Exhibit 10.3

 

NUO THERAPEUTICS, INC.

2016 OMNIBUS INCENTIVE COMPENSATION PLAN

(As amended and restated by the Board of Directors on August 4, 2016,

subject to approval by the Company’s shareholders)

 

Article 1.
Effective Date, Objectives and Duration

 

1.1       Effective Date of the Plan.    NUO THERAPEUTICS, INC., a Delaware
corporation (the “Company”), adopted this 2016 Omnibus Incentive Compensation
Plan (the “Plan”) on July 1, 2016, subject to approval by the Company’s
shareholders. The terms of the Plan are set forth herein.

 

1.2       Objectives of the Plan.    The Plan is intended (a) to allow selected
employees of and consultants to the Company and its Subsidiaries to acquire or
increase equity ownership in the Company, thereby strengthening their commitment
to the success of the Company and stimulating their efforts on behalf of the
Company, and to assist the Company and its Subsidiaries in attracting new
employees, officers and consultants and retaining existing employees and
consultants, (b) to provide annual cash incentive compensation opportunities
that are competitive with those of other peer corporations, (c) to optimize the
profitability and growth of the Company and its Subsidiaries through incentives
which are consistent with the Company’s goals, (d) to provide Grantees with an
incentive for excellence in individual performance, (e) to promote teamwork
among employees, consultants and Non-Employee Directors, and (f) to attract and
retain highly qualified persons to serve as Non-Employee Directors and to
promote ownership by such Non-Employee Directors of a greater proprietary
interest in the Company, thereby aligning such Non-Employee Directors’ interests
more closely with the interests of the Company’s shareholders.

 

1.3       Duration of the Plan.   The Plan shall commence on July 1, 2016 (the
“Effective Date”) and shall remain in effect, subject to the right of the Board
of Directors of the Company (“Board”) to amend or terminate the Plan at any time
pursuant to Article 16 hereof, until the earlier of July 1, 2026, or the date
all Shares subject to the Plan shall have been purchased or acquired and the
restrictions on all Restricted Shares granted under the Plan shall have lapsed,
according to the Plan’s provisions.

 

Article 2.
Definitions

 

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

 

2.1       “Affiliate” means any corporation or other entity, including but not
limited to partnerships, limited liability companies and joint ventures, with
respect to which the Company, directly or indirectly, owns as applicable (a)
stock possessing more than fifty percent (50%) of the total combined voting
power of all classes of stock entitled to vote, or more than fifty percent (50%)
of the total value of all shares of all classes of stock of such corporation, or
(b) an aggregate of more than fifty percent (50%) of the profits interest or
capital interest of a non-corporate entity.

 

   

   

 

2.2       “Award” means Options (including non-qualified options and Incentive
Stock Options), SARs, Restricted Shares, Performance Units (which may be paid in
cash), Performance Shares, Deferred Stock, Restricted Stock Units, Dividend
Equivalents, Bonus Shares, Cash Incentive Awards or Other Stock-Based Awards
granted under the Plan.

 

2.3       “Award Agreement” means either (a) a written agreement entered into by
the Company and a Grantee setting forth the terms and provisions applicable to
an Award granted under this Plan, or (b) a written statement issued by the
Company to a Grantee describing the terms and provisions of such Award,
including any amendment or modification thereof. The Committee may provide for
the use of electronic, internet or other non-paper Award Agreements and the use
of electronic, internet or other non-paper means for the acceptance thereof and
actions thereunder by the Grantee.

 

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

 

2.5       “Bonus Shares” means Shares that are awarded to a Grantee with or
without cost and without restrictions either in recognition of past performance
(whether determined by reference to another employee benefit plan of the Company
or otherwise), as an inducement to become an Eligible Person or, with the
consent of the Grantee, as payment in lieu of any cash remuneration otherwise
payable to the Grantee.

 

2.6       “Cash Incentive Award” means an Award granted under Article 15 of the
Plan.

 

2.7       “CEO” means the Chief Executive Officer of the Company.

 

2.8       “Code” means the Internal Revenue Code of 1986, as amended from time
to time. References to a particular section of the Code include references to
regulations and rulings thereunder and to successor provisions.

 

2.9       “Committee” or “Incentive Plan Committee” has the meaning set forth in
Section 3.1(a).

 

2.10     “Compensation Committee” means the compensation committee of the Board.

 

2.11     “Covered Employee” means a Grantee who, as of the last day of the
fiscal year in which the value of an Award is recognizable as income for federal
income tax purposes, is a “covered employee,” within the meaning of Code Section
162(m), with respect to the Company.

 

2.12     “Deferred Stock” means a right, granted under Article 10, to receive
Shares at the end of a specified deferral period.

 

2.13     “Disability” or “Disabled” means, unless otherwise defined in an Award
Agreement, or as otherwise determined under procedures established by the
Committee for purposes of the Plan:

 

(a)        Except as provided in (b) below, a disability within the meaning of
Section 22(e)(3) of the Code; and

 

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(b)        In the case of any Award that constitutes deferred compensation
within the meaning of Section 409A of the Code, a disability as defined in
regulations under Code Section 409A. For purpose of Code Section 409A, a Grantee
will be considered Disabled if:

 

(i)       the Grantee is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, or

 

(ii)       the Grantee is, by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months, receiving
income replacement benefits for a period of not less than three (3) months under
an accident and health plan covering employees of the Grantee’s employer.

 

2.14     “Dividend Equivalent” means a right to receive payments equal to
dividends or property, if and when paid or distributed, on a specified number of
Shares.

 

2.15     “Effective Date” has the meaning set forth in Section 1.3.

