Exhibit 10.1

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

2018 EQUITY INCENTIVE PLAN

SECTION 1

BACKGROUND AND PURPOSE

 

1.1

Background. The Plan permits the grant of Nonqualified Stock Options, Incentive
Stock Options, Stock Appreciation Rights (SARs), Restricted Stock, Restricted
Stock Units, Performance Awards and Other Stock-Based Awards.

 

1.2

Purpose of the Plan. The Plan is intended to attract, motivate and retain the
following individuals: (a) employees of the Company or its Affiliates;
(b) consultants who provide significant services to the Company or its
Affiliates and (c) directors of the Company or any of its Affiliates who are
employees of neither the Company nor any Affiliate. The Plan is also designed to
encourage stock ownership by such individuals, thereby aligning their interests
with those of the Company’s shareholders.

SECTION 2

DEFINITIONS

The following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:

 

2.1

“1934 Act” means the Securities Exchange Act of 1934, as amended. Reference to a
specific section of the Act shall include such section, any valid rules or
regulations promulgated under such section, and any comparable provisions of any
future legislation, rules or regulations amending, supplementing or superseding
any such section, rule or regulation.

 

2.2

“Administrator” means, collectively, (i) the Board, (ii) a committee of the
Board designated in accordance with Section 4.1, or (iii) one or more Directors
or executive officers of the Company designated by the Board to administer the
Plan or specific portions thereof as provided in Section 4.4; provided, however,
that Awards to Nonemployee Directors may only be granted by a committee of the
Board consisting of two or more Independent Directors.

 

2.3

“Affiliate” means any corporation or any other entity (including, but not
limited to, Subsidiaries, partnerships and joint ventures) controlling,
controlled by, or under common control with the Company.

 

2.4

“Applicable Law” means the legal requirements relating to the administration of
an Award issued pursuant to the Plan and similar incentive plans under any
applicable laws, including but not limited to federal and state employment,
labor, privacy and securities laws, the Code, and applicable rules and
regulations promulgated by any stock exchange or quotation system upon which the
Shares may then be listed or quoted.

 

2.5

“Award” means, individually or collectively, a grant under the Plan of
Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock,
Restricted Stock Units, Performance Awards, and Other Stock-Based Awards.

 

2.6

“Award Agreement” means the written agreement or program document between the
Company and a Participant setting forth the terms and provisions applicable to
each Award granted under the Plan, including the Grant Date.

 

2.7

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

 

2.8

“Cause” shall have the meaning assigned to such term in any Company or Affiliate
employment, severance, or similar agreement or Award Agreement with the
Participant or, if no such agreement exists or the agreement does not define
“Cause,” Cause means (i) commission of, indictment for, or conviction of a
felony or crime involving moral turpitude or dishonesty, (ii) an act of theft,
fraud, embezzlement or

 

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  misappropriation, (iii) violation of Company (or any Affiliate) policies, with
or acting against the interests of the Company (or any Affiliate), including
employing or recruiting any present, former or future employee of the Company
(or any Affiliate), (iv) willful failure to perform duties on behalf of the
Company (or any Affiliate), (v) misuse of any confidential, secret, privileged
or non-public information relating to the Company’s (or any Affiliate’s)
business, or (vi) participating in a hostile takeover attempt of the Company or
an Affiliate.

 

2.9

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

 

  a)

Any “person” (as such term is used in Sections 13(d) and 14(d) of the 1934 Act)
becomes the “beneficial owner” (as defined in Rule 13d-3 of the 1934 Act),
directly or indirectly, of securities of the Company representing fifty percent
(50%) or more of the total voting power represented by the Company’s then
outstanding voting securities;

 

  b)

The following individuals cease for any reason to constitute a majority of the
number of Directors then serving on the Board: individuals who, during any
period of two (2) consecutive years, constitute the Board and any new Director
(other than a Director whose initial assumption of office is in connection with
an actual or threatened election contest, including, but not limited to, a
consent solicitation, relating to the election of Directors of the Company)
whose appointment or election by the Board or nomination for election by the
Company’s stockholders was approved or recommended by a vote of at least
two-thirds (2/3) of the Directors then still in office who either were Directors
at the beginning of the two (2) year period or whose appointment, election or
nomination for election was previously so approved or recommended;

 

  c)

The consummation of the sale or disposition by the Company of all or
substantially all of the Company’s assets; or

 

  d)

The consummation of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity or its parent outstanding immediately after
such merger or consolidation.

 

2.10

“Code” means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code or regulation thereunder shall include such section
or regulation, any valid regulation promulgated under such section, and any
comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.

 

2.11

“Committee” means any committee of the Board designated to administer the Plan
in accordance with Section 4.1.

 

2.12

“Company” means Superior Industries International, Inc., or any successor
thereto.

 

2.13

“Consultant” means any consultant, independent contractor or other person who
provides significant services (other than capital-raising activities) to the
Company or its Affiliates or any employee or affiliate of any of the foregoing,
but who is neither an Employee nor a Director.

 

2.14

“Continuous Service” means that a Participant’s employment or service
relationship with the Company or any Affiliate is not interrupted or terminated.
Continuous Service shall not be considered interrupted in the following cases:
(i) any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company and any Subsidiary or successor.
A leave of absence approved by the Company shall include sick leave, military
leave or any other personal leave approved by an authorized representative of
the Company. For purposes of Incentive Stock Options, no leave of absence may
exceed ninety (90) days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. If such reemployment is approved by the
Company but not guaranteed by statute or contract, then such employment will be
considered terminated on the ninety-first (91st) day of such leave and on such
date any Incentive Stock Option held by the Participant shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonqualified Stock Option. In the event a Participant’s status

 

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  changes among the positions of Employee, Director and Consultant, the
Participant’s Continuous Service shall not be considered terminated solely as a
result of any such changes in status. Whether military, government or other
service or other leave of absence shall constitute a termination of Continuous
Service shall be determined in each case by the Administrator at its discretion,
and any determination by the Administrator shall be final and conclusive;
provided, however, that for purposes of any Award that is subject to
Section 409A of the Code, the determination of a leave of absence must comply
with the requirements of a “bona fide leave of absence” as provided in Treasury
Regulations Section 1.409A-1(h).

 

2.15

“Director” means any individual who is a member of the Board of Directors of the
Company or an Affiliate of the Company.

 

2.16

“Disability” means a permanent and total disability within the meaning of
Section 22(e)(3) of the Code, provided that in the case of Awards other than
Incentive Stock Options, the Administrator in its discretion may determine
whether a permanent and total disability exists in accordance with uniform and
non-discriminatory standards adopted by the Administrator from time to time.

 

2.17

“Eligible Participant” means an Employee, Director or Consultant.

 

2.18

“Employee” means any individual who is a common-law employee (including a leased
employee) of the Company or of an Affiliate.

 

2.19

“Exercise Price” means the price at which a Share may be purchased by a
Participant pursuant to the exercise of an Option, and the base price used to
determine the amount of cash or number of Shares payable to a Participant upon
the exercise of a SAR.

