Exhibit 10.1
NUPATHE INC.
2010 OMNIBUS INCENTIVE COMPENSATION PLAN

 

 

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NUPATHE INC.
2010 OMNIBUS INCENTIVE COMPENSATION PLAN
Effective as of the Effective Date (as defined below), the NuPathe 2010 Omnibus
Incentive Compensation Plan (the “Plan”) is hereby established as a successor to
the 2005 Equity Compensation Plan (the “2005 Plan”). The 2005 Plan is hereby
merged with and into this Plan effective as of the Effective Date, and no
additional grants shall be made thereafter under the 2005 Plan. Outstanding
grants under the 2005 Plan shall continue in effect according to their terms as
in effect before the Plan merger (subject to such amendments as the Committee
(as defined below) determines, consistent with the 2005 Plan, as applicable),
and the shares with respect to outstanding grants under the 2005 Plan shall be
issued or transferred under this Plan.
The purpose of the Plan is (i) to provide employees of NuPathe Inc. (the
“Company”) and its subsidiaries, certain consultants and advisors who perform
services for the Company or its subsidiaries and non-employee members of the
Board of Directors of the Company with the opportunity to receive grants of
incentive stock options, nonqualified stock options, stock appreciation rights,
stock awards, stock units, performance units and other stock-based awards, and
(ii) to provide selected executive employees with the opportunity to receive
bonus awards that are considered “qualified performance-based compensation”
under section 162(m) of the Code (as defined below).
The Company believes that the Plan will encourage the participants to contribute
materially to the growth of the Company, thereby benefitting the Company’s
stockholders, and will align the economic interests of the participants with
those of the stockholders. The Plan shall be effective as of Effective Date.
Section 1. Definitions
The following terms shall have the meanings set forth below for purposes of the
Plan:
(a) “Board” shall mean the Board of Directors of the Company.
(b) “Bonus Award” shall mean a bonus awarded under the Plan that is designated
as “qualified performance-based compensation” under section 162(m) of the Code,
as described in Section 15.
(c) “Cause” shall mean, except to the extent specified otherwise by the
Committee, a finding by the Committee that the Participant (i) has breached his
or her employment or service contract with the Employer, (ii) has engaged in
disloyalty to the Employer, including, without limitation, fraud, embezzlement,
theft, commission of a felony or proven dishonesty, (iii) has disclosed trade
secrets or confidential information of the Employer to persons not entitled to
receive such information, (iv) has breached any written non-competition,
non-solicitation, invention assignment or confidentiality agreement between the
Participant and the Employer or (v) has engaged in such other behavior
detrimental to the interests of the Employer as the Committee determines.

 

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(d) Unless otherwise set forth in a Grant Instrument, a “Change of Control”
shall be deemed to have occurred if:
(i) Any “person” (as such term is used in sections 13(d) and 14(d) of the
Exchange Act) becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
more than 50% of the voting power of the then outstanding securities of the
Company; provided that a Change of Control shall not be deemed to occur as a
result of a transaction in which the Company becomes a subsidiary of another
corporation and in which the stockholders of the Company, immediately prior to
the transaction, will beneficially own, immediately after the transaction,
shares entitling such stockholders to more than 50% of all votes to which all
stockholders of the parent corporation would be entitled in the election of
directors.
(ii) The consummation of (A) a merger or consolidation of the Company with
another corporation where the stockholders of the Company, immediately prior to
the merger or consolidation, will not beneficially own in substantially the same
proportion as ownership immediately prior to the merger or consolidation,
immediately after the merger or consolidation, shares entitling such
stockholders to more than 50% of all votes to which all stockholders of the
surviving corporation would be entitled in the election of directors, or where
the members of the Board, immediately prior to the merger or consolidation,
would not, immediately after the merger or consolidation, constitute a majority
of the board of directors of the surviving corporation, (B) a sale or other
disposition of all or substantially all of the assets of the Company, or (C) a
liquidation or dissolution of the Company.
(iii) A change in the composition of the Board over a period of twelve
(12) consecutive months or less such that a majority of the Board members
ceases, by reason of one or more contested elections for Board membership, to be
comprised of individuals who either (A) have been Board members continuously
since the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of the Board
members described in clause (A) who were still in office at the time the Board
approved such election or nomination.
The Committee may modify the definition of Change of Control for a particular
Grant as the Committee deems appropriate to comply with section 409A of the Code
or otherwise.
(e) “Code” shall mean the Internal Revenue Code of 1986, as amended and the
regulations promulgated thereunder.
(f) “Committee” shall mean the Compensation Committee of the Board or another
committee appointed by the Board to administer the Plan. With respect to Grants
and Bonus Awards that are intended to be “qualified performance-based
compensation” under section 162(m) of the Code, the Committee shall consist of
two or more persons appointed by the Board, all of whom shall be “outside
directors” as defined under section 162(m) of the Code. The Committee shall also
consist of directors who are “non-employee directors” as defined under
Rule 16b-3 promulgated under the Exchange Act.

 

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(g) “Company” shall mean NuPathe Inc. and shall include its successors.
(h) “Company Stock” shall mean common stock of the Company.
(i) “Disability” or “Disabled” shall mean a Participant’s becoming disabled
within the meaning of section 22(e)(3) of the Code, within the meaning of the
Employer’s long-term disability plan applicable to the Participant or as
otherwise determined by the Committee.
(j) “Dividend Equivalent” shall mean an amount determined by multiplying the
number of shares of Company Stock subject to a Grant by the per-share cash
dividend paid by the Company on its outstanding Company Stock, or the per-share
fair market value (as determined by the Committee) of any dividend paid on its
outstanding Company Stock in consideration other than cash.
(k) “Effective Date” shall mean the date at which the registration statement for
the initial public offering of the Company Stock is declared effective by the
Securities and Exchange Commission and the Company Stock is priced for the
initial public offering of such Company Stock, subject to approval of the Plan
by the stockholders of the Company.
(l) “Employee” shall mean an employee of the Employer (including an officer or
director who is also an employee), but excluding any person who is classified by
the Employer as a “contractor” or “consultant,” no matter how characterized by
the Internal Revenue Service, other governmental agency or a court. Any change
of characterization of an individual by the Internal Revenue Service or any
court or government agency shall have no effect upon the classification of an
individual as an Employee for purposes of this Plan, unless the Committee
determines otherwise.
(m) “Employed by, or providing service to, the Employer” shall mean employment
or service as an Employee, Key Advisor or member of the Board (so that, for
purposes of exercising Options and SARs and satisfying conditions with respect
to Stock Awards, Stock Units, Performance Units and Other Stock-Based Awards, a
Participant shall not be considered to have terminated employment or service
until the Participant ceases to be both an Employee, Key Advisor and member of
the Board).
(n) “Employer” shall mean the Company and each of its subsidiaries.
(o) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
(p) “Exercise Price” shall mean the per share price at which shares of Company
Stock may be purchased under an Option, as designated by the Committee.
(q) “Fair Market Value” shall mean:

 