 

2.16     “Eligible Person” means any employee (including any officer) of, or
non-employee consultant to, or Non-Employee Director of, the Company or any
Affiliate, or potential employee (including a potential officer) of, or
non-employee consultant to, the Company or an Affiliate; provided, however, that
solely with respect to the grant of an Incentive Stock Option, an Eligible
Person shall be any employee (including any officer) of the Company or any
Subsidiary Corporation. Solely for purposes of Section 5.6(b), current or former
employees or non-employee directors of, or consultants to, of an Acquired Entity
who receive Substitute Awards in substitution for Acquired Entity Awards shall
be considered Eligible Persons under this Plan with respect to such Substitute
Awards.

 

2.17     “Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time. References to a particular section of the Exchange Act
include references to successor provisions.

 

2.18     “Exercise Price” means (a) with respect to an Option, the price at
which a Share may be purchased by a Grantee pursuant to such Option or (b) with
respect to an SAR, the price established at the time an SAR is granted pursuant
to Article 7, which is used to determine the amount, if any, of the payment due
to a Grantee upon exercise the SAR.

 

2.19     “Fair Market Value” means a price that is based on the opening,
closing, actual, high, low, or the arithmetic mean of selling prices of a Share
reported on the NASDAQ Global Market (“NASDAQ”), or if not the NASDAQ, on the
established stock exchange which is the principal exchange upon which the Shares
are traded on the applicable date or the preceding trading day. Unless the
Committee determines otherwise, if the Shares are traded over the counter at the
time a determination of its Fair Market Value is required to be made hereunder,
Fair Market Value shall be deemed to be equal to the arithmetic mean between the
reported high and low or closing bid and asked prices of a Share on the
applicable date, or if no such trades were made that day then the most recent
date on which Shares were publicly traded. In the event Shares are not publicly
traded at the time a determination of their value is required to be made
hereunder, the determination of their Fair Market Value shall be made by the
Committee in such manner as it deems appropriate provided such manner is
consistent with Treasury Regulation 1.409A-1(b)(5)(iv)(B).

 

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2.20     “Grant Date” means the date on which an Award is granted or such later
date as specified in advance by the Committee.

 

2.21     “Grantee” means a person who has been granted an Award.

 

2.22     “Incentive Stock Option” means an Option that is intended to meet the
requirements of Section 422 of the Code.

 

2.23     “Including” or “includes” means “including, without limitation,” or
“includes, without limitation,” respectively.

 

2.24     “Management Committee” has the meaning set forth in Section 3.1(b).

 

2.25     “Non-Employee Director” means a member of the Board who is not an
employee of the Company or any Affiliate.

 

2.26     “Option” means an option granted under Article 6 of the Plan.

 

2.27     “Other Stock-Based Award” means a right, granted under Article 13
hereof, that relates to or is valued by reference to Shares or other Awards
relating to Shares.

 

2.28     “Performance-Based Exception” means the performance-based exception
from the tax deductibility limitations of Code Section 162(m) contained in Code
Section 162(m)(4)(C) (including the special provisions for options thereunder).
No Award (other than Stock Options, SARs and Restricted Shares granted during
the Section 162(m) Transition Period) granted after the Company becomes Publicly
Held shall satisfy the Performance-Based Exception unless such Award is granted
after the shareholders have approved the material terms of this Plan (including
the provisions of Section 4.3 and 4.4) after the Company becomes Publicly Held.
Notwithstanding the foregoing, nothing in this Plan shall be construed to mean
that an Award which does not satisfy the requirements for performance-based
compensation under Code Section 162(m) does not constitute performance-based
compensation for other purposes, including Code Section 409A.

 

2.29     “Performance Measures” has the meaning set forth in Section 4.4.

 

2.30     “Performance Period” means the time period during which performance
goals must be met.

 

2.31     “Performance Share” and “Performance Unit” have the respective meanings
set forth in Article 9.

 

2.32     “Period of Restriction” means the period during which Restricted Shares
are subject to forfeiture if the conditions specified in the Award Agreement are
not satisfied.

 

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2.33     “Person” means any individual, sole proprietorship, partnership, joint
venture, limited liability company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity or
government instrumentality, division, agency, body or department.

 

2.34     “Publicly Held” has the meaning set forth in Section 4.3.

 

2.35     “Restricted Shares” means Shares, granted under Article 8, that are
both subject to forfeiture and are nontransferable if the Grantee does not
satisfy the conditions specified in the Award Agreement applicable to such
Shares.

 

2.36     “Restricted Stock Units” are rights, granted under Article 10, to
receive Shares if the Grantee satisfies the conditions specified in the Award
Agreement applicable to such rights.

 

2.37     “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange
Act, as amended from time to time, together with any successor rule.

 

2.38     “SEC” means the United States Securities and Exchange Commission, or
any successor thereto.

 

2.39     “Section 16 Non-Employee Director” means a member of the Board who
satisfies the requirements to qualify as a “non-employee director” under Rule
16b-3.

 

2.40     “Section 16 Person” means a person who is subject to potential
liability under Section 16(b) of the Exchange Act with respect to transactions
involving equity securities of the Company.

 

2.41     “Section 162(m) Transition Period” means the transition period
commencing on the date the Company becomes Publicly Held and ending on the
earliest of: (a) the first material modification of the Plan (including any
increase in the number of shares reserved for issuance under the Plan in
accordance with Section 4.1) after the Company becomes Publicly Held; (b) the
issuance of all of the Shares reserved for issuance under the Plan; (c) the
expiration of the Plan; (d) the first meeting of shareholders at which members
of the Board are to be elected that occurs after the close of the third calendar
year following the calendar year in which the Company becomes Publicly Held
pursuant to an initial public offering of any class of the Company’s common
equity securities; or (e) if the Company becomes Publicly Held without an
initial public offering of any class of its common equity securities, the first
calendar year following the calendar year in which the Company becomes Publicly
Held.