 

2.20

“Fair Market Value” means with respect to a Share, as of any date, the closing
sales price for such Share on the Grant Date of the Award, provided the Shares
are listed on an established stock exchange or a national market system,
including without limitation the New York Stock Exchange (“NYSE”). If no sales
were reported on such Grant Date of the Award, the Fair Market Value of a Share
shall be the closing price for such Share as quoted on the NYSE (or the exchange
with the greatest volume of trading in the Shares) on the last market trading
day with reported sales prior to the date of determination. In the case where
the Company is not listed on an established stock exchange or national market
system, Fair Market Value shall be determined by the Board in good faith in
accordance with Code Section 409A and the applicable Treasury regulations.

 

2.21

“Fiscal Year” means a fiscal year of the Company.

 

2.22

“Full-Value Award” means an Award other than in the form of an Option or SAR,
and which is settled by the issuance of Shares (or at the discretion of the
Administrator, settled in cash valued by reference to Share value).

 

2.23

“Full-Value Award Limitation” means the limit on Full-Value Awards specified in
Section 5.4.

 

2.24

“Good Reason” shall have the meaning assigned to such term in any Company or
Affiliate employment, severance, or similar agreement or Award Agreement with
the Participant, to the extent applicable.

 

2.25

“Grant Date” means the first date on which all necessary corporate action has
been taken to approve the grant of the Award as provided in the Plan, or such
later date as is determined and specified as part of that authorization process.
Notice of the grant shall be provided to the grantee within a reasonable time
after the Grant Date.

 

2.26

“Incentive Stock Option” means an Option to purchase Shares, which is designated
as an Incentive Stock Option and is intended to meet the requirements of
Section 422 of the Code.

 

2.27

“Independent Director” means a Nonemployee Director who is (i) a “nonemployee
director” within the meaning of Rule 16b-3 of the 1934 Act and (ii)
“independent” as determined under the applicable rules of the NYSE, as any of
these definitions may be modified or supplemented from time to time.

 

2.28

“Nonemployee Director” means a Director who is not employed by the Company or an
Affiliate.

 

2.29

“Nonqualified Stock Option” means an option to purchase Shares that is not
intended to be an Incentive Stock Option.

 

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2.30

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

 

2.31

“Other Stock-Based Award” means a right or other interest granted to a
Participant pursuant to Section 11 of the Plan that may be denominated or
payable in, valued in whole or in part by reference to, or otherwise based on or
related to, Shares, including, but not limited to, unrestricted Shares or
dividend equivalents, each of which may be subject to the attainment of
Performance Goals or a period of continued employment or other terms or
conditions as permitted under the Plan.

 

2.32

“Participant” means an Employee, Consultant or Nonemployee Director who has an
outstanding Award.

 

2.33

“Performance Award” means an Award granted to a Participant pursuant to
Section 10 of the Plan, the vesting of which is contingent on the satisfaction
of specified performance conditions.

 

2.34

“Period of Restriction” means the period during which the transfer of Shares
underlying Awards of Restricted Stock or Restricted Stock Units are subject to
restrictions that subject the Shares to a substantial risk of forfeiture.

 

2.35

“Plan” means this Superior Industries International, Inc. 2018 Equity Incentive
Plan, as set forth in this instrument and as hereafter amended from time to
time.

 

2.36

“Restricted Stock” means an Award granted to a Participant pursuant to Section 9
of the Plan. An Award of Restricted Stock constitutes a transfer of ownership of
Shares to a Participant from the Company subject to restrictions against
transferability, assignment, and hypothecation. Under the terms of the Award,
the restrictions against transferability are removed when the Participant has
met the specified vesting requirement.

 

2.37

“Restricted Stock Unit” means an Award granted to a Participant pursuant to
Section 9 of the Plan. An Award of Restricted Stock Units constitutes the right
to receive Shares (or the equivalent value in cash or other property if the
Administrator so provides) in the future, which right is subject to certain
restrictions and to risk of forfeiture.

 

2.38

“Retirement” shall mean satisfactory completion of the Company’s guidelines for
retirement as specified by the Company’s retirement policy, as may be in effect
from time to time.

 

2.39

“SEC” means the U.S. Securities and Exchange Commission.

 

2.40

“Section 16 Person” means a person who, with respect to the Shares, is subject
to Section 16 of the 1934 Act.

 

2.41

“Shares” means shares of common stock of the Company.

 

2.42

“Stock Appreciation Right” or “SAR” means an Award granted to a Participant
pursuant to Section 8 of the Plan. Upon exercise, a SAR gives a Participant a
right to receive a payment in cash, or the equivalent value in Shares, equal to
the difference between the Fair Market Value of the Shares on the exercise date
and the Exercise Price. Both the number of SARs and the Exercise Price are
determined on the Grant Date. For example, assume a Participant is granted 100
SARs at an Exercise Price of $10 and the award agreement specifies that the SARs
will be settled in Shares. Also assume that the SARs are exercised when the
underlying Shares have a Fair Market Value of $20 per Share. Upon exercise of
the SAR, the Participant is entitled to receive 50 Shares [(($20-$10)x100)/$20].

 

2.43

“Subsidiary” means any corporation in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain then owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

 

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SECTION 3

EFFECTIVE DATE AND TERM

 

3.1

Effective Date. The Superior Industries International, Inc. 2008 Equity
Incentive Plan was originally approved by the Company’s shareholders at the 2008
Annual Meeting of shareholders and became effective on May 30, 2008 (the
“Original Plan”). The Original Plan was subsequently amended and restated and
re-approved by the Company’s shareholders at the 2013 Annual Meeting (the
“Amended and Restated Plan”). The Amended and Restated Plan is further amended
and restated hereby in order to, among other things, (i) rename the Plan to the
Superior Industries International, Inc. 2018 Equity Incentive Plan, (ii) extend
the termination date of the Plan, (iii) increase the number of Shares available
for issuance pursuant to Awards granted under the Plan and (iv) expand the types
of Awards that may be granted under the Plan. Subject to the approval of the
Company’s shareholders at the 2018 Annual Meeting, the Plan, as amended and
restated hereby, will become effective on the date that it is approved by the
Company’s shareholders (the “Effective Date”).

 

3.2

Term. Unless earlier terminated as provided herein, the Plan shall continue in
effect until the tenth (10th) anniversary of the Effective Date. The termination
of the Plan on such date shall not affect the validity of any Award outstanding
on the date of termination, which shall continue to be governed by the
applicable terms and conditions of the Plan.

SECTION 4

ADMINISTRATION

 

4.1

The Administrator. The Plan shall be administered by a Committee of the Board
appointed by the Board (which Committee shall consist of at least two Directors)
or, at the discretion of the Board from time to time, the Plan may be
administered by the Board. It is intended that at least two of the Directors
appointed to serve on the Committee shall be Independent Directors and that any
such members of the Committee who do not so qualify shall abstain from
participating in any decision to make or administer Awards that are made to
Eligible Participants who at the time of consideration for such Award are
Section 16 Persons. However, the mere fact that a Committee member shall fail to
qualify as an Independent Director or shall fail to abstain from such action
shall not invalidate any Award made by the Committee which Award is otherwise
validly made under the Plan. The members of the Committee shall be appointed by,
and may be changed at any time and from time to time in the discretion of, the
Board. Unless and until changed by the Board, the Compensation and Benefits
Committee of the Board is designated as the Administrator to administer the
Plan. The Board may reserve to itself any or all of the authority and
responsibility of the Committee under the Plan or may act as administrator of
the Plan for any and all purposes. Notwithstanding any of the foregoing, grants
of Awards to Nonemployee Directors under the Plan shall be subject to the
applicable award limit set forth in Section 5.4 hereof.