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(i) If the Company Stock is publicly traded, then the Fair Market Value per
share shall be determined as follows: (A) if the principal trading market for
the Company Stock is a national securities exchange, the closing price during
regular trading hours on the relevant date or (if there were no trades on that
date) the latest preceding date upon which a sale was reported, or (B) if the
Company Stock is not principally traded on any such exchange, the last reported
sale price of a share of Company Stock during regular trading hours on the
relevant date, as reported by the OTC Bulletin Board or, if shares are not
reported on the OTC Bulletin Board, as determined by the Committee through any
reasonable valuation method authorized under the Code.
(ii) If the Company Stock is not publicly traded or, if publicly traded, is not
subject to reported transactions as set forth above, the Fair Market Value per
share shall be as determined by the Committee through any reasonable valuation
method authorized under the Code.
(r) “Grant” shall mean an Option, SAR, Stock Award, Stock Unit, Performance
Unit, Other Stock-Based Award or Bonus Award granted under the Plan.
(s) “Grant Instrument” shall mean the written agreement that sets forth the
terms and conditions of a Grant, including all amendments thereto.
(t) “Incentive Stock Option” shall mean an Option that is intended to meet the
requirements of an incentive stock option under section 422 of the Code.
(u) “Key Advisor” shall mean a consultant or advisor of the Employer
(v) “Non-Employee Director” shall mean a member of the Board who is not an
Employee.
(w) “Nonqualified Stock Option” shall mean an Option that is not intended to be
taxed as an incentive stock option under section 422 of the Code.
(x) “Option” shall mean an option to purchase shares of Company Stock, as
described in Section 6.
(y) “Other Stock-Based Award” shall mean any Grant based on, measured by or
payable in Company Stock, as described in Section 11.
(z) “Plan” shall mean this NuPathe Inc. 2010 Omnibus Incentive Compensation
Plan, as in effect from time to time.
(aa) “Participant” shall mean an Employee, Key Advisor or Non-Employee Director
designated by the Committee to participate in the Plan.
(bb) “Performance Unit” shall mean a performance unit award, as described in
Section 10.

 

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(cc) “SAR” shall mean a stock appreciation right, as described in Section 9.
(dd) “Stock Award” shall mean an award of Company Stock, as described in
Section 7.
(ee) “Stock Unit” shall mean an award of a phantom unit representing a share of
Company Stock, as described in Section 8.
Section 2. Administration
(a) Committee. The Plan shall be administered and interpreted by the Committee;
provided, however, that any Grants to members of the Compensation Committee must
be authorized by a disinterested majority of the Board. The Committee may
delegate authority to one or more subcommittees, as it deems appropriate. To the
extent that the Board or a subcommittee administers the Plan, references in the
Plan to the “Committee” shall be deemed to refer to the Board or such
subcommittee. In the absence of a specific designation by the Board to the
contrary, the Plan shall be administered by the Committee of the Board or any
successor Board committee performing substantially the same functions.
(b) Committee Authority. The Committee shall have the sole authority to
(i) determine the individuals to whom Grants or Bonus Awards shall be made under
the Plan, (ii) determine the type, size and terms of the Grants or Bonus Awards
to be made to each such individual, (iii) determine the time when the Grants or
Bonus Awards will be made, (iv) determine the duration of any applicable
exercise or restriction period, including the criteria for exercisability and
the acceleration of exercisability, (v) amend the terms of any previously issued
Grant or Bonus Award, subject to the provisions of Section 20 below, and
(vi) deal with any other matters arising under the Plan.
(c) Committee Determinations. The Committee shall have full power and express
discretionary authority to administer and interpret the Plan, to make factual
determinations and to adopt or amend such rules, regulations, agreements and
instruments for implementing the Plan and for the conduct of its business as it
deems necessary or advisable, in its sole discretion. The Committee’s
interpretations of the Plan and all determinations made by the Committee
pursuant to the powers vested in it hereunder shall be conclusive and binding on
all persons having any interest in the Plan or in any awards granted hereunder.
All powers of the Committee shall be executed in its sole discretion, in the
best interest of the Company, not as a fiduciary, and in keeping with the
objectives of the Plan and need not be uniform as to similarly situated
individuals.
Section 3. Grants
Grants under the Plan may consist of Options as described in Section 6, Stock
Awards as described in Section 7, Stock Units as described in Section 8, SARs as
described in Section 9, Performance Units as described in Section 10 and Other
Stock-Based Awards as described in Section 11. Bonus Awards may be granted as
described in Section 15. All Grants and Bonus Awards shall be subject to the
terms and conditions set forth herein and to such other terms and

 

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conditions consistent with this Plan as the Committee deems appropriate and as
are specified in writing by the Committee to the individual in the Grant
Instrument. All Grants and Bonus Awards shall be made conditional upon the
Participant’s acknowledgement, in writing or by acceptance of the Grant or Bonus
Award, that all decisions and determinations of the Committee shall be final and
binding on the Participant, his or her beneficiaries and any other person having
or claiming an interest under such Grant or Bonus Award. Grants and Bonus Awards
under a particular Section of the Plan need not be uniform as among the
Participants.
Section 4. Shares Subject to the Plan
(a) Shares Authorized. Subject to adjustment as described below, the aggregate
number of shares of Company Stock that may be issued or transferred under the
Plan shall be equal to the sum of the following: (i) 686,221 shares, plus
(ii) the number of shares of Company Stock subject to outstanding grants under
the 2005 Plan as of the Effective Date, and (iii) the number of shares of
Company Stock remaining available for issuance under the 2005 Plan but not
subject to previously exercised, vested or paid Grants as of the Effective Date;
provided, however, that the aggregate number of shares of Company Stock that may
be issued or transferred under the Plan pursuant to Incentive Stock Options
shall not exceed 124,767 shares of Company Stock. In addition, as of the first
trading day of January during the term of the Plan (excluding any extensions),
beginning with calendar year 2011, an additional positive number of shares of
Company Stock shall be added to the number of shares of Company Stock authorized
to be issued or transferred under the Plan and the number of shares authorized
to be issued or transferred pursuant to Incentive Stock Options, equal to five
percent (5%) of the total number of shares of Company Stock outstanding on the
last trading day in December of the immediately preceding calendar year, or
499,070 shares, whichever is less.
(b) Source of Shares; Share Counting. Shares issued or transferred under the
Plan may be authorized but unissued shares of Company Stock or reacquired shares
of Company Stock, including shares purchased by the Company on the open market
for purposes of the Plan. If and to the extent Options or SARs granted under the
Plan (including options granted under the 2005 Plan) terminate, expire or are
canceled, forfeited, exchanged or surrendered without having been exercised, or
if any Stock Awards, Stock Units or Other Stock-Based Awards (including Stock
Awards granted under the 2005 Plan) are forfeited, terminated or otherwise not
paid in full, the shares subject to such Grants shall again be available for
purposes of the Plan. If shares of Company Stock otherwise issuable under the
Plan are surrendered in payment of the Exercise Price of an Option, then the
number of shares of Company Stock available for issuance under the Plan shall be
reduced only by the net number of shares actually issued by the Company upon
such exercise and not by the gross number of shares as to which such Option is
exercised. Upon the exercise of any SAR under the Plan, the number of shares of
Company Stock available for issuance under the Plan shall be reduced by the
gross number of shares as to which such right is exercised, and not by the net
number of shares actually issued by the Company upon such exercise. If shares of
Company Stock otherwise issuable under the Plan are withheld by the Company in
satisfaction of the withholding taxes incurred in connection with the issuance,
vesting or exercise of any Grant or the issuance of Company Stock thereunder,
then the number of shares of Company Stock available for issuance under the Plan
shall be reduced by the net number of shares issued, vested or exercised under
such Grant, calculated in each instance after payment of such share withholding.
To the extent any Grants are paid in cash, and not in shares of Company Stock,
any shares previously subject to such Grants shall again be available for
issuance or transfer under the Plan.