 

2.42     “Separation from Service” means, with respect to any Award that
constitutes deferred compensation within the meaning of Code Section 409A, a
“separation from service” as defined in Treasury Regulation Section 1.409A-1(h).
For this purpose, a “separation from service” is deemed to occur on the date
that the Company and the Grantee reasonably anticipate that the level of bona
fide services the Grantee would perform for the Company and/or any Affiliates
after that date (whether as an employee, Non-Employee Director or consultant or
independent contractor) would permanently decrease to a level that, based on the
facts and circumstances, would constitute a separation from service; provided
that a decrease to a level that is 50% or more of the average level of bona fide
services provided over the prior 36 months shall not be a separation from
service, and a decrease to a level that is 20% or less of the average level of
such bona fide services shall be a separation from service. The Committee
retains the right and discretion to specify, and may specify, whether a
separation from service occurs for individuals providing services to the Company
or an Affiliate immediately prior to an asset purchase transaction in which the
Company or an Affiliate is the seller who provide services to a buyer after and
in connection with such asset purchase transaction; provided, such specification
is made in accordance with the requirements of Treasury Regulation Section
1.409A-1(h)(4).

 

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2.43     “Share” means a share of Common Stock, par value $0.0001 per share, of
the Company and such other securities of the Company, as may be substituted or
resubstituted for Shares pursuant to Section 4.2 hereof.

 

2.44     “Stock Appreciation Right” or “SAR” means an Award granted under
Article 7 of the Plan.

 

2.45     “Subsidiary Corporation” means a corporation other than the Company in
an unbroken chain of corporations beginning with the Company if, at the time of
granting the Option, each of the corporations other than the last corporation in
the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.

 

2.46     “Surviving Company” means the surviving corporation in any merger or
consolidation, involving the Company, including the Company if the Company is
the surviving corporation, or the direct or indirect parent company of the
Company or such surviving corporation following a sale of substantially all of
the outstanding stock of the Company.

 

2.47     “Term” of any Option or SAR means the period beginning on the Grant
Date of an Option or SAR and ending on the date such Option or SAR expires,
terminates or is cancelled. No Option or SAR granted under this Plan shall have
a Term exceeding 10 years.

 

2.48     “Termination of Affiliation” occurs on the first day on which an
individual is for any reason no longer providing services to the Company or any
Affiliate in the capacity of an employee, officer or consultant or with respect
to an individual who is an employee or officer of or a consultant to an
Affiliate, the first day on which such entity ceases to be an Affiliate of the
Company; provided, however, that if an Award constitutes deferred compensation
within the meaning of Code Section 409A, Termination of Affiliation with respect
to such Award shall mean the Grantee’s Separation from Service.

 

Article 3.
Administration

 

3.1       Committee.

 

(a)        Subject to Article 14, and to Section 3.2, the Plan shall be
administered by a Committee (the “Incentive Plan Committee” or the “Committee”)
appointed by the Board from time to time. Notwithstanding the foregoing, either
the Board or the Compensation Committee may at any time and in one or more
instances reserve administrative powers to itself as the Committee or exercise
any of the administrative powers of the Committee. To the extent the Board or
Compensation Committee considers it desirable to comply with Rule 16b-3 or meet
the Performance-Based Exception, the Committee shall consist of two or more
directors of the Company, all of whom qualify as “outside directors” within the
meaning of Code Section 162(m) and Section 16 Non-Employee Directors. The number
of members of the Committee shall from time to time be increased or decreased,
and shall be subject to such conditions, in each case if and to the extent the
Board deems it appropriate to permit transactions in Shares pursuant to the Plan
to satisfy such conditions of Rule 16b-3 and the Performance-Based Exception as
then in effect.

 

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(b)       The Board or the Compensation Committee may appoint and delegate to
another committee (“Management Committee”), or to the CEO, any or all of the
authority of the Board or the Committee, as applicable, with respect to Awards
to Grantees other than Grantees who are executive officers, Non-Employee
Directors, or are (or are expected to be) Covered Employees and/or are Section
16 Persons at the time any such delegated authority is exercised.

 

(c)        Unless the context requires otherwise, any references herein to
“Committee” include references to the Incentive Plan Committee, the Board or the
Compensation Committee to the extent the Incentive Plan Committee, the Board or
the Compensation Committee, as applicable, has assumed or exercises
administrative powers itself as the Committee pursuant to subsection (a), and to
the Management Committee or the CEO to the extent either has been delegated
authority pursuant to subsection (b), as applicable; provided that (i) for
purposes of Awards to Non-Employee Directors, “Committee” shall include only the
full Board, and (ii) for purposes of Awards intended to comply with Rule 16b-3
or meet the Performance-Based Exception, “Committee” shall include only the
Incentive Plan Committee or the Compensation Committee.

