stock Grant Certificate.

 

16.3         Withholding. Each Option, Stock Appreciation Right, Stock Grant and
Stock Unit Grant shall be made subject to the condition that the Eligible
Employee, Director or consultant consents to whatever action the Committee
directs to satisfy the minimum statutory federal and state tax withholding
requirements, if any, which the Company determines are applicable to the
exercise of such Option or Stock

 

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Appreciation Right or to the satisfaction of any forfeiture conditions with
respect to Stock subject to a Stock Grant or Stock Unit Grant issued in the name
of the Eligible Employee, Director or consultant. No withholding shall be
effected under this Plan which exceeds the minimum statutory federal and state
withholding requirements.

 

16.4         Construction. All references to sections (§) are to sections (§) of
this Plan unless otherwise indicated. This Plan shall be construed under the
laws of the State of Delaware. Each term set forth in § 2 shall, unless
otherwise stated, have the meaning set forth opposite such term for purposes of
this Plan and, for purposes of such definitions, the singular shall include the
plural and the plural shall include the singular. Finally, if there is any
conflict between the terms of this Plan and the terms of any Option Certificate,
Stock Appreciation Right Certificate or Stock Grant Certificate, the terms of
this Plan shall control.

 

16.5         Other Conditions. Each Option Certificate, Stock Appreciation Right
Certificate or Stock Grant Certificate may require that an Eligible Employee,
Director or consultant (as a condition to the exercise of an Option or a Stock
Appreciation Right or the issuance of Stock subject to a Stock Grant) enter into
any agreement or make such representations prepared by the Company, including
(without limitation) any agreement which restricts the transfer of Stock
acquired pursuant to the exercise of an Option or a Stock Appreciation Right or
a Stock Grant or provides for the repurchase of such Stock by the Company.

 

16.6         Rule 16b-3. The Committee shall have the right to amend any Option,
Stock Grant or Stock Appreciation Right to withhold or otherwise restrict the
transfer of any Stock or cash under this Plan to an Eligible Employee, Director
or

 

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consultant as the Committee deems appropriate in order to satisfy any condition
or requirement under Rule 16b-3 to the extent Rule 16 of the 1934 Act might be
applicable to such grant or transfer.

 

16.7         Coordination with Employment Agreements and Other Agreements. If
the Company enters into an employment agreement or other agreement with an
Eligible Employee, Director or consultant which expressly provides for the
acceleration in vesting of an outstanding Option, Stock Appreciation Right,
Stock Grant or Stock Unit Grant or for the extension of the deadline to exercise
any rights under an outstanding Option, Stock Appreciation Right, Stock Grant or
Stock Unit Grant, any such acceleration or extension shall be deemed effected
pursuant to, and in accordance with, the terms of such outstanding Option, Stock
Appreciation Right, Stock Grant or Stock Unit Grant and this Plan even if such
employment agreement or other agreement is first effective after the date the
outstanding Option or Stock Appreciation Right was granted or the Stock Grant or
Stock Unit Grant was made.

 

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