 

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(c) Individual Limits. Each person participating in the Plan shall be subject
the following limitations:
(i) for Grants measured in shares of Company Stock (whether payable in Company
Stock, cash or a combination of both), the maximum number of shares of Company
Stock for which such Grants may be made to such person in any calendar year
shall not exceed 124,767 shares of Company Stock in the aggregate, and
(ii) for Grants measured in cash dollars (whether payable in cash, Company Stock
or a combination of both), the maximum dollar amount for which such Grants may
be made to such person in any calendar year shall not exceed $3,000,000 in the
aggregate, with such limitation to be measured at the time the Grant is made.
(d) Adjustments. If there is any change in the number or kind of shares of
Company Stock outstanding by reason of (i) a stock dividend, spinoff,
recapitalization, stock split, or combination or exchange of shares, (ii) a
merger, reorganization or consolidation, (iii) a reclassification or change in
par value, or (iv) any other extraordinary or unusual event affecting the
outstanding Company Stock as a class without the Company’s receipt of
consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company’s payment of an
extraordinary dividend or distribution, the maximum number of shares of Company
Stock available for issuance under the Plan, the maximum number of shares of
Company Stock for which any individual may receive Grants in any year, the kind
and number of shares covered by outstanding Grants, the kind and number of
shares issued and to be issued under the Plan, and the price per share or the
applicable market value of such Grants shall be equitably adjusted by the
Committee to reflect any increase or decrease in the number of, or change in the
kind or value of, the issued shares of Company Stock to preclude, to the extent
practicable, the enlargement or dilution of rights and benefits under the Plan
and such outstanding Grants; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated. In addition, in the event of
a Change of Control, the provisions of Section 14 of the Plan shall apply. Any
adjustments to outstanding Grants shall be consistent with section 409A or 424
of the Code, to the extent applicable. The Committee shall have the sole
discretion and authority to determine what appropriate adjustments shall be made
and any adjustments determined by the Committee shall be final, binding and
conclusive.
Section 5. Eligibility for Participation
(a) Eligible Persons. All Employees (including, for all purposes of the Plan, an
Employee who is a member of the Board) and Non-Employee Directors shall be
eligible to participate in the Plan. Key Advisors shall be eligible to
participate in the Plan if the Key Advisors render bona fide services to the
Employer, the services are not in connection with the offer and sale of
securities in a capital-raising transaction and the Key Advisors do not directly
or indirectly promote or maintain a market for the Company’s securities.

 

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(b) Selection of Participants. The Committee shall select the Employees,
Non-Employee Directors and Key Advisors to receive Grants and shall determine
the number of shares of Company Stock subject to a particular Grant in such
manner as the Committee determines.
Section 6. Options
The Committee may grant Options to an Employee, Non-Employee Director or Key
Advisor upon such terms as the Committee deems appropriate. The following
provisions are applicable to Options:
(a) Number of Shares. The Committee shall determine the number of shares of
Company Stock that will be subject to each Grant of Options to Employees,
Non-Employee Directors and Key Advisors.
(b) Type of Option and Exercise Price.
(i) The Committee may grant Incentive Stock Options or Nonqualified Stock
Options or any combination of the two, all in accordance with the terms and
conditions set forth herein. Incentive Stock Options may be granted only to
employees of the Company or its parent or subsidiary corporations, as defined in
section 424 of the Code. Nonqualified Stock Options may be granted to Employees,
Non-Employee Directors and Key Advisors.
(ii) The Exercise Price of Company Stock subject to an Option shall be
determined by the Committee and shall be equal to or greater than the Fair
Market Value of a share of Company Stock on the date the Option is granted.
However, an Incentive Stock Option may not be granted to an Employee who, at the
time of grant, owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company, or any parent or subsidiary
corporation of the Company, as defined in section 424 of the Code, unless the
Exercise Price per share is not less than 110% of the Fair Market Value of a
share of Company Stock on the date of grant.
(c) Option Term. The Committee shall determine the term of each Option. The term
of any Option shall not exceed ten years from the date of grant. However, an
Incentive Stock Option that is granted to an Employee who, at the time of grant,
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company, or any parent or subsidiary corporation of the
Company, as defined in section 424 of the Code, may not have a term that exceeds
five years from the date of grant.
(d) Exercisability of Options. Options shall become exercisable in accordance
with such terms and conditions, consistent with the Plan, as may be determined
by the Committee and specified in the Grant Instrument. The Committee may
accelerate the exercisability of any or all outstanding Options at any time for
any reason.

 

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(e) Grants to Non-Exempt Employees. Notwithstanding the foregoing, Options
granted to persons who are non-exempt employees under the Fair Labor Standards
Act of 1938, as amended, may not be exercisable for at least six months after
the date of grant (except that such Options may become exercisable, as
determined by the Committee, upon the Participant’s death, Disability or
retirement, or upon a Change of Control or other circumstances permitted by
applicable regulations).
(f) Termination of Employment, Disability or Death.
(i) Except as provided below, an Option may only be exercised while the
Participant is employed by, or providing service to, the Employer as an
Employee, member of the Board or Key Advisor.
(ii) In the event that a Participant ceases to be employed by, or provide
service to, the Employer for any reason other than Disability, death or
termination for Cause, any Option which is otherwise exercisable by the
Participant shall terminate unless exercised within 90 days after the date on
which the Participant ceases to be employed by, or provide service to, the
Employer (or within such other period of time as may be specified by the
Committee), but in any event no later than the date of expiration of the Option
term. Except as otherwise provided by the Committee, any of the Participant’s
Options that are not otherwise exercisable as of the date on which the
Participant ceases to be employed by, or provide service to, the Employer shall
terminate as of such date.
(iii) In the event the Participant ceases to be employed by, or provide service
to, the Company on account of a termination for Cause by the Employer, any
Option held by the Participant shall terminate as of the date the Participant
ceases to be employed by, or provide service to, the Employer. In addition,
notwithstanding any other provisions of this Section 6, if the Committee
determines that the Participant has engaged in conduct that constitutes Cause at
any time while the Participant is employed by, or providing service to, the
Employer or after the Participant’s termination of employment or service, any
Option held by the Participant shall immediately terminate and the Participant
shall automatically forfeit all shares underlying any exercised portion of an
Option for which the Company has not yet delivered the share certificates, upon
refund by the Company of the Exercise Price paid by the Participant for such
shares. Upon any exercise of an Option, the Company may withhold delivery of
share certificates pending resolution of an inquiry that could lead to a finding
resulting in a forfeiture.
(iv) In the event the Participant ceases to be employed by, or provide service
to, the Employer because the Participant is Disabled, any Option which is
otherwise exercisable by the Participant shall terminate unless exercised within
one year after the date on which the Participant ceases to be employed by, or
provide service to, the Employer (or within such other period of time as may be
specified by the Committee), but in any event no later than the date of
expiration of the Option term. Except as otherwise provided by the Committee,
any of the Participant’s Options which are not otherwise exercisable as of the
date on which the Participant ceases to be employed by, or provide service to,
the Employer shall terminate as of such date.