 

3.2       Powers of Committee.  Subject to and consistent with the provisions of
the Plan (including Article 14), the Committee has full and final authority and
sole discretion as follows; provided that any such authority or discretion
exercised with respect to a specific Non-Employee Director shall be approved by
the affirmative vote of a majority of the members of the Board, even if not a
quorum, but excluding the Non-Employee Director with respect to whom such
authority or discretion is exercised:

 

(a)        to determine when, to whom and in what types and amounts Awards
should be granted;

 

(b)        to grant Awards to Eligible Persons in any number and to determine
the terms and conditions applicable to each Award (including the number of
Shares or the amount of cash or other property to which an Award will relate,
any Exercise Price or purchase price, any limitation or restriction, any
schedule for or performance conditions relating to the earning of the Award or
the lapse of limitations, forfeiture restrictions, restrictions on
exercisability or transferability, any performance goals including those
relating to the Company and/or an Affiliate and/or any division thereof and/or
an individual, and/or vesting based on the passage of time, based in each case
on such considerations as the Committee shall determine);

 

(c)        to determine the benefit payable under any Performance Unit,
Performance Share, Dividend Equivalent, Other Stock-Based Award or Cash
Incentive Award and to determine whether any performance or vesting conditions
have been satisfied;

 

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(d)        to determine whether or not specific Awards shall be granted in
connection with other specific Awards, and if so, whether they shall be
exercisable cumulatively with, or alternatively to, such other specific Awards
and all other matters to be determined in connection with an Award;

 

(e)        to determine the Term of any Option or SAR;

 

(f)         to determine the amount, if any, that a Grantee shall pay for
Restricted Shares, whether to permit or require the payment of cash dividends
thereon to be deferred and the terms related thereto, when Restricted Shares
(including Restricted Shares acquired upon the exercise of an Option) shall be
forfeited and whether such shares shall be held in escrow;

 

(g)        to determine whether, to what extent and under what circumstances an
Award may be settled in, or the exercise price of an Award may be paid in, cash,
Shares, other Awards or other property, or an Award may be accelerated, vested,
canceled, forfeited or surrendered or any terms of the Award may be waived, and
to accelerate the exercisability of, and to accelerate or waive any or all of
the terms and conditions applicable to, any Award or any group of Awards for any
reason and at any time;

 

(h)        to determine with respect to Awards granted to Eligible Persons
whether, to what extent and under what circumstances cash, Shares, other Awards,
other property and other amounts payable with respect to an Award will be
deferred, either at the election of the Grantee or if and to the extent
specified in the Award Agreement automatically or at the election of the
Committee (whether to limit loss of deductions pursuant to Code Section 162(m)
or otherwise);

 

(i)         to offer to exchange or buy out any previously granted Award for a
payment in cash, Shares or other Award;

 

(j)         to construe and interpret the Plan and to make all determinations,
including factual determinations, necessary or advisable for the administration
of the Plan;

 

(k)        to make, amend, suspend, waive and rescind rules and regulations
relating to the Plan;

 

(l)         to appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;

 

(m)       to determine the terms and conditions of all Award Agreements
applicable to Eligible Persons (which need not be identical) and, with the
consent of the Grantee, to amend any such Award Agreement at any time, among
other things, to permit transfers of such Awards to the extent permitted by the
Plan; provided that the consent of the Grantee shall not be required for any
amendment (i) which does not adversely affect the rights of the Grantee, or (ii)
which is necessary or advisable (as determined by the Committee) to carry out
the purpose of the Award as a result of any new applicable law or change in an
existing applicable law, or (iii) to the extent the Award Agreement specifically
permits amendment without consent;

 

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(n)        to cancel, with the consent of the Grantee, outstanding Awards and to
grant new Awards in substitution therefor;

 

(o)        to impose such additional terms and conditions upon the grant,
exercise or retention of Awards as the Committee may, before or concurrently
with the grant thereof, deem appropriate, including limiting the percentage of
Awards which may from time to time be exercised by a Grantee;

 

(p)        to make adjustments in the terms and conditions of, and the criteria
in, Awards in recognition of unusual or nonrecurring events (including events
described in Section 4.2) affecting the Company or an Affiliate or the financial
statements of the Company or an Affiliate, or in response to changes in
applicable laws, regulations or accounting principles; provided, however, that
in no event shall such adjustment increase the value of an Award for a person
expected to be a Covered Employee for whom the Committee desires to have the
Performance-Based Exception apply;

 

(q)        to correct any defect or supply any omission or reconcile any
inconsistency, and to construe and interpret the Plan, the rules and
regulations, and Award Agreement or any other instrument entered into or
relating to an Award under the Plan; and

 

(r)         to take any other action with respect to any matters relating to the
Plan for which it is responsible and to make all other decisions and
determinations as may be required under the terms of the Plan or as the
Committee may deem necessary or advisable for the administration of the Plan.

 

Any action of the Committee with respect to the Plan shall be final, conclusive
and binding on all persons, including the Company, its Affiliates, any Grantee,
any person claiming any rights under the Plan from or through any Grantee, and
shareholders, except to the extent the Committee may subsequently modify, or
take further action not consistent with, its prior action. If not specified in
the Plan, the time at which the Committee must or may make any determination
shall be determined by the Committee, and any such determination may thereafter
be modified by the Committee. The express grant of any specific power to the
Committee, and the taking of any action by the Committee, shall not be construed
as limiting any power or authority of the Committee. The Committee may delegate
to officers or managers of the Company or any Affiliate the authority, subject
to such terms as the Committee shall determine, to perform specified functions
under the Plan (subject to Sections 4.3 and 5.7(c)).

 

3.3       No Repricings.  Notwithstanding any provision in Section 3.2 to the
contrary, the terms of any outstanding Option or SAR may not be amended to
reduce the Exercise Price of such Option or SAR or cancel any outstanding Option
or SAR in exchange for other Options or SARs with an Exercise Price that is less
than the Exercise Price of the cancelled Option or SAR or for any cash payment
(or Shares having a Fair Market Value) in an amount that exceeds the excess of
the Fair Market Value of the Shares underlying such cancelled Option or SAR over
the aggregate Exercise Price of such Option or SAR or for any other Award,
without shareholder approval; provided, however, that the restrictions set forth
in this Section 3.3, shall not apply (i) unless the Company has a class of stock
that is registered under Section 12 of the Exchange Act or (ii) to any
adjustment allowed under Section 4.2.