 

4.2

Action and Interpretation by the Administrator. For purposes of administering
the Plan, the Administrator may from time to time adopt rules, regulations,
guidelines and procedures for carrying out the provisions and purposes of the
Plan and make such other determinations, not inconsistent with the Plan, as the
Administrator may deem appropriate. The Administrator may correct any defect,
supply any omission or reconcile any inconsistency in the Plan or in any Award
in the manner and to the extent it deems necessary to carry out the intent of
the Plan. The Administrator’s interpretation of the Plan, any Awards granted
under the Plan, any Award Agreement and all decisions and determinations by the
Administrator with respect to the Plan are final, binding, and conclusive on all
persons and shall be given the maximum deference permitted by Applicable Law.
Each member of the Administrator is entitled to, in good faith, rely or act upon
any report or other information furnished to that member by any officer or other
employee of the Company or any Affiliate, the Company’s or an Affiliate’s
independent certified public accountants, Company counsel or any executive
compensation consultant or other professional retained by the Company to assist
in the administration of the Plan. No member of the Administrator will be liable
for any good faith determination, act or omission in connection with the Plan or
any Award.

 

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4.3

Authority of the Administrator. It shall be the duty of the Administrator to
administer the Plan in accordance with the Plan’s provisions and in accordance
with Applicable Law. The Administrator shall have all powers and discretion
necessary or appropriate to administer the Plan and to control its operation,
including, but not limited to, the power to: (a) determine which Employees,
Consultants and Directors shall be granted Awards; (b) determine the vesting
conditions, if any, applicable to Awards and the circumstances under which
vesting conditions may be modified, (c) determine the other terms and conditions
of the Awards, (d) interpret the Plan, (e) adopt rules for the administration,
interpretation and application of the Plan as are consistent therewith,
(f) interpret, amend or revoke any such rules, and (g) adopt such modifications,
procedures, and subplans as may be necessary or desirable to comply with
provisions of the laws of the United States or any non-U.S. jurisdictions in
which the Company or any Affiliate may operate, in order to assure the viability
of the benefits of Awards granted to participants located in the United States
or such other jurisdictions and to further the objectives of the Plan.

 

4.4

Delegation. The Board may, by resolution, expressly delegate to a special
committee, consisting of one or more Board members who may but need not be
officers of the Company, the authority, within specified parameters as to the
number and terms of Awards, to (i) designate Eligible Participants to be
recipients of Awards under the Plan, and (ii) to determine the number of such
Awards to be received by any such Participants; provided, however, that such
delegation of duties and responsibilities to an officer of the Company may not
be made with respect to the grant of Awards to Eligible Participants (a) who are
Nonemployee Directors or (b) who are Section 16 Persons at the Grant Date. The
acts of such delegates shall be treated hereunder as acts of the Board and such
delegates shall report regularly to the Board and the Compensation and Benefits
Committee regarding the delegated duties and responsibilities and any Awards so
granted. The Administrator may also delegate nondiscretionary administrative
duties to other parties as it deems appropriate.

SECTION 5

SHARES SUBJECT TO THE PLAN

 

5.1

Number of Shares. Subject to adjustment as provided in Section 5.3, the total
number of Shares available for grant under the Plan shall be 4,350,000 Shares,
including Shares issued or issuable with respect to Awards granted since May 30,
2008. Shares granted under the Plan may be authorized but unissued Shares or
reacquired Shares bought on the market or otherwise.

 

5.2

Share Counting. Shares covered by an Award shall be subtracted from the Plan
share reserve as of the Grant Date, but shall be added back to the Plan share
reserve in accordance with this Section 5.2:

 

  a)

To the extent that an Award is canceled, terminates, expires, is forfeited or
lapses for any reason, any unissued or forfeited Shares originally subject to
the Award will be added back to the Plan share reserve and again be available
for issuance pursuant to Awards granted under the Plan.

 

  b)

Shares subject to Awards settled in cash will be added back to the Plan share
reserve and again be available for issuance pursuant to Awards granted under the
Plan.

 

  c)

The following Shares may not again be made available for issuance as Awards
under the Plan: (i) Shares not issued or delivered as a result of the net
settlement of an outstanding Option or SAR, (ii) Shares used to pay the Exercise
Price or withholding taxes related to an outstanding Option or SAR, (iii) Shares
repurchased on the open market with the proceeds of the exercise price of an
Option or (iv) Shares surrendered or withheld to cover taxes due upon the
vesting of an Award.

 

  d)

To the extent that the full number of Shares subject to an Award other than an
Option or SAR is not issued for any reason, including by reason of failure to
achieve maximum performance goals, the unissued Shares originally subject to the
Award will be added back to the Plan share reserve and again be available for
issuance pursuant to Awards granted under the Plan. For the avoidance of doubt,
Shares underlying Awards that are subject to the achievement of performance
goals shall be counted against the Plan share reserve based on the target value
of such Awards unless and until such time as such Awards become vested and
settled in Shares.

 

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  e)

Substitute Awards granted pursuant to Section 5.6 of the Plan shall not count
against the Shares otherwise available for issuance under the Plan under
Section 5.1.

 

  f)

Subject to applicable stock exchange requirements, shares available under a
shareholder-approved plan of a company acquired by the Company (as appropriately
adjusted to Shares to reflect the transaction) may be issued under the Plan
pursuant to Awards granted to individuals who were not employees of the Company
or its Affiliates immediately before such transaction and will not count against
the maximum share limitation specified in Section 5.1.

 

5.3

Adjustments in Awards and Authorized Shares. The number and kind of shares
authorized for grant under the Plan in Section 5.1, the Award limits in
Section 5.4, the number and kind of shares covered by each outstanding Award,
and the per share exercise price of each such Option or SAR, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, reverse stock split, recapitalization,
combination, reclassification, spin-off, stock dividend on the Shares, or any
other increase or decrease in the number of such Shares effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.” The Administrator shall make such adjustments
to the Plan and Awards as it deems necessary, in its sole discretion, to prevent
dilution or enlargement of rights immediately resulting from such transaction,
and the decisions of the Administrator in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an Option. Notwithstanding
any anti-dilution provision in the Plan, the Administrator shall not make any
adjustments to outstanding Options or SARs that would constitute a modification
or substitution of the stock right under Treasury Regulations Sections
1.409A-1(b)(5)(v) that would be treated as the grant of a new stock right or
change in the form of payment for purposes of Code Section 409A.