 

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(v) If the Participant dies while employed by, or providing service to, the
Employer or within 90 days after the date on which the Participant ceases to be
employed or provide service on account of a termination specified in
Section 6(f)(ii) above (or within such other period of time as may be specified
by the Committee), any Option that is otherwise exercisable by the Participant
shall terminate unless exercised within one year after the date on which the
Participant ceases to be employed by, or provide service to, the Employer (or
within such other period of time as may be specified by the Committee), but in
any event no later than the date of expiration of the Option term. Except as
otherwise provided by the Committee, any of the Participant’s Options that are
not otherwise exercisable as of the date on which the Participant ceases to be
employed by, or provide service to, the Employer shall terminate as of such
date.
(g) Exercise of Options. A Participant may exercise an Option that has become
exercisable, in whole or in part, by delivering a notice of exercise to the
Company. The Participant shall pay the Exercise Price for an Option as specified
by the Committee (i) in cash, (ii) unless the Committee determines otherwise, by
delivering shares of Company Stock owned by the Participant and having a Fair
Market Value on the date of exercise at least equal to the Exercise Price or by
attestation (on a form prescribed by the Committee) to ownership of shares of
Company Stock having a Fair Market Value on the date of exercise at least equal
to the Exercise Price, (iii) by payment through a broker in accordance with
procedures permitted by Regulation T of the Federal Reserve Board, or (iv) by
such other method as the Committee may approve. In addition, to the extent an
Option is at the time exercisable for vested shares of Company Stock, all or any
part of that vested portion may be surrendered to the Company for an
appreciation distribution payable in shares of Company Stock with a Fair Market
Value at the time of the Option surrender equal to the dollar amount by which
the then Fair Market Value of the shares of Company Stock subject to the
surrendered portion exceeds the aggregate Exercise Price payable for those
shares. Shares of Company Stock used to exercise an Option shall have been held
by the Participant for the requisite period of time necessary to avoid adverse
accounting consequences to the Company with respect to the Option. Payment for
the shares to be issued or transferred pursuant to the Option, and any required
withholding taxes, must be received by the Company by the time specified by the
Committee depending on the type of payment being made, but in all cases prior to
the issuance or transfer of such shares.
(h) Limits on Incentive Stock Options. Each Incentive Stock Option shall provide
that, if the aggregate Fair Market Value of the Company Stock on the date of the
grant with respect to which Incentive Stock Options are exercisable for the
first time by a Participant during any calendar year, under the Plan or any
other stock option plan of the Company or a parent or subsidiary, exceeds
$100,000, then the Option, as to the excess, shall be treated as a Nonqualified
Stock Option.

 

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Section 7. Stock Awards
The Committee may issue or transfer shares of Company Stock to an Employee,
Non-Employee Director or Key Advisor under a Stock Award, upon such terms as the
Committee deems appropriate. The following provisions are applicable to Stock
Awards:
(a) General Requirements. Shares of Company Stock issued or transferred pursuant
to Stock Awards may be issued or transferred for consideration or for no
consideration, and subject to restrictions or no restrictions, as determined by
the Committee. The Committee may, but shall not be required to, establish
conditions under which restrictions on Stock Awards shall lapse over a period of
time or according to such other criteria as the Committee deems appropriate,
including, without limitation, restrictions based upon the achievement of
specific performance goals. The period of time during which the Stock Awards
will remain subject to restrictions will be designated in the Grant Instrument
as the “Restriction Period.”
(b) Number of Shares. The Committee shall determine the number of shares of
Company Stock to be issued or transferred pursuant to a Stock Award and the
restrictions applicable to such shares.
(c) Requirement of Employment or Service. If the Participant ceases to be
employed by, or provide service to, the Employer during a period designated in
the Grant Instrument as the Restriction Period, or if other specified conditions
are not met, the Stock Award shall terminate as to all shares covered by the
Grant as to which the restrictions have not lapsed, and those shares of Company
Stock must be immediately returned to the Company. The Committee may, however,
provide for complete or partial exceptions to this requirement as it deems
appropriate.
(d) Restrictions on Transfer and Legend on Stock Certificate. During the
Restriction Period, a Participant may not sell, assign, transfer, pledge or
otherwise dispose of the shares of a Stock Award except under Section 18(a)
below. Unless otherwise determined by the Committee, the Company will retain
possession of certificates for shares of Stock Awards until all restrictions on
such shares have lapsed. Each certificate for a Stock Award, unless held by the
Company, shall contain a legend giving appropriate notice of the restrictions in
the Grant. The Participant shall be entitled to have the legend removed from the
stock certificate covering the shares subject to restrictions when all
restrictions on such shares have lapsed. The Committee may determine that the
Company will not issue certificates for Stock Awards until all restrictions on
such shares have lapsed.
(e) Right to Vote and to Receive Dividends. Unless the Committee determines
otherwise, during the Restriction Period, the Participant shall have the right
to vote shares of Stock Awards and to receive any dividends or other
distributions paid on such shares, subject to any restrictions deemed
appropriate by the Committee, including, without limitation, the achievement of
specific performance goals.
(f) Lapse of Restrictions. All restrictions imposed on Stock Awards shall lapse
upon the expiration of the applicable Restriction Period and the satisfaction of
all conditions, if any, imposed by the Committee. The Committee may determine,
as to any or all Stock Awards, that the restrictions shall lapse without regard
to any Restriction Period.

 

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Section 8. Stock Units
The Committee may grant Stock Units, each of which shall represent one
hypothetical share of Company Stock, to an Employee, Non-Employee Director or
Key Advisor upon such terms and conditions as the Committee deems appropriate.
The following provisions are applicable to Stock Units:
(a) Crediting of Units. Each Stock Unit shall represent the right of the
Participant to receive a share of Company Stock or an amount of cash based on
the value of a share of Company Stock, if and when specified conditions are met.
All Stock Units shall be credited to bookkeeping accounts established on the
Company’s records for purposes of the Plan.
(b) Terms of Stock Units. The Committee may grant Stock Units that are payable
if specified performance goals or other conditions are met, or under other
circumstances. Stock Units may be paid at the end of a specified performance
period or other period, or payment may be deferred to a date authorized by the
Committee. The Committee shall determine the number of Stock Units to be granted
and the requirements applicable to such Stock Units.
(c) Requirement of Employment or Service. If the Participant ceases to be
employed by, or provide service to, the Employer prior to the vesting of Stock
Units, or if other conditions established by the Committee are not met, the
Participant’s Stock Units shall be forfeited. The Committee may, however,
provide for complete or partial exceptions to this requirement as it deems
appropriate.
(d) Payment With Respect to Stock Units. Payments with respect to Stock Units
shall be made in cash, Company Stock or any combination of the foregoing, as the
Committee shall determine.
Section 9. Stock Appreciation Rights
The Committee may grant SARs to an Employee, Non-Employee Director or Key
Advisor separately or in tandem with any Option. The following provisions are
applicable to SARs:
(a) General Requirements. The Committee may grant SARs to an Employee or
Non-Employee Director separately or in tandem with any Option (for all or a
portion of the applicable Option). Tandem SARs may be granted either at the time
the Option is granted or at any time thereafter while the Option remains
outstanding; provided, however, that, in the case of an Incentive Stock Option,
SARs may be granted only at the time of the Grant of the Incentive Stock Option.
The Committee shall establish the base amount of the SAR at the time the SAR is
granted. The base amount of each SAR shall be equal to the per share Exercise
Price of the related Option or, if there is no related Option, an amount equal
to or greater than the Fair Market Value of a share of Company Stock as of the
date of Grant of the SAR.