 

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Article 4.
Shares Subject to the Plan, Maximum Awards, and 162(m) Compliance

 

4.1       Number of Shares Available for Grants. Subject to adjustment as
provided in Section 4.2 and except as provided in Section 5.6(b), the maximum
number of Shares hereby reserved for delivery under the Plan (including Shares
previously delivered under this Plan) shall initially be 1,500,000 Shares, plus
an annual increase, to be added on the first day of each fiscal year beginning
with the fiscal year ending December 31, 2017, equal to six percent (6%) of the
Shares so reserved for delivery under the Plan as of the last day of the
immediately preceding fiscal year; provided, however, that the aggregate number
of Shares reserved for delivery pursuant to such increases (including Shares
previously delivered under this Plan pursuant to such increases) shall not
exceed a total of 1,000,000 Shares.

 

If any Shares subject to an Award granted hereunder (other than a Substitute
Award granted pursuant to Section 5.6.(b)) are forfeited or such Award otherwise
terminates without the delivery of such Shares, the Shares subject to such
Award, to the extent of any such forfeiture or termination, shall again be
available for grant under the Plan. For avoidance of doubt, however, if any
Shares subject to an Award granted hereunder are withheld or applied as payment
in connection with the exercise of an Award or the withholding or payment of
taxes related thereto (“Returned Shares”), such Returned Shares will be treated
as having been delivered for purposes of determining the maximum number of
Shares available for grant under the Plan and shall not again be treated as
available for grant under the Plan. Moreover, the number of Shares available for
issuance under the Plan may not be increased through the Company’s purchase of
Shares on the open market with the proceeds obtained from the exercise of any
Options granted hereunder. Upon settlement of an SAR, the number of Shares
underlying the portion of the SAR that is exercised will be treated as having
been delivered for purposes of determining the maximum number of Shares
available for grant under the Plan and shall not again be treated as available
for grant under the Plan.

 

Shares delivered pursuant to the Plan may be, in whole or in part, authorized
and unissued Shares, or treasury Shares, including Shares repurchased by the
Company for purposes of the Plan.

 

4.2       Adjustments in Authorized Shares and Awards; Liquidation, Dissolution
or Change of Control.

 

(a)        Adjustment in Authorized Shares and Awards. In the event that the
Committee determines that any dividend or other distribution (whether in the
form of cash, Shares, or other property), recapitalization, forward or reverse
stock split, subdivision, consolidation or reduction of capital, reorganization,
merger, consolidation, scheme of arrangement, split-up, spin-off or combination
involving the Company or repurchase or exchange of Shares or other securities of
the Company or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares such
that any adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then the Committee shall, in such manner as
it may deem equitable, adjust any or all of (i) the number and type of Shares
(or other securities or property) with respect to which Awards may be granted,
(ii) the number and type of Shares (or other securities or property) subject to
outstanding Awards, (iii) the Exercise Price with respect to any Award or, if
deemed appropriate, make provision for a cash payment to the holder of an
outstanding Award, and (iv) the number and kind of Shares of outstanding
Restricted Shares, or the Shares underlying any Award of Restricted Stock Units,
Deferred Stock or other outstanding Share-based Award. Notwithstanding the
foregoing, no such adjustment shall be authorized with respect to any Options or
SARs to the extent that such adjustment would cause the Option or SAR
(determined as if such Option or SAR was an Incentive Stock Option) to violate
Section 424(a) of the Code or otherwise subject any Grantee to taxation under
Section 409A of the Code; and provided further that the number of Shares subject
to any Award denominated in Shares shall always be a whole number.

 

 10 

   

 

(b)        Merger, Consolidation or Similar Corporate Transaction. In the event
of a merger or consolidation of the Company with or into another corporation or
a sale of substantially all of the stock of the Company (a “Corporate
Transaction”), unless an outstanding Award is assumed by the Surviving Company
or replaced with an equivalent Award granted by the Surviving Company in
substitution for such outstanding Award, the Committee shall cancel any
outstanding Awards that are not vested and nonforfeitable as of the consummation
of such Corporate Transaction (unless the Committee accelerates the vesting of
any such Awards) and with respect to any vested and nonforfeitable Awards, the
Committee may either (i) allow all Grantees to exercise such Awards of Options
and SARs within a reasonable period prior to the consummation of the Corporate
Transaction and cancel any outstanding Options or SARs that remain unexercised
upon consummation of the Corporate Transaction, or (ii) cancel any or all of
such outstanding Awards in exchange for a payment (in cash, or in securities or
other property) in an amount equal to the amount that the Grantee would have
received (net of the Exercise Price with respect to any Options or SARs) if such
vested Awards were settled or distributed or such vested Options and SARs were
exercised immediately prior to the consummation of the Corporate Transaction.
Notwithstanding the foregoing, if an Option or SAR is not assumed by the
Surviving Company or replaced with an equivalent Award issued by the Surviving
Company and the Exercise Price with respect to any outstanding Option or SAR
exceeds the Fair Market Value of the Shares immediately prior to the
consummation of the Corporation Transaction, such Awards shall be cancelled
without any payment to the Grantee.

 

(c)         Liquidation or Dissolution of the Company. In the event of the
proposed dissolution or liquidation of the Company, each Award will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Committee. Additionally, the Committee may, in the exercise of
its sole discretion, cause Awards to be vested and non-forfeitable and cause any
conditions on any such Award to lapse, as to all or any part of such Award,
including Shares as to which the Award would not otherwise be exercisable or
non-forfeitable and allow all Grantees to exercise such Awards of Options and
SARs within a reasonable period prior to the consummation of such proposed
action. Any Awards that remain unexercised upon consummation of such proposed
action shall be cancelled.