 

5.4

Limitations on Awards. Notwithstanding any provision in the Plan to the contrary
(but subject to adjustment as provided in Section 5.3):

 

  a)

Incentive Stock Options Limitation. No more than 3,000,000 Shares may be granted
over the life of the Plan in the form of Incentive Stock Options.

 

  b)

Full-Value Award Limitation. No more than 1,200,000 Shares may be issued over
the life of the Plan in the form of Full Value Awards that are settled in
Shares. To the extent that the full number of Shares subject to a Full Value
Award is not issued for any reason, including by reason of failure to achieve
maximum performance goals, the unissued Shares originally subject to the Award
will not count against the Full-Value Award Limitation. Cash-settled Full Value
Awards shall not count against this Full-Value Award Limitation.

 

  c)

Awards to Nonemployee Directors. The maximum aggregate number of Shares
associated with any Award granted under the Plan in any 12-month period to any
one Nonemployee Director shall be 20,000 Shares.

 

5.5

Minimum Vesting Requirements. Except in the case of substitute Awards granted
pursuant to Section 5.6 and subject to the following sentence, Awards granted
under the Plan shall be subject to a minimum vesting period of one year.
Notwithstanding the foregoing, (i) the Administrator may permit acceleration of
vesting of an Award in the event of the Participant’s death, Disability, or
Retirement, or the occurrence of a Change in Control, and (ii) the Administrator
may grant Awards covering five percent (5%) or fewer of the total number of
Shares authorized under the Plan without respect to the above-described minimum
vesting requirements. Notwithstanding the foregoing, with respect to Awards to
Nonemployee Directors, the vesting of such Awards will be deemed to satisfy the
one-year minimum vesting requirement to the extent that the Awards vest based on
the approximately one-year period beginning on each regular annual meeting of
the Company’s shareholders and ending on the date of the next regular annual
meeting of the Company’s shareholders.

 

5.6

Substitute Awards. In the event that the Company or an Affiliate consummates a
transaction described in Section 424(a) of the Code (e.g., the acquisition of
property or stock from an unrelated corporation),

 

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  persons who become Employees, Directors or Consultants on account of such
transaction may be granted Awards in substitution for awards granted by their
former employer, and any such substitute such Options or SARs may be granted
with an Exercise Price less than the Fair Market Value of a Share on the Grant
Date; provided, however, the grant of such substitute Option or SAR shall not
constitute a “modification” as defined in Code Section 424(h)(3) and the
applicable Treasury regulations.

SECTION 6

ELIGIBILITY

 

6.1

General. Awards may be granted only to Eligible Participants. Incentive Stock
Options may be granted only to Eligible Participants who are employees of the
Company or a Subsidiary as defined in Section 424(e) and (f) of the Code.
Eligible Participants who are service providers to an Affiliate may be granted
Options or SARs under this Plan only if the Affiliate qualifies as an “eligible
issuer of service recipient stock” within the meaning of Treasury Regulations
§1.409A-1(b)(5)(iii)(E).

SECTION 7

STOCK OPTIONS

 

7.1

Grant of Options. Subject to the terms and provisions of the Plan, Options may
be granted at any time and from time to time as determined by the Administrator
in its discretion. The Administrator may grant Incentive Stock Options,
Nonqualified Stock Options, or a combination thereof, and the Administrator, in
its discretion and subject to Section 5.4, shall determine the number of Shares
subject to each Option. Unless the Administrator expressly provides in an Award
Agreement that an Award of Options is intended to be Incentive Stock Options,
the Award shall be Nonqualified Stock Options.

 

7.2

Award Agreement. Each Option shall be evidenced by an Award Agreement that shall
specify the Exercise Price, the expiration date of the Option, the number of
Shares to which the Option pertains, any conditions to exercise the Option, and
such other terms and conditions as the Administrator, in its discretion, shall
determine. The Award Agreement shall also specify whether the Option is intended
to be an Incentive Stock Option or a Nonqualified Stock Option.

 

7.3

Exercise Price. The Administrator shall determine the Exercise Price for each
Option subject to the provisions of this Section 7.3. Other than an Option
issued as a substitute Award pursuant to Section 5.6, the per Share Exercise
Price of an Option shall not be less than one hundred percent (100%) of the Fair
Market Value of a Share on the Grant Date.

 

7.4

Incentive Stock Options. The grant of Incentive Stock Options shall be subject
to all of the requirements of Code Section 422, including the following
limitations:

 

  a)

The Exercise Price of an Incentive Stock Option shall be not less than one
hundred percent (100%) of the Fair Market Value of a Share on the Grant Date;
provided, however, that if on the Grant Date, the Employee (together with
persons whose stock ownership is attributed to the Employee pursuant to
Section 424(d) of the Code) owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any of its
Subsidiaries, the Exercise Price shall be not less than one hundred and ten
percent (110%) of the Fair Market Value of a Share on the Grant Date;

 

  b)

Incentive Stock Options may be granted only to persons who are, as of the Grant
Date, Employees of the Company or a Subsidiary, and may not be granted to
Consultants or Nonemployee Directors.

 

  c)

To the extent that the aggregate Fair Market Value of the Shares with respect to
which Incentive Stock Options are exercisable for the first time by the
Participant during any calendar year (under all plans of the Company and any
parent or Subsidiary) exceeds $100,000, such Options shall be treated as
Nonqualified Stock Options. For purposes of this Section 7.4(c), Incentive Stock
Options shall be taken into account in the order in which they were granted. The
Fair Market Value of the Shares shall be determined as of the time the Option
with respect to such Shares is granted; and

 

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  d)

In the event of a Participant’s change of status from Employee to Consultant or
Director, an Incentive Stock Option held by the Participant shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonqualified Stock Option three (3) months and one (1) day following such change
of status.

 

7.5

Expiration of Options.

 

7.5.1

Expiration Dates. Unless otherwise specified in the Award Agreement, but in any
event no later than ten (10) years from the Grant Date, each Option shall
terminate no later than the first to occur of the following events:

 

  a)

Date in Award Agreement. The date for termination of the Option set forth in the
written Award Agreement;

 

  b)

Termination of Service. The thirtieth (30th) day following the date the
Participant’s Continuous Service terminates (other than for a reason described
in subsections (c), (d), (e), or (f) below);

 

  c)

Termination for Cause. In the event a Participant’s Continuous Service
terminates because the Participant has committed an act of Cause, as determined
by the Administrator, all unexercised Options held by such Participant, whether
or not vested, shall expire immediately following written notice from the
Company to the Participant;

 

  d)

Disability. In the event that a Participant’s Continuous Service terminates as a
result of the Participant’s Disability, the Participant may exercise his or her
Option at any time within twelve (12) months following the date of such
termination, but only to the extent that the Participant was entitled to
exercise it at the date of such termination (but in no event later than the
expiration of the term of the Option as set forth in the Award Agreement). If,
at the date of termination, the Participant is not entitled to exercise his or
her entire Option, the Shares covered by the unexercisable portion of the Option
shall revert to the Plan. If, after termination, the Participant does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan;

 

  e)

Death. In the event of the death of a Participant, the Participant’s Option may
be exercised at any time within twelve (12) months following the date of death
(but in no event later than the expiration of the term of such Option as set
forth in the Award Agreement), by the Participant’s estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that the Participant was entitled to exercise the Option at the date
of death. If, at the time of death, the Participant was not entitled to exercise
his or her entire Option, the Shares covered by the unexercisable portion of the
Option shall immediately revert to the Plan. If, after death, the Participant’s
estate or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan; or

 

  f)

Ten Years from Grant. An Option shall expire no more than ten (10) years after
the Grant Date; provided, however, that if an Incentive Stock Option is granted
to an Employee who, together with persons whose stock ownership is attributed to
the Employee pursuant to Section 424(d) of the Code, owns stock possessing more
than ten percent (10%) of the total combined voting power of all classes of the
stock of the Company or any of its Subsidiaries, such Incentive Stock Option may
not be exercised after the expiration of five (5) years from the Grant Date.