 

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(b) Tandem SARs. In the case of tandem SARs, the number of SARs granted to a
Participant that shall be exercisable during a specified period shall not exceed
the number of shares of Company Stock that the Participant may purchase upon the
exercise of the related Option during such period. Upon the exercise of an
Option, the SARs relating to the Company Stock covered by such Option shall
terminate. Upon the exercise of SARs, the related Option shall terminate to the
extent of an equal number of shares of Company Stock.
(c) Exercisability. An SAR shall be exercisable during the period specified by
the Committee in the Grant Instrument and shall be subject to such vesting and
other restrictions as may be specified in the Grant Instrument. The Committee
may accelerate the exercisability of any or all outstanding SARs at any time for
any reason. SARs may only be exercised while the Participant is employed by, or
providing service to, the Employer or during the applicable period after
termination of employment or service as described in Section 6(f) above. A
tandem SAR shall be exercisable only during the period when the Option to which
it is related is also exercisable.
(d) Grants to Non-Exempt Employees. Notwithstanding the foregoing, SARs granted
to persons who are non-exempt employees under the Fair Labor Standards Act of
1938, as amended, may not be exercisable for at least six months after the date
of grant (except that such SARs may become exercisable, as determined by the
Committee, upon the Participant’s death, Disability or retirement, or upon a
Change of Control or other circumstances permitted by applicable regulations).
(e) Value of SARs. When a Participant exercises SARs, the Participant shall
receive in settlement of such SARs an amount equal to the value of the stock
appreciation for the number of SARs exercised. The stock appreciation for an SAR
is the amount by which the Fair Market Value of the underlying Company Stock on
the date of exercise of the SAR exceeds the base amount of the SAR as described
in subsection (a).
(f) Form of Payment. The appreciation in an SAR shall be paid in shares of
Company Stock, cash or any combination of the foregoing, as the Committee shall
determine. For purposes of calculating the number of shares of Company Stock to
be received, shares of Company Stock shall be valued at their Fair Market Value
on the date of exercise of the SAR.
Section 10. Performance Units
The Committee shall have the discretionary authority to make Performance Unit
awards in accordance with the terms of this Section 10. The following provisions
are applicable to Performance Unit awards:
(a) General Requirements. A Performance Unit award shall represent a
participating interest in a special bonus pool tied to the attainment of
pre-established corporate performance objectives based on one or more
performance goals or the right to receive a targeted dollar amount tied to the
attainment of pre-established corporate performance objectives based on one or
more performance goals. The amount of the bonus pool may vary with the level at
which the applicable performance objectives are attained, and the value of each
Performance Unit which becomes due and payable upon the attained level of
performance shall be determined by dividing the amount of the resulting bonus
pool, if any, by the total number of Performance

 

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Units issued and outstanding at the completion of the applicable performance
period. Similarly, the targeted dollar amount may vary with the level at which
the applicable performance objectives are attained and the value of the
Performance Units which becomes due and payable upon the attained level of
performance shall be determined based on the threshold, target and maximum
amounts that may be paid if the performance goals are met.
(b) Continued Employment or Service Requirement. Performance Units may also be
structured to include a requirement that the Participant continue to be employed
by, or providing service to, the Employer following the completion of the
performance period in order to vest in the Performance Units awarded with
respect to that performance period.
(c) Payment with Respect to Performance Units. Payments with respect to
Performance Units shall be made in cash, Company Stock or any combination of the
foregoing, as the Committee shall determine.
(d) Requirement of Employment or Service. If a Participant ceases to be employed
by, or providing service to the Company prior to the vesting of Performance
Units, or if other conditions established by the Committee are not met, the
Participant’s Performance Units shall be forfeited. The Committee may provide
for complete or partial exceptions to this requirement as it deems appropriate.
Section 11. Other Stock-Based Awards
The Committee may grant Other Stock-Based Awards, which are awards (other than
those described in Sections 6, 7, 8, 9 and 10 of the Plan) that are based on or
measured by Company Stock, to any Employee, Non-Employee Director or Key
Advisor, on such terms and conditions as the Committee shall determine. Other
Stock-Based Awards may be awarded subject to the achievement of performance
goals or other conditions and may be payable in cash, Company Stock or any
combination of the foregoing, as the Committee shall determine.
Section 12. Dividend Equivalents
The Committee may grant Dividend Equivalents in connection Stock Units or Other
Stock-Based Awards. Dividend Equivalents may be paid currently or accrued as
contingent cash obligations and may be payable in cash or shares of Company
Stock, and upon such terms as the Committee may establish, including, without
limitation, the achievement of specific performance goals.
Section 13. Qualified Performance-Based Compensation
The Committee may determine that Stock Awards, Stock Units, Performance Units
Other Stock-Based Awards and Dividend Equivalents granted to an Employee shall
be considered “qualified performance-based compensation” under section 162(m) of
the Code. The following provisions shall apply to Grants of Stock Awards, Stock
Units, Performance Units Other Stock-Based Awards and Dividend Equivalents that
are to be considered “qualified performance-based compensation” under section
162(m) of the Code:

 

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(a) Performance Goals.
(i) When Stock Awards, Stock Units, Performance Units, Other Stock-Based Awards
or Dividend Equivalents that are to be considered “qualified performance-based
compensation” are granted, the Committee shall establish in writing (A) the
objective performance goals that must be met, (B) the performance period during
which the performance will be measured, (C) the threshold, target and maximum
amounts that may be paid if the performance goals are met, and (D) any other
conditions that the Committee deems appropriate and consistent with the Plan and
section 162(m) of the Code.
(ii) The performance goal criteria may relate to the Participant’s business unit
or the performance of the Company and its parents and subsidiaries as a whole,
or any combination of the foregoing. The Committee shall use objectively
determinable performance goals based on one or more of the following criteria:
cash flow; earnings (including gross margin, earnings before interest and taxes,
earnings before taxes, earnings before interest, taxes, depreciation,
amortization and charges for stock-based compensation, earnings before interest,
taxes, depreciation and amortization, and net earnings); earnings per share;
growth in earnings or earnings per share; stock price; return on equity or
average stockholder equity; total stockholder return or growth in total
stockholder return either directly or in relation to a comparative group; return
on capital; return on assets or net assets; revenue, growth in revenue or return
on sales; income or net income; operating income, net operating income or net
operating income after tax; operating profit or net operating profit; operating
margin; return on operating revenue or return on operating profit; regulatory
filings; regulatory approvals, litigation and regulatory resolution goals; other
operational, regulatory or departmental objectives; budget comparisons; growth
in stockholder value relative to established indexes, or another peer group or
peer group index; development and implementation of strategic plans and/or
organizational restructuring goals; development and implementation of risk and
crisis management programs; improvement in workforce diversity; compliance
requirements and compliance relief; safety goals; productivity goals; workforce
management and succession planning goals; economic value added (including
typical adjustments consistently applied from generally accepted accounting
principles required to determine economic value added performance measures);
measures of customer satisfaction, employee satisfaction or staff development;
development or marketing collaborations, formations of joint ventures or
partnerships or the completion of other similar transactions intended to enhance
the Corporation’s revenue or profitability or enhance its customer base; merger
and acquisitions; and other similar criteria consistent with the foregoing.
(b) Establishment of Goals. The Committee shall establish the performance goals
in writing either before the beginning of the performance period or during a
period ending no later than the earlier of (i) 90 days after the beginning of
the performance period or (ii) the date on which 25% of the performance period
has been completed, or such other date as may be required or permitted under
applicable regulations under section 162(m) of the Code. The performance goals
shall satisfy the requirements for “qualified performance-based compensation,”
including the requirement that the achievement of the goals be substantially
uncertain at the time they are established and that the goals be established in
such a way that a third party with knowledge of the relevant facts could
determine whether and to what extent the performance goals have been met. The
Committee shall not have discretion to increase the amount of compensation that
is payable upon achievement of the designated performance goals.