 

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(d)        Deferred Compensation and Awards Intended to Comply With the
Performance-Based Exception. Notwithstanding the forgoing provisions of this
Section 4.2,

 

(i)          if an Award (other than an Option or SAR) is intended to comply
with the Performance-Based Exception, no payment or settlement of such Award
shall be made pursuant to Section 4.2(b) or (c) until the earlier (i) the
consummation of a change of control of the Company (as determined by the
Committee in its sole discretion) or (ii) the attainment of the Performance
Measure(s) upon which the Award is conditioned as certified by the Committee;
and

 

(ii)          if an Award constitutes deferred compensation within the meaning
of Code Section 409A, no payment or settlement of such Award shall be made
pursuant to Section 4.2(b) or (c), unless the Corporate Transaction or the
dissolution or liquidation of the Company, as applicable, constitutes a change
in ownership or effective control of the Company or a change in ownership of a
substantial portion of the assets of the Company as described in Treasury
Regulation Section 1.409A-3(i)(5).

 

4.3       Compliance with Section 162(m) of the Code.

  

(a)        Section 162(m) Compliance. To the extent the Committee determines
that compliance with the Performance-Based Exception is desirable with respect
to an Award, this Section 4.3(a) shall apply. Each Award that is intended to
meet the Performance-Based Exception and is granted to a person the Committee
believes is likely to be a Covered Employee at the time such Award is settled
shall comply with the requirements of the Performance-Based Exception; provided,
however, that to the extent Code Section 162(m) requires periodic shareholder
approval of performance measures, such approval shall not be required for the
continuation of the Plan or as a condition to grant any Award hereunder after
such approval is required. In addition, in the event that changes are made to
Code Section 162(m) to permit flexibility with respect to the Award or Awards
available under the Plan, the Committee may, subject to this Section 4.3, make
any adjustments to such Awards as it deems appropriate.

 

(b)        Annual Individual Limitations. Except as provided in Section 5.6(b),
no Grantee may be granted Awards (other than Awards that cannot be settled in
Shares) with respect to more than 500,000 Shares in a single calendar year,
subject to adjustment as provided in Section 4.2(a). The maximum potential value
of Awards to be settled in cash or property (other than Shares) that may be
granted in any calendar year to any Grantee shall not exceed $1,000,000 for all
such Awards.

 

(c)        Section 162(m) Transition Rules. The foregoing restrictions and
limitations set forth in the forgoing provisions of this Section 4.3 shall not
apply to any grants made before the Company becomes Publicly Held or to any
grant made during the Section 162(m) Transition Period. The Company will be
“Publicly Held” if any class of its common equity securities is required to be
registered under Section 12 of the Exchange Act. The determination of whether
and when the Company becomes Publicly Held and the deductibility of Awards
granted before the Company becomes Publicly Held will be made in accordance with
regulations promulgated under Code Section 162(m).

 

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4.4       Performance-Based Exception Under Section 162(m). Unless and until the
Committee proposes for shareholder vote and shareholders approve a change in the
general performance measures set forth in this Section 4.4, for Awards (other
than Options or SARs) designed to qualify for the Performance-Based Exception,
the objective Performance Measure(s) shall be chosen from among the following:
the attainment by a Share of a specified Fair Market Value for a specified
period of time or within a specified period of time; earnings per Share;
earnings per Share from continuing operations; total shareholder return; return
on assets; return on equity; return on capital; earnings before or after taxes,
interest, depreciation, and/or amortization; return on investment; interest
expense; cash flow; cash flow from operations; revenues; sales; costs; assets;
debt; expenses; inventory turnover; economic value added; cost of capital;
operating margin; gross margin; net income before or after taxes; operating
earnings either before or after interest expense and either before or after
incentives or asset impairments; attainment of cost reduction goals; revenue per
customer; customer turnover rate; asset impairments; financing costs; capital
expenditures; working capital; strategic business criteria, consisting of one or
more objectives based on meeting specified revenue, market penetration,
geographic business expansion goals, objectively identified project milestones,
production volume levels, cost targets, and goals relating to acquisitions or
divestitures; customer satisfaction, aggregate product price and other product
price measures; safety record; service reliability; debt rating; and achievement
of business and operational goals, such as market share, new products, and/or
business development. Any applicable Performance Measure may be applied on a
pre- or post-tax basis. The Committee may, on the Grant Date of an Award
intended to comply with the Performance-Based Exception, and in the case of
other grants, at any time, provide that the formula for such Award may include
or exclude items to measure specific objectives, such as losses from
discontinued operations, extraordinary gains or losses, the cumulative effect of
accounting changes, acquisitions or divestitures, foreign exchange impacts and
any unusual, nonrecurring gain or loss. The levels of performance required with
respect to Performance Measures may be expressed in absolute or relative levels
and may be based upon a set increase, set positive result, maintenance of the
status quo, set decrease or set negative result. Performance Measures may differ
for Awards to different Grantees. The Committee shall specify the weighting
(which may be the same or different for multiple objectives) to be given to each
performance objective for purposes of determining the final amount payable with
respect to any such Award. Any one or more of the Performance Measures may apply
to the Grantee, a department, unit, division or function within the Company or
any one or more Affiliates; and may apply either alone or relative to the
performance of other businesses or individuals (including industry or general
market indices). For Awards intended to comply with the Performance-Based
Exception, the Committee shall set the Performance Measures within the time
period prescribed by Section 162(m) of the Code.