 

7.5.2

Administrator Discretion. Notwithstanding the foregoing, the Administrator may,
after an Option is granted, extend the exercise period that an Option is
exercisable following termination of a Participant’s Continuous Service (subject
to limitations applicable to Incentive Stock Options); provided, however that
such extension does not exceed the maximum term of the Option.

 

7.6

Exercise of Options. Options granted under the Plan shall be exercisable at such
times and be subject to such restrictions as set forth in the Award Agreement
and conditions as the Administrator shall determine in its discretion.

 

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7.7

Exercise and Payment. Options shall be exercised by the Participant’s delivery
of a written notice of exercise to the Secretary of the Company (or its
designee), setting forth the number of Shares with respect to which the Option
is to be exercised, accompanied by full payment for the Shares.

 

7.7.1

Form of Consideration. Upon the exercise of any Option, the Exercise Price shall
be payable to the Company in full. The Administrator shall determine the methods
by which the exercise price of an Option may be paid, the form of payment, and
the methods by which Shares shall be delivered or deemed to be delivered to
Participants. Unless otherwise determined by the Administrator at or after the
Grant Date, payment of the exercise price of an Option may be made in, in whole
or in part, in the form of (i) cash or cash equivalents, (ii) delivery (by
either actual delivery or attestation) of previously-acquired Shares based on
the Fair Market Value of the Shares on the date the Option is exercised,
(iii) withholding of Shares from the Option based on the Fair Market Value of
the Shares on the date the Option is exercised, (iv) broker-assisted market
sales, or (v) by any other means that the Administrator, in its discretion,
determines to provide legal consideration for the Shares and to be consistent
with the purposes of the Plan.

 

7.7.2

Delivery of Shares. As soon as practicable after receipt of a written
notification of exercise and full payment for the Shares purchased, the Company
shall deliver Shares to the Participant (or the Participant’s designated
broker), which may be in book entry form or certificated form.

 

7.8

No “Re-Pricing” Without Shareholder Approval. Except as otherwise provided in
Section 5.3, without the prior approval of shareholders of the Company: (i) the
Exercise Price of an Option may not be reduced, directly or indirectly, (ii) an
Option may not be cancelled in exchange for cash, other Awards, or Options or
SARs with an Exercise Price that is less than the Exercise Price of the original
Option, or otherwise, and (iii) the Company may not repurchase an Option for
value (in cash or otherwise) from a Participant if the current Fair Market Value
of the Shares underlying the Option is lower than the Exercise Price per share
of the Option.

 

7.9

No Deferral Feature. No Option shall provide for any feature for the deferral of
compensation other than the deferral of recognition of income until the exercise
or disposition of the Option.

 

7.10

No Dividend Equivalents. No Option shall provide for dividend equivalents.

SECTION 8

STOCK APPRECIATION RIGHTS

 

8.1

Grant of SARs. Subject to the terms and provisions of the Plan, SARs may be
granted at any time and from time to time as determined by the Administrator in
its discretion.

 

8.1.1

Number of Shares. The Administrator shall have complete discretion to determine
the number of SARs granted to any Participant.

 

8.1.2

Exercise Price and Other Terms. The Administrator, subject to the provisions of
the Plan, shall have discretion to determine the terms and conditions of SARs
granted under the Plan, including whether upon exercise the SARs will be settled
in Shares or cash. However, other than a SAR issued as a substitute Award
pursuant to Section 5.6, the Exercise Price of a SAR shall be no less than one
hundred percent (100%) of the Fair Market Value of a Share on the Grant Date.

 

8.2

Exercise of SARs. SARs granted under the Plan shall be exercisable at such times
and be subject to such restrictions as set forth in the Award Agreement and
conditions as the Administrator shall determine in its discretion.

 

8.3

SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement that
shall specify the Exercise Price, the term of the SAR, the conditions of
exercise and such other terms and conditions as the Administrator shall
determine.

 

8.4

Expiration of SARs. A SAR granted under the Plan shall expire upon the date
determined by the Administrator in its discretion as set forth in the Award
Agreement, or otherwise pursuant to the provisions relating to the expiration of
Options as set forth in Section 7.5.

 

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8.5

Payment of SAR Amount. Upon exercise of a SAR, a Participant shall be entitled
to receive from the Company either (whichever is specified in the Award
Agreement) (a) a cash payment in an amount equal to (x) the difference between
the Fair Market Value of a Share on the date of exercise and the SAR Exercise
Price, multiplied by (y) the number of Shares with respect to which the SAR is
exercised, or (b) a number of Shares determined by dividing such cash amount by
the Fair Market Value of a Share on the exercise date. If the Administrator
designates in the Award Agreement that the SAR will be settled in cash, upon
Participant’s exercise of the SAR the Company shall make a cash payment to
Participant as soon as reasonably practical.

 

8.6

No “Re-Pricing” Without Shareholder Approval. Except as otherwise provided in
Section 5.3, without the prior approval of shareholders of the Company: (i) the
Exercise Price of a SAR may not be reduced, directly or indirectly, (ii) a SAR
may not be cancelled in exchange for cash, other Awards, or Options or SARs with
an Exercise Price that is less than the Exercise Price of the original SAR, or
otherwise, and (iii) the Company may not repurchase a SAR for value (in cash or
otherwise) from a Participant if the current Fair Market Value of the Shares
underlying the SAR is lower than the Exercise Price per share of the SAR.

 

8.7

No Deferral Feature. No SAR shall provide for any feature for the deferral of
compensation other than the deferral of recognition of income until the exercise
or disposition of the SAR.

 

8.8

No Dividend Equivalents. No SAR shall provide for dividend equivalents.

SECTION 9

RESTRICTED STOCK OR RESTRICTED STOCK UNITS

 

9.1

Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the
Administrator, at any time and from time to time, may grant Shares of Restricted
Stock or Restricted Stock Units to Eligible Participants in such amounts as the
Administrator, in its discretion, shall determine, subject to the Full-Value
Award Limitation in Section 5.4.

 

9.2

Award Agreement. An Award of Restricted Stock or Restricted Stock Units shall be
evidenced by an Award Agreement setting forth the terms, conditions, and
restrictions applicable to the Award, as the Administrator, in its discretion,
shall determine. Unless the Administrator determines otherwise, Shares of
Restricted Stock shall be held by the Company as escrow agent until the
restrictions on such Shares have lapsed.