 

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(c) Certification of Results. The Committee shall certify and announce the
results for each performance period to all Participants after the announcement
of the Company’s financial results for the performance period. If and to the
extent that the Committee does not certify that the performance goals have been
met, the grants of Stock Awards, Stock Units, Performance Units, Other
Stock-Based Awards and Dividend Equivalents for the performance period shall be
forfeited or shall not be made, as applicable. If Dividend Equivalents are
granted as “qualified performance-based compensation” under section 162(m) of
the Code, a Participant may not accrue more than $1,000,000 of such Dividend
Equivalents during any calendar year.
(d) Death, Disability or Other Circumstances. The Committee may provide that
Stock Awards, Stock Units, Performance Units, Other Stock-Based Awards and
Dividend Equivalents shall be payable or restrictions on such Grants shall
lapse, in whole or in part, in the event of the Participant’s death or
Disability during the performance period, or under other circumstances
consistent with the Treasury regulations and rulings under section 162(m) of the
Code.
Section 14. Consequences of a Change of Control
(a) Notice and Acceleration. Unless the Committee determines otherwise,
effective upon the date of the Change of Control, (i) all outstanding Options
and SARs shall automatically accelerate and become fully exercisable, (ii) the
restrictions and conditions on all outstanding Stock Awards shall immediately
lapse, and (iii) all Stock Units, Performance Units, Other Stock-Based Awards
and Dividend Equivalents shall become fully vested and shall be paid at their
target values, or in such greater amounts as the Committee may determine.
(b) Other Alternatives. Notwithstanding the foregoing, in the event of a Change
of Control, the Committee may take one or more of the following actions with
respect to any or all outstanding Grants: the Committee may (i) require that
Participants surrender their outstanding Options and SARs in exchange for one or
more payments by the Company, in cash or Company Stock as determined by the
Committee, in an amount equal to the amount by which the then Fair Market Value
of the shares of Company Stock subject to the Participant’s unexercised Options
and SARs exceeds the Exercise Price of the Options or the base amount of the
SARs, as applicable, (ii) after giving Participants an opportunity to exercise
their outstanding Options and SARs, terminate any or all unexercised Options and
SARs at such time as the Committee deems appropriate, or (iii) determine that
outstanding Options and SARs that are not exercised shall be assumed by, or
replaced with comparable options or rights by, the surviving corporation, (or a
parent or subsidiary of the surviving corporation), and other outstanding Grants
that remain in effect after the Change of Control shall be converted to similar
grants of the surviving corporation (or a parent or subsidiary of the surviving
corporation). Such surrender or termination shall take place as of the date of
the Change of Control or such other date as the Committee may specify.

 

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Section 15. Bonus Awards
(a) General Requirements. The Committee may grant Bonus Awards that shall be
considered “qualified performance-based compensation” under section 162(m) of
the Code to Employees who are executive Employees, upon such terms and
conditions as the Committee deems appropriate under this Section 15.
(b) Target Bonus Awards and Performance Goals. When the Committee decides to
make Bonus Awards under this Section 15, the Committee shall select the
executive Employees who will be eligible for Bonus Awards, specify the
performance period and establish target Bonus Awards and performance goals for
the performance period. The performance period shall be the Company’s fiscal
year or such other period (of not more than 12 months) as the Committee
determines. The Committee shall determine each Participant’s target Bonus Award
based on the Participant’s responsibility level, position or such other criteria
as the Committee shall determine. A Participant’s target Bonus Award may provide
for differing amounts to be paid based on differing thresholds of performance.
The Committee shall establish in writing (i) the objective performance goals
that must be met in order for the Bonus Awards to be paid for the performance
period, (ii) the maximum amounts that may be paid if the performance goals are
met, (iii) any threshold levels of performance that must be met in order for
Bonus Awards to be paid, and (iv) any other conditions that the Committee deems
appropriate and consistent with the requirements of section 162(m) of the Code
for “qualified performance-based compensation.” The performance goals shall
satisfy the requirements for “qualified performance-based compensation,”
including the requirement that the achievement of the goals be substantially
uncertain at the time they are established and that the performance goals be
established in such a way that a third party with knowledge of the relevant
facts could determine whether and to what extent the performance goals have been
met. The Company shall notify each Participant of the Participant’s target Bonus
Award and the applicable performance goals for the performance period.
(c) Criteria Used for Objective Performance Goals. The Committee shall use
objectively determinable performance goals based on one or more of the criteria
described in Section 13(a)(ii) above. The performance goals may relate to one or
more business units or the performance of the Company and its subsidiaries as a
whole, or any combination of the foregoing. Performance goals need not be
uniform among Participants.
(d) Timing of Establishment of Target Bonus Awards and Goals. The Committee
shall establish each Participant’s target Bonus Award and performance goals in
writing either before the beginning of the performance period or during a period
ending no later than the earlier of (i) 90 days after the beginning of the
performance period or (ii) the date on which 25% of the performance period has
been completed, or such other date as may be required or permitted under
applicable regulations under section 162(m) of the Code.

 