 

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The Committee shall have the discretion to adjust the determinations of the
degree of attainment of the pre-established performance goals; provided,
however, that Awards which are designed to qualify for the Performance-Based
Exception may not (unless the Committee determines to amend the Award so that it
no longer qualified for the Performance-Based Exception) be adjusted upward (the
Committee shall retain the discretion to adjust such Awards downward). The
Committee may not, unless the Committee determines to amend the Award so that it
no longer qualifies for the Performance-Based Exception, delegate any
responsibility with respect to Awards intended to qualify for the
Performance-Based Exception. All determinations by the Committee as to the
achievement of the Performance Measure(s) shall be in writing prior to payment
of the Award.

 

In the event that applicable laws change to permit Committee discretion to alter
the governing performance measures without obtaining shareholder approval of
such changes, and still qualify for the Performance-Based Exception, the
Committee shall have sole discretion to make such changes without obtaining
shareholder approval.

 

Article 5.
Eligibility and General Conditions of Awards

 

5.1       Eligibility. The Committee may in its discretion grant Awards to any
Eligible Person, whether or not he or she has previously received an Award;
provided, however, that all Awards made to Non-Employee Directors shall be
determined by the Board in its sole discretion.

 

5.2       Award Agreement. To the extent not set forth in the Plan, the terms
and conditions of each Award shall be set forth in an Award Agreement.

 

5.3       General Terms and Termination of Affiliation. The Committee may impose
on any Award or the exercise or settlement thereof, at the date of grant or,
subject to the provisions of Section 16.2, thereafter, such additional terms and
conditions not inconsistent with the provisions of the Plan as the Committee
shall determine, including terms requiring forfeiture, acceleration or pro-rata
acceleration of Awards in the event of a Termination of Affiliation by the
Grantee. Except as may be required under the Delaware General Corporation Law,
Awards may be granted for no consideration other than prior and future services.
Except as otherwise determined by the Committee pursuant to this Section 5.3,
all Options that have not been exercised, or any other Awards that remain
subject to a risk of forfeiture or which are not otherwise vested, or which have
outstanding Performance Periods, at the time of a Termination of Affiliation
shall be forfeited to the Company.

 

5.4       Nontransferability of Awards.

 

(a)        Each Award and each right under any Award shall be exercisable only
by the Grantee during the Grantee’s lifetime, or, if permissible under
applicable law, by the Grantee’s guardian or legal representative or by a
transferee receiving such Award pursuant to a qualified domestic relations order
(a “QDRO”) as defined in the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.

 

(b)        No Award (prior to the time, if applicable, Shares are delivered in
respect of such Award), and no right under any Award, may be assigned,
alienated, pledged, attached, sold or otherwise transferred or encumbered by a
Grantee otherwise than by will or by the laws of descent and distribution (or in
the case of Restricted Shares, to the Company) or pursuant to a QDRO, and any
such purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or any
Affiliate; provided that the designation of a beneficiary to receive benefits in
the event of the Grantee’s death shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance.

 

 14 

   

 

(c)        Notwithstanding subsections (a) and (b) above, to the extent provided
in the Award Agreement, Options (other than Incentive Stock Options) and
Restricted Shares, may be transferred, without consideration, to a Permitted
Transferee. For this purpose, a “Permitted Transferee” in respect of any Grantee
means any member of the Immediate Family of such Grantee, any trust of which all
of the primary beneficiaries are such Grantee or members of his or her Immediate
Family, or any partnership (including limited liability companies and similar
entities) of which all of the partners or members are such Grantee or members of
his or her Immediate Family; and the “Immediate Family” of a Grantee means the
Grantee’s spouse, children, stepchildren, grandchildren, parents, stepparents,
siblings, grandparents, nieces and nephews. Such Option may be exercised by such
transferee in accordance with the terms of the Award Agreement. If so determined
by the Committee, a Grantee may, in the manner established by the Committee,
designate a beneficiary or beneficiaries to exercise the rights of the Grantee,
and to receive any distribution with respect to any Award upon the death of the
Grantee. A transferee, beneficiary, guardian, legal representative or other
person claiming any rights under the Plan from or through any Grantee shall be
subject to and consistent with the provisions of the Plan and any applicable
Award Agreement, except to the extent the Plan and Award Agreement otherwise
provide with respect to such persons, and to any additional restrictions or
limitations deemed necessary or appropriate by the Committee.

 

(d)        Nothing herein shall be construed as requiring the Committee to honor
a QDRO except to the extent required under applicable law.

 

5.5       Cancellation and Rescission of Awards. Unless the Award Agreement
specifies otherwise, the Committee may cancel, rescind, suspend, withhold, or
otherwise limit or restrict any unexercised Award at any time if the Grantee is
not in compliance with all applicable provisions of the Award Agreement and the
Plan or if the Grantee has a Termination of Affiliation.

 

5.6       Stand-Alone, Tandem and Substitute Awards.

 

(a)        Awards granted under the Plan may, in the discretion of the
Committee, be granted either alone or in addition to, in tandem with, or in
substitution for, any other Award granted under the Plan unless such tandem or
substitution Award would subject the Grantee to tax penalties imposed under
Section 409A of the Code; provided further that if the stand-alone, tandem or
substitute Award is intended to qualify for the Performance-Based Exception, it
must separately satisfy the requirements of the Performance-Based Exception. If
an Award is granted in substitution for another Award or any non-Plan award or
benefit, the Committee shall require the surrender of such other Award or
non-Plan award or benefit in consideration for the grant of the new Award.
Awards granted in addition to or in tandem with other Awards or non-Plan awards
or benefits may be granted either at the same time as or at a different time
from the grant of such other Awards or non-Plan awards or benefits; provided,
however, that if any SAR is granted in tandem with an Incentive Stock Option,
such SAR and Incentive Stock Option must have the same Grant Date, Term and the
Exercise Price of the SAR may not be less than the Exercise Price of the
Incentive Stock Option.