 

9.3

Transferability. Except as provided in this Section 9, Shares of Restricted
Stock or Awards of Restricted Stock Units may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until expiration of the
applicable Period of Restriction.

 

9.4

Other Restrictions. Restricted Stock and Restricted Stock Units shall be subject
to such other restrictions as the Administrator may impose. These restrictions
may lapse separately or in combination at such times, under such circumstances,
in such installments, upon the satisfaction of performance goals or otherwise,
as the Administrator determines at the time of the grant of the Award or
thereafter, subject to Section 5.5.

 

9.5

Legend on Certificates. The Administrator, in its discretion, may place a legend
or legends on the certificates representing Restricted Stock to give appropriate
notice of such restrictions.

 

9.6

Removal of Restrictions. Except as otherwise provided in this Section 9, Shares
of Restricted Stock covered by each Restricted Stock grant made under the Plan
shall be released from escrow as soon as practicable after expiration of the
Period of Restriction. After the restrictions have lapsed, the Participant shall
be entitled to have any legend or legends under Section 9.5 removed from his or
her Share certificate, and the Shares shall be freely transferable by the
Participant, subject to Applicable Law.

 

9.7

Voting Rights. During the Period of Restriction, Participants holding Shares of
Restricted Stock granted hereunder may exercise full voting rights with respect
to those Shares, unless otherwise provided in the Award Agreement. Except as
otherwise provided in an Award Agreement, a Participant shall have none of the
rights of a shareholder with respect to Restricted Stock Units until such time
as Shares are paid in settlement of such Awards.

 

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9.8

Dividends and Other Distributions. Unless otherwise provided by the
Administrator in an Award Agreement, Participants holding Shares of Restricted
Stock shall be entitled to receive all dividends and other distributions
declared with respect to such Shares during the Period of Restriction; provided,
that such dividends and other distributions shall be accumulated and paid to the
Participants at such time as the restrictions applicable to the Shares of
Restricted Stock lapse.

 

9.9

Return of Restricted Stock to Company. On the date that any forfeiture event set
forth in the Award Agreement occurs, the Restricted Stock or Restricted Stock
Units for which restrictions have not lapsed shall revert to the Company and
again shall become available for grant under the Plan.

SECTION 10

PERFORMANCE AWARDS

 

10.1

Grant of Performance Awards. The Administrator is authorized to grant any Award
under this Plan, including Options, SARs, Restricted Stock, Restricted Stock
Units or Other Stock-Based Awards, with performance-based vesting criteria, on
such terms and conditions as may be selected by the Administrator. Any such
Awards with performance-based vesting criteria are referred to herein as
Performance Awards. The Administrator shall have the complete discretion to
determine the number of Performance Awards granted to each Participant, subject
to Section 5.4, and to designate the provisions of such Performance Awards as
provided in Section 10.2. All Performance Awards shall be evidenced by an Award
Agreement or a written program established by the Administrator, pursuant to
which Performance Awards are awarded under the Plan under uniform terms,
conditions and restrictions set forth in such written program.

 

10.2

Performance Goals. The Administrator may establish performance goals for
Performance Awards which may be based on any criteria selected by the
Administrator. Such performance goals may be described in terms of Company-wide
objectives or in terms of objectives that relate to the performance of the
Participant, an Affiliate or a division, region, department or function within
the Company or an Affiliate. The time period during which the performance goals
or other vesting provisions must be met will be called the “Performance Period.”
If the Administrator determines that a change in the business, operations,
corporate structure or capital structure of the Company or the manner in which
the Company or an Affiliate conducts its business, or other events or
circumstances render performance goals to be unsuitable, the Administrator may
modify such performance goals in whole or in part, as the Administrator deems
appropriate. If a Participant is promoted, demoted or transferred to a different
business unit or function during a Performance Period, the Administrator may
determine that the performance goals or Performance Period are no longer
appropriate and may (i) adjust, change or eliminate the performance goals or the
applicable Performance Period as it deems appropriate to make such goals and
period comparable to the initial goals and period, or (ii) make a cash payment
to the Participant in an amount determined by the Administrator.

SECTION 11

OTHER STOCK-BASED AWARDS

 

11.1

Grant of Other Stock-Based Awards. The Administrator is authorized to grant
Awards to Participants in the form of Other Stock-Based Awards, as deemed by the
Administrator to be consistent with the purposes of the Plan and as evidenced by
an Award Agreement. The Administrator shall determine the terms and conditions
of such Awards, consistent with the terms of the Plan, at the Grant Date or
thereafter. Shares or other securities or property delivered pursuant to an
Award in the nature of a purchase right granted under this Section 11 shall be
purchased for such consideration, paid for at such times, by such methods, and
in such forms, including, without limitation, Shares, other Awards, notes or
other property, as the Administrator shall determine, subject to any required
corporate action.

 

12

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SECTION 12

MISCELLANEOUS

 

12.1

Change in Control. Unless otherwise provided in the Award Agreement, in the
event of a Change in Control, unless an Award is assumed or substituted by the
successor corporation, then (i) all outstanding Options or SARs shall become
fully vested and exercisable as of the date of the Change in Control, whether or
not otherwise then exercisable, (ii) all service-based restrictions and
conditions on any Award then outstanding shall lapse as of the date of the
Change in Control, and (iii) the payout level under all Performance Awards shall
be deemed to have been earned as of the date of the Change in Control based upon
an assumed achievement of all relevant performance goals at the “target” level.
If an Award is assumed or substituted by the successor corporation, then if
within two (2) years after the effective date of the Change in Control, a
Participant’s Continuous Service is terminated without Cause or the Participant
resigns for Good Reason, then as of the date of termination (i) all of that
Participant’s outstanding Options and SARs shall become fully vested and
exercisable, (ii) all service-based vesting restrictions applicable to his or
her outstanding Awards shall lapse, and (iii) the payout level under all of that
Participant’s Performance Awards that were outstanding immediately prior to
effective time of the Change in Control shall be determined and deemed to have
been earned as of the date of employment termination based upon an assumed
achievement of all relevant performance goals at the “target” level. To the
extent that this provision causes Incentive Stock Options to exceed the dollar
limitation set forth in Code Section 422(d), the excess Options shall be deemed
to be Nonqualified Stock Options.

 

12.2

Transfers Upon a Change in Control. In the sole and absolute discretion of the
Administrator, an Award Agreement may provide that in the event of certain
Change in Control events, which may include any or all of the Change in Control
events described in Section 2.9, Shares obtained pursuant to this Plan shall be
subject to certain rights and obligations, which include but are not limited to
the following: (i) the obligation to vote all such Shares in favor of such
Change in Control transaction, whether by vote at a meeting of the Company’s
shareholders or by written consent of such shareholders; (ii) the obligation to
sell or exchange all such Shares and all rights to acquire Shares, under this
Plan pursuant to the terms and conditions of such Change in Control transaction;
(iii) the right to transfer less than all but not all of such Shares pursuant to
the terms and conditions of such Change in Control transaction, and (iv) the
obligation to execute all documents and take any other action reasonably
requested by the Company to facilitate the consummation of such Change in
Control transaction.