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(e) Section 162(m) Requirements. A target Bonus Award that is designated as
“qualified performance-based compensation” under section 162(m) of the Code may
not be awarded as an alternative to any other award that is not designated as
“qualified performance-based compensation,” but instead must be separate and
apart from all other awards made. The Committee shall not have discretion to
increase the amount of compensation that is payable based achievement of the
performance goals, but the Committee may reduce the amount of compensation that
is payable based upon the Committee’s assessment of personal performance or
other factors. Any reduction of a Participant’s Bonus Award shall not result in
an increase in any other Participant’s Bonus Award.
(f) Certification of Results. The Committee shall certify the performance
results for the performance period after the performance period ends. The
Committee shall determine the amount, if any, to be paid pursuant to each Bonus
Award based on the achievement of the performance goals, the Committee’s
exercise of its discretion to reduce Bonus Awards and the satisfaction of all
other terms of the Bonus Awards. Subject to the provisions of Sections 15(i) and
Section 16, payment of the Bonus Awards certified by the Committee shall be made
in a single lump sum cash payment on or after January 1, but not later than
March 15 of the calendar year following the close of the performance period.
(g) Limitations on Rights to Payment of Bonus Awards. No Participant shall have
any right to receive payment of a Bonus Award under the Plan for a performance
period unless the Participant remains in the employ of the Employer through the
last day of the performance period; provided, however, that the Committee may
determine that if a Participant’s employment with the Company terminates prior
to the end of the performance period, the Participant may be eligible to receive
all or a prorated portion of any Bonus Award that would otherwise have been
earned for the performance period, under such circumstances as the Committee
deems appropriate.
(h) Change of Control. If a Change of Control occurs prior to the end of a
performance period, the Committee may determine that each Participant who is
then an Employee and was awarded a target Bonus Award for the performance period
may receive a Bonus Award for the performance period, in such amount and at such
time as the Committee determines.
(i) Discretionary and Other Bonuses. In addition to Bonus Awards that are
designated “qualified performance-based compensation” under section 162(m) of
the Code, as described above, the Committee may grant to executive Employees
such other bonuses as the Committee deems appropriate, which may be based on
individual performance, Company performance or such other criteria as the
Committee determines. Decisions with respect to such bonuses shall be made
separate and apart from the Bonus Awards described in this Section 15.
Section 16. Deferrals
The Committee may permit or require a Participant to defer receipt of the
payment of cash or the delivery of shares that would otherwise be due to such
Participant in connection with any Grant or Bonus Award. If any such deferral
election is permitted or required, the Committee shall establish rules and
procedures for such deferrals and may provide for interest or other earnings to
be paid on such deferrals. The rules and procedures for any such deferrals shall
be consistent with applicable requirements of section 409A of the Code.

 

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Section 17. Withholding of Taxes
(a) Required Withholding. All Grants and Bonus Awards under the Plan shall be
subject to applicable federal (including FICA), state and local tax withholding
requirements. The Employer may require that the Participant or other person
receiving Grants or Bonus Awards or exercising Grants pay to the Employer the
amount of any federal, state or local taxes that the Employer is required to
withhold with respect to such Grants or Bonus Awards, or the Employer may deduct
from other wages and compensation paid by the Employer the amount of any
withholding taxes due with respect to such Grants or Bonus Awards.
(b) Election to Withhold Shares. If the Committee so permits, a Participant may
elect to satisfy the Employer’s tax withholding obligation with respect to
Grants paid in Company Stock by having shares withheld up to an amount that does
not exceed the Participant’s minimum applicable withholding tax rate for federal
(including FICA), state and local tax liabilities. The election must be in a
form and manner prescribed by the Committee and may be subject to the prior
approval of the Committee.
Section 18. Transferability of Grants
(a) Nontransferability of Grants. Except as described in subsection (b) below,
only the Participant may exercise rights under a Grant during the Participant’s
lifetime. A Participant may not transfer those rights except (i) by will or by
the laws of descent and distribution or (ii) with respect to Grants other than
Incentive Stock Options, pursuant to a domestic relations order. When a
Participant dies, the personal representative or other person entitled to
succeed to the rights of the Participant may exercise such rights. Any such
successor must furnish proof satisfactory to the Company of his or her right to
receive the Grant under the Participant’s will or under the applicable laws of
descent and distribution. Bonus Awards are not transferable. If a Participant
dies, any amounts payable after the Participant’s death pursuant to a Bonus
Award shall be paid to the personal representative or other person entitled to
succeed to the rights of the Participant.
(b) Transfer of Nonqualified Stock Options. Notwithstanding the foregoing, the
Committee may provide, in a Grant Instrument, that a Participant may transfer
Nonqualified Stock Options to family members, or one or more trusts or other
entities for the benefit of or owned by family members, consistent with the
applicable securities laws, according to such terms as the Committee may
determine; provided that the Participant receives no consideration for the
transfer of an Option and the transferred Option shall continue to be subject to
the same terms and conditions as were applicable to the Option immediately
before the transfer.
Section 19. Requirements for Issuance or Transfer of Shares
No Company Stock shall be issued or transferred in connection with any Grant
hereunder unless and until all legal requirements applicable to the issuance or
transfer of such Company Stock have been complied with to the satisfaction of
the Committee. The Committee shall have the right to condition any Grant on the
Participant’s undertaking in writing to comply with such restrictions on his or
her subsequent disposition of the shares of Company Stock as the

 

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Committee shall deem necessary or advisable, and certificates representing such
shares may be legended to reflect any such restrictions. Certificates
representing shares of Company Stock issued or transferred under the Plan may be
subject to such stop-transfer orders and other restrictions as the Committee
deems appropriate to comply with applicable laws, regulations and
interpretations, including any requirement that a legend be placed thereon.
Section 20. Amendment and Termination of the Plan
(a) Amendment. The Board may amend or terminate the Plan at any time; provided,
however, that the Board shall not amend the Plan without stockholder approval if
such approval is required in order to comply with the Code or other applicable
law, or to comply with applicable stock exchange requirements.
(b) Repricing of Options or SARs.
(i) The Committee shall have the authority to effect, at any time and from time
to time, with the consent of the affected holders, the cancellation of any or
all outstanding Options or SAR (including outstanding options transferred from
the 2005 Plan) and to grant in exchange one or more of the following: (A) new
Options or SARs covering the same or a different number of shares of Company
Stock but with an Exercise Price or base amount per share not less than the Fair
Market Value per share of Company Stock on the new grant date or (B) cash or
shares of Company Stock, whether vested or unvested, equal in value to the value
of the cancelled Options or SARs.
(ii) The Committee shall also have the authority, exercisable at any time and
from time to time, with the consent of the affected holders, to reduce the
Exercise Price or base amount of one or more outstanding Options or SARs to the
then current Fair Market Value per share of Company Stock or issue new Options
or SARs with a lower Exercise Price or base amount on immediate cancellation of
outstanding Options or SARs with a higher Exercise Price or base amount.
(c) Stockholder Approval Requirements.
(i) The Plan is intended to comply with the transition relief set forth at
Treas. Reg. §1.162-27(f)(1) for companies that become publicly held in
connection with an initial public offering, and shall be approved by the
stockholders of the Company no later than the first to occur of (A) the
expiration of the Plan, (B) a material modification of the Plan within the
meaning of section 162(m) and the regulations thereunder, (C) the issuance of
all Company Stock authorized under the Plan, or (D) the first meeting of
stockholders at which directors are to be elected that occurs after the close of
the third calendar year following the calendar year in which the initial public
offering occurs (the period commencing on the initial public offering and ending
on the first to occur of the foregoing events shall be hereinafter referred to
as the “Reliance Period”).