 

 15 

   

 

(b)        The Committee may, in its discretion and on such terms and conditions
as the Committee considers appropriate in the circumstances, grant Awards under
the Plan (“Substitute Awards”) in substitution for stock and stock-based awards
(“Acquired Entity Awards”) held by current or former employees or non-employee
directors of, or consultants to, another corporation or entity who become
Eligible Persons as the result of a merger or consolidation of the employing
corporation or other entity (the “Acquired Entity”) with the Company or an
Affiliate or the acquisition by the Company or an Affiliate of property or stock
of the Acquired Entity immediately prior to such merger, consolidation or
acquisition in order to preserve for the Grantee the economic value of all or a
portion of such Acquired Entity Award at such price as the Committee determines
necessary to achieve preservation of economic value. The limitations of Sections
4.1 and 4.3 on the number of Shares reserved or available for grants shall not
apply to Substitute Awards granted under this Section 5.6(b).

 

5.7       Compliance with Rule 16b-3. The provisions of this Section 5.7 will
not apply unless and until the Company has a class of stock that is registered
under Section 12 of the Exchange Act.

 

(a)        Six-Month Holding Period Advice.  Unless a Grantee could otherwise
dispose of or exercise a derivative security or dispose of Shares delivered
under the Plan without incurring liability under Section 16(b) of the Exchange
Act, the Committee may advise or require a Grantee to comply with the following
in order to avoid incurring liability under Section 16(b) of the Exchange Act:
(i) at least six months must elapse from the date of acquisition of a derivative
security under the Plan to the date of disposition of the derivative security
(other than upon exercise or conversion) or its underlying equity security, and
(ii) Shares granted or awarded under the Plan other than upon exercise or
conversion of a derivative security must be held for at least six months from
the date of grant of an Award.

 

(b)        Reformation to Comply with Exchange Act Rules. To the extent the
Committee determines that a grant or other transaction by a Section 16 Person
should comply with applicable provisions of Rule 16b-3 (except for transactions
exempted under alternative Exchange Act rules), the Committee shall take such
actions as necessary to make such grant or other transaction so comply, and if
any provision of this Plan or any Award Agreement relating to a given Award does
not comply with the requirements of Rule 16b-3 as then applicable to any such
grant or transaction, such provision will be construed or deemed amended, if the
Committee so determines, to the extent necessary to conform to the then
applicable requirements of Rule 16b-3.

 

(c)        Rule 16b-3 Administration.  Any function relating to a Section 16
Person shall be performed solely by the Committee or the Board if necessary to
ensure compliance with applicable requirements of Rule 16b-3, to the extent the
Committee determines that such compliance is desired. Each member of the
Committee or person acting on behalf of the Committee shall be entitled to, in
good faith, rely or act upon any report or other information furnished to him by
any officer, manager or other employee of the Company or any Affiliate, the
Company’s independent certified public accountants or any executive compensation
consultant or attorney or other professional retained by the Company to assist
in the administration of the Plan.

 

 16 

   

 

5.8       Deferral of Award Payouts.  The Committee may permit a Grantee to
defer, or if and to the extent specified in an Award Agreement require the
Grantee to defer, receipt of the payment of cash or the delivery of Shares that
would otherwise be due by virtue of the lapse or waiver of restrictions with
respect to Restricted Stock Units, the satisfaction of any requirements or goals
with respect to Performance Units or Performance Shares, the lapse or waiver of
the deferral period for Deferred Stock, or the lapse or waiver of restrictions
with respect to Other Stock-Based Awards or Cash Incentive Awards. If the
Committee permits such deferrals, the Committee shall establish rules and
procedures for making such deferral elections and for the payment of such
deferrals, which shall conform in form and substance with applicable regulations
promulgated under Section 409A of the Code and Article 17 to ensure that the
Grantee is not subjected to tax penalties under Section 409A of the Code with
respect to such deferrals. Except as otherwise provided in an Award Agreement,
any payment or any Shares that are subject to such deferral shall be made or
delivered to the Grantee as specified in the Award Agreement or pursuant to the
Grantee’s deferral election.

 

Article 6.
Stock Options

 

6.1       Grant of Options.  Subject to and consistent with the provisions of
the Plan, Options may be granted to any Eligible Person in such number, and upon
such terms, and at any time and from time to time as shall be determined by the
Committee.

 

6.2       Award Agreement.  Each Option grant shall be evidenced by an Award
Agreement that shall specify the Exercise Price, the Term of the Option, the
number of Shares to which the Option pertains, the time or times at which such
Option shall be exercisable and such other provisions as the Committee shall
determine.

 

6.3       Option Exercise Price.  The Exercise Price of an Option under this
Plan shall be determined in the sole discretion of the Committee but may not be
less than 100% of the Fair Market Value of a Share on the Grant Date.

 

6.4       Grant of Incentive Stock Options.  At the time of the grant of any
Option, the Committee may in its discretion designate that such Option shall be
made subject to additional restrictions to permit it to qualify as an Incentive
Stock Option. Any Option designated as an Incentive Stock Option:

 

(a)        shall be granted only to an employee of the Company or a Subsidiary
Corporation;

 

(b)        shall have an Exercise Price of not less than 100% of the Fair Market
Value of a Share on the Grant Date, and, if granted to a person who owns capital
stock (including stock treated as owned under Section 424(d) of the Code)
possessing more than 10% of the total combined voting power of all classes of
capital stock of the Company or any Subsidiary Corporation (a “More Than 10%
Owner”), have an Exercise Price not less than 110% of the Fair Market Value of a
Share on its Grant Date;

 

 17 

   

(c)        shall be for a period of not more than 10 years (five years if the
Grantee is a More Than 10% Owner) from its Grant Date, and shall be subject to
earlier termination as provided herein