 

12.3

Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Participant as
soon as practicable prior to the effective date of such proposed transaction.
Notwithstanding anything to the contrary contained in this Plan or in any Award
Agreement, the Participant shall have the right to exercise his or her Award for
a period not less than ten (10) days immediately prior to such dissolution or
liquidation as to all of the Shares covered thereby, including Shares as to
which the Award would not otherwise be exercisable.

 

12.4

No Effect on Employment or Service. Nothing in the Plan shall interfere with or
limit in any way the right of the Company or an Affiliate to terminate any
Participant’s employment or service at any time, with or without Cause. Unless
otherwise provided by written contract, employment or service with the Company
or any of its Affiliates is on an at-will basis only. Additionally, the Plan
shall not confer upon any Director any right with respect to continuation of
service as a Director or nomination to serve as a Director, nor shall it
interfere in any way with any rights which such Director or the Company may have
to terminate his or her directorship at any time.

 

12.5

Compensation Recoupment Policy. The Plan and all Awards issued hereunder shall
be subject to any compensation recovery and/or recoupment policy adopted by the
Company to comply with Applicable Law, including, without limitation, the
Dodd-Frank Wall Street Reform and Consumer Protection Act, or to comport with
good corporate governance practices, as such policies may be amended from time
to time.

 

12.6

Participation. No Employee, Consultant or Nonemployee Director shall have the
right to be selected to receive an Award under this Plan, or, having been so
selected, to be selected to receive a future Award.

 

13

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12.7

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

 

12.8

Beneficiary Designations. If permitted by the Administrator, a Participant under
the Plan may name a beneficiary or beneficiaries to whom any vested but unpaid
Award shall be paid in the event of the Participant’s death. Each such
designation shall revoke all prior designations by the Participant and shall be
effective only if given in a form and manner acceptable to the Administrator. In
the absence of any such designation, any vested benefits remaining unpaid at the
Participant’s death shall be paid to the Participant’s estate and, subject to
the terms of the Plan and of the applicable Award Agreement, any unexercised
vested Award may be exercised by the administrator or executor of the
Participant’s estate.

 

12.9

Limited Transferability of Awards. No Award granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. All rights with respect
to an Award granted to a Participant shall be available during his or her
lifetime only to the Participant. Notwithstanding the foregoing, the Participant
may, in a manner specified by the Administrator, (a) transfer a Nonqualified
Stock Option to a Participant’s spouse, former spouse or dependent pursuant to a
court-approved domestic relations order which relates to the provision of child
support, alimony payments or marital property rights and (b) transfer a
Nonqualified Stock Option by bona fide gift and not for any consideration to
(i) a member or members of the Participant’s immediate family, (ii) a trust
established for the exclusive benefit of the Participant and/or member(s) of the
Participant’s immediate family, (iii) a partnership, limited liability company
of other entity whose only partners or members are the Participant and/or
member(s) of the Participant’s immediate family or (iv) a foundation in which
the Participant and/or member(s) of the Participant’s immediate family control
the management of the foundation’s assets.

 

12.10

Restrictions on Share Transferability. The Administrator may impose such
restrictions on any Shares acquired pursuant to the exercise of an Award as it
may deem advisable, including, but not limited to, restrictions related to
applicable federal securities laws, the requirements of any national securities
exchange or system upon which Shares are then listed or traded or any blue sky
or state securities laws.

 

12.11

Legal Compliance. Shares shall not be issued pursuant to the making or exercise
of an Award unless the exercise of Options and rights and the issuance and
delivery of Shares shall comply with the Securities Act of 1933, as amended, the
1934 Act and other Applicable Law, and shall be further subject to the approval
of counsel for the Company with respect to such compliance. Any Award or
exercise made in violation hereof shall be null and void.

 

12.12

Investment Representations. As a condition to the exercise of an Option or other
right, the Company may require the person exercising such Option or right to
represent and warrant at the time of exercise that the Shares are being acquired
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.

SECTION 13

SPECIAL PROVISIONS RELATED TO SECTION 409A OF THE CODE

 

13.1

General. It is intended that the payments and benefits provided under the Plan
and any Award shall either be exempt from the application of, or comply with,
the requirements of Section 409A of the Code. The Plan and all Award Agreements
shall be construed in a manner that effects such intent. Nevertheless, the tax
treatment of the benefits provided under the Plan or any Award is not warranted
or guaranteed. Neither the Company, its Affiliates nor their respective
directors, officers, employees or advisers (other than in his or her capacity as
a Participant) shall be held liable for any taxes, interest, penalties or other
monetary amounts owed by any Participant or other taxpayer as a result of the
Plan or any Award.

 

14

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13.2

Definitional Restrictions. Notwithstanding anything in the Plan or in any Award
Agreement to the contrary, to the extent that any amount or benefit that would
constitute non-exempt “deferred compensation” for purposes of Section 409A of
the Code (“Non-Exempt Deferred Compensation”) would otherwise be payable or
distributable, or a different form of payment (e.g., lump sum or installment) of
such Non-Exempt Deferred Compensation would be effected, under the Plan or any
Award Agreement by reason of the occurrence of a Change in Control, or the
Participant’s Disability or separation from service, such Non-Exempt Deferred
Compensation will not be payable or distributable to the Participant, and/or
such different form of payment will not be effected, by reason of such
circumstance unless the circumstances giving rise to such Change in Control,
Disability or separation from service meet any description or definition of
“change in control event”, “disability” or “separation from service”, as the
case may be, in Section 409A of the Code and applicable regulations (without
giving effect to any elective provisions that may be available under such
definition). This provision does not affect the dollar amount or prohibit the
vesting of any Award upon a Change in Control, Disability or separation from
service, however defined. If this provision prevents the payment or distribution
of any amount or benefit, or the application of a different form of payment of
any amount or benefit, such payment or distribution shall be made at the time
and in the form that would have otherwise applied absent the non-409A-conforming
event.

 

13.3

Allocation among Possible Exemptions. If any one or more Awards granted under
the Plan to a Participant could qualify for any separation pay exemption
described in Treasury Regulations Section 1.409A-1(b)(9), but such Awards in the
aggregate exceed the dollar limit permitted for the separation pay exemptions,
the Company (acting through the Administrator or the General Counsel) shall
determine which Awards or portions thereof will be subject to such exemptions.