 

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(ii) Following the Reliance Period, if Grants are made as “qualified
performance-based compensation” under Section 13 above or if Bonus Awards are
made under Section 15 above, the Plan must be reapproved by the stockholders no
later than the first stockholders meeting that occurs in the fifth year
following the year in which the stockholders previously approved the provisions
of Sections 13 and 15, if additional Grants are to be made under Section 13 or
if additional Bonus Awards are made under Section 15 and if required by section
162(m) of the Code or the regulations thereunder.
(d) Termination of Plan. The Plan shall terminate on the day immediately
preceding the tenth anniversary of its Effective Date, unless the Plan is
terminated earlier by the Board or is extended by the Board with the approval of
the stockholders.
(e) Termination and Amendment of Outstanding Grants. A termination or amendment
of the Plan that occurs after a Grant or Bonus Award is made shall not
materially impair the rights of a Participant unless the Participant consents or
unless the Committee acts under Section 21(f) below. The termination of the Plan
shall not impair the power and authority of the Committee with respect to an
outstanding Grant or Bonus Award. Whether or not the Plan has terminated, an
outstanding Grant or Bonus Award may be terminated or amended under Section
21(f) below or may be amended by agreement of the Company and the Participant
consistent with the Plan.
Section 21. Miscellaneous
(a) Grants in Connection with Corporate Transactions and Otherwise. Nothing
contained in the Plan shall be construed to (i) limit the right of the Committee
to make Grants under the Plan in connection with the acquisition, by purchase,
lease, merger, consolidation or otherwise, of the business or assets of any
corporation, firm or association, including Grants to employees thereof who
become Employees, or (ii) limit the right of the Company to grant stock options
or make other awards outside of the Plan. The Committee may make a Grant to an
employee of another corporation who becomes an Employee by reason of a corporate
merger, consolidation, acquisition of stock or property, reorganization or
liquidation involving the Company, in substitution for a stock option or stock
awards grant made by such corporation. Notwithstanding anything in the Plan to
the contrary, the Committee may establish such terms and conditions of the new
Grants as it deems appropriate, including setting the Exercise Price of Options
or the base price of SARs at a price necessary to retain for the Participant the
same economic value as the prior options or rights.
(b) Governing Document. The Plan shall be the controlling document. No other
statements, representations, explanatory materials or examples, oral or written,
may amend the Plan in any manner. The Plan shall be binding upon and enforceable
against the Company and its successors and assigns.
(c) Funding of the Plan. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Grants or Bonus Awards under
the Plan.

 

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(d) Rights of Participants. Nothing in the Plan shall entitle any Employee,
Non-Employee Director, Key Advisor or other person to any claim or right to
receive a Grant or Bonus Award under the Plan. Neither the Plan nor any action
taken hereunder shall be construed as giving any individual any rights to be
retained by or in the employ of the Employer or any other employment rights.
(e) No Fractional Shares. No fractional shares of Company Stock shall be issued
or delivered pursuant to the Plan or any Grant. Except as otherwise provided
under the Plan, the Committee shall determine whether cash, other awards or
other property shall be issued or paid in lieu of such fractional shares or
whether such fractional shares or any rights thereto shall be forfeited or
otherwise eliminated.
(f) Compliance with Law.
(i) The Plan, the exercise of Options and SARs and the obligations of the
Company to issue or transfer shares of Company Stock under Grants shall be
subject to all applicable laws and regulations, and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to section 16 of the Exchange Act, it is the intent of the Company that
the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act. In addition,
it is the intent of the Company that Incentive Stock Options comply with the
applicable provisions of section 422 of the Code, that Grants of “qualified
performance-based compensation” and Bonus Awards comply with the applicable
provisions of section 162(m) of the Code and that, to the extent applicable,
Grants and Bonus Awards comply with the requirements of section 409A of the
Code. To the extent that any legal requirement of section 16 of the Exchange Act
or section 422, 162(m) or 409A of the Code as set forth in the Plan ceases to be
required under section 16 of the Exchange Act or section 422, 162(m) or 409A of
the Code, that Plan provision shall cease to apply. The Committee may revoke any
Grant or Bonus Award if it is contrary to law or modify a Grant or Bonus Award
to bring it into compliance with any valid and mandatory government regulation.
The Committee may also adopt rules regarding the withholding of taxes on
payments to Participants. The Committee may, in its sole discretion, agree to
limit its authority under this Section.
(ii) The Plan is intended to comply with the requirements of section 409A of the
Code, to the extent applicable. Each Grant shall be construed and administered
such that the Grant either (A) qualifies for an exemption from the requirements
of section 409A of the Code or (B) satisfies the requirements of section 409A of
the Code. If a Grant is subject to section 409A of the Code, (I) distributions
shall only be made in a manner and upon an event permitted under section 409A of
the Code, (II) payments to be made upon a termination of employment shall only
be made upon a “separation from service” under section 409A of the Code,
(III) unless the Grant specifies otherwise, each installment payment shall be
treated as a separate payment for purposes of section 409A of the Code, and
(IV) in no event shall a Grantee, directly or indirectly, designate the calendar
year in which a distribution is made except in accordance with section 409A of
the Code.

 

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(iii) Any Grant that is subject to section 409A of the Code and that is to be
distributed to a Key Employee (as defined below) upon separation from service
shall be administered so that any distribution with respect to such Award shall
be postponed for six months following the date of the Participant’s separation
from service, if required by section 409A of the Code. If a distribution is
delayed pursuant to section 409A of the Code, the distribution shall be paid
within 15 days after the end of the six-month period. If the Grantee dies during
such six-month period, any postponed amounts shall be paid within 90 days of the
Grantee’s death. The determination of Key Employees, including the number and
identity of persons considered Key Employees and the identification date, shall
be made by the Committee or its delegate each year in accordance with section
416(i) of the Code and the “specified employee” requirements of section 409A of
the Code.
(iv) Notwithstanding anything in the Plan or any Grant agreement to the
contrary, each Grantee shall be solely responsible for the tax consequences of
Grants under the Plan, and in no event shall the Company have any responsibility
or liability if a Grant does not meet any applicable requirements of section
409A of the Code. Although the Company intends to administer the Plan to prevent
taxation under section 409A of the Code, the Company does not represent or
warrant that the Plan or any Grant complies with any provision of federal,
state, local or other tax law.
(g) Employees Subject to Taxation Outside the United States. With respect to
Participants who are believed by the Committee to be subject to taxation in
countries other than the United States, the Committee may make Grants on such
terms and conditions, consistent with the Plan, as the Committee deems
appropriate to comply with the laws of the applicable countries, and the
Committee may create such procedures, addenda and subplans and make such
modifications as may be necessary or advisable to comply with such laws.
(h) Clawback Rights. Subject to the requirements of applicable law, the
Committee may provide in any Grant Instrument that, if a Participant breaches
any restrictive covenant agreement between the Participant and the Employer or
otherwise engages in activities that constitute Cause either while employed by,
or providing service to, the Employer or within a specified period of time
thereafter, all Grants held by the Participant shall terminate, and the Company
may rescind any exercise of an Option or SAR and the vesting of any other Grant
and delivery of shares upon such exercise or vesting, as applicable on such
terms as the Committee shall determine, including the right to require that in
the event of any such rescission, (i) the Participant shall return to the
Company the shares received upon the exercise of any Option or SAR and/or the
vesting and payment of any other Grant or, (ii) if the Participant no longer
owns the shares, the Participant shall pay to the Company the amount of any gain
realized or payment received as a result of any sale or other disposition of the
shares (or, in the event the Participant transfers the shares by gift or
otherwise without consideration, the Fair Market Value of the shares on the date
of the breach), net of the price originally paid by the Participant for the
shares. Payment by the Participant shall be made in such manner and on such
terms and conditions as may be required by the Committee. The Employer shall be
entitled to set off against the amount of any such payment any amounts otherwise
owed to the Participant by the Employer.
(i) Governing Law. The validity, construction, interpretation and effect of the
Plan and Grant Instruments issued under the Plan shall be governed and construed
by and determined in accordance with the laws of the State of Delaware, without
giving effect to the conflict of laws provisions thereof.

 

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