 

13.4

Six-Month Delay in Certain Circumstances. Notwithstanding anything in the Plan
or in any Award Agreement to the contrary, if any amount or benefit that would
constitute Non-Exempt Deferred Compensation would otherwise be payable or
distributable under this Plan or any Award Agreement by reason of a
Participant’s separation from service during a period in which the Participant
is a Specified Employee (as defined below), then, subject to any permissible
acceleration of payment by the Administrator under Treasury Regulations
Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of
interest), or (j)(4)(vi) (payment of employment taxes): (i) the amount of such
Non-Exempt Deferred Compensation that would otherwise be payable during the
six-month period immediately following the Participant’s separation from service
will be accumulated through and paid or provided on the first day of the seventh
month following the Participant’s separation from service (or, if the
Participant dies during such period, within 30 days after the Participant’s
death) (in either case, the “Required Delay Period”); and (ii) the normal
payment or distribution schedule for any remaining payments or distributions
will resume at the end of the Required Delay Period. For purposes of this Plan,
the term “Specified Employee” has the meaning given such term in Code
Section 409A and the final regulations thereunder; provided, however, that, as
permitted in such final regulations, the Company’s Specified Employees and its
application of the six-month delay rule of Code Section 409A(a)(2)(B)(i) shall
be determined in accordance with rules adopted by the Board or any committee of
the Board, which shall be applied consistently with respect to all nonqualified
deferred compensation arrangements of the Company, including this Plan.

 

13.5

Installment Payments. If, pursuant to an Award, a Participant is entitled to a
series of installment payments, such Participant’s right to the series of
installment payments shall be treated as a right to a series of separate
payments and not to a single payment. For purposes of the preceding sentence,
the term “series of installment payments” has the meaning provided in Treasury
Regulations Section 1.409A-2(b)(2)(iii) (or any successor thereto).

 

13.6

Timing of Release of Claims. Whenever an Award conditions a payment or benefit
on the Participant’s execution and non-revocation of a release of claims, such
release must be executed and all revocation periods shall have expired within 60
days after the date of termination of the Participant’s employment, failing
which such payment or benefit shall be forfeited. If such payment or benefit is
exempt from Section 409A of the Code, the Company may elect to make or commence
payment at any time during such 60-day period. If such payment or benefit
constitutes Non-Exempt Deferred Compensation, then, subject to Section 13.4, (i)
if such 60-day period begins and ends in a single calendar year, the Company may
make or commence payment at any time during such period at its discretion, and
(ii) if such 60-day period begins

 

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  in one calendar year and ends in the next calendar year, the payment shall be
made or commence during the second such calendar year (or any later date
specified for such payment under the applicable Award), even if such signing and
non-revocation of the release occur during the first such calendar year included
within such 60-day period. In other words, a Participant is not permitted to
influence the calendar year of payment based on the timing of signing the
release.

 

13.7

Permitted Acceleration. The Company shall have the sole authority to make any
accelerated distribution permissible under Treasury Regulations section
1.409A-3(j)(4) to Participants of deferred amounts, provided that such
distribution(s) meets the requirements of Treasury Regulations section
1.409A-3(j)(4).

 

13.8

Timing of Distribution of Dividend Equivalents. Unless otherwise provided in the
applicable Award Agreement, any dividend equivalents granted with respect to an
Award hereunder (other than Options or SARs, which shall have no dividend
equivalents) will be paid or distributed no later than the 15th day of the 3rd
month following the later of (i) the calendar year in which the corresponding
dividends were paid to shareholders, or (ii) the first calendar year in which
the Participant’s right to such dividends equivalents is no longer subject to a
substantial risk of forfeiture. In addition, notwithstanding anything to the
contrary in the Plan, in no event shall dividends or dividend equivalents
payable in connection with an Award granted under the Plan be paid earlier than
at the time that the Award or applicable portion thereof becomes vested in
accordance with the applicable Award Agreement.

SECTION 14

AMENDMENT, SUSPENSION, AND TERMINATION

 

14.1

Amendment, Suspension, or Termination. Except as provided in Section 14.2, the
Board, in its sole discretion, may amend, suspend or terminate the Plan, or any
part thereof, at any time and for any reason. The amendment, suspension or
termination of the Plan shall not, without the consent of the Participant,
materially adversely alter or impair any rights or obligations under any Award
theretofore granted to such Participant. No Award may be granted during any
period of suspension or after termination of the Plan.

 

14.2

No Amendment without Shareholder Approval. The Company shall obtain shareholder
approval of any material Plan amendment (including but not limited to any
provision to reduce the exercise or purchase price of any outstanding Options or
other Awards after the Grant Date (other than for adjustments made pursuant
Section 5.3), or to cancel and re-grant Options or other rights at a lower
exercise price), to the extent necessary or desirable to comply with Applicable
Law.

SECTION 15

TAX WITHHOLDING

 

15.1

Withholding Requirements. Prior to the delivery of any Shares or cash pursuant
to an Award (or exercise thereof), the Company shall have the power and the
right to deduct or withhold, or require a Participant to remit to the Company,
an amount sufficient to satisfy federal, state, and local taxes (including the
Participant’s FICA obligation) required to be withheld with respect to such
Award (or exercise thereof).

 

15.2

Withholding Arrangements. The Administrator, in its discretion and pursuant to
such procedures as it may specify from time to time, may permit a Participant to
satisfy such tax withholding obligation, in whole or in part by (a) electing to
have the Company withhold otherwise deliverable Shares or (b) delivering to the
Company already-owned Shares having a Fair Market Value equal to the applicable
withholding amount. The amount of the withholding requirement shall be deemed to
include any amount which the Administrator agrees may be withheld at the time
the election is made; provided, however, in the case Shares are withheld by the
Company to satisfy the tax withholding that would otherwise be issued to the
Participant, the amount of such tax withholding shall be determined by applying
the relevant federal, state or local withholding tax rates applicable to the
Participant with respect to the Award on the date that the amount of tax to be
withheld is to be determined. The Fair Market Value of the Shares to be withheld
or delivered shall be determined as of the date taxes are required to be
withheld.

 

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SECTION 16

LEGAL CONSTRUCTION

 

16.1

Liability of Company. The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company’s
counsel to be necessary to the lawful grant or any Award or the issuance and
sale of any Shares hereunder, shall relieve the Company, its officers, Directors
and Employees of any liability in respect of the failure to grant such Award or
to issue or sell such Shares as to which such requisite authority shall not have
been obtained.

 

16.2

Grants Exceeding Allotted Shares. If the Shares covered by an Award exceed, as
of the date of grant, the number of Shares, which may be issued under the Plan
without additional shareholder approval, such Award shall be void with respect
to such excess Shares, unless shareholder approval of an amendment sufficiently
increasing the number of Shares subject to the Plan is timely obtained.

 

16.3

Gender and Number. 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.

 

16.4

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.

 

16.5

Requirements of Law. The granting of Awards and the issuance of Shares under the
Plan shall be subject to all Applicable Law and to such approvals by any
governmental agencies or national securities exchanges as may be required.

 

16.6

Governing Law. The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of Michigan, without
giving effect to principles of conflicts of law of such state.

 

16.7

Captions. Captions are provided herein for convenience only, and shall not serve
as a basis for interpretation or construction of the Plan.

 

16.8

Plan Document Controls. All awards granted pursuant to the Plan, including the
Original Plan and the Amended and Restated Plan, shall be subject to the terms
and conditions of the Plan as amended and restated herein. The Plan and each
Award Agreement constitute the entire agreement with respect to the subject
matter hereof and thereof; provided that in the event of any inconsistency
between the Plan and such Award Agreement, the terms and conditions of the Plan
shall control.

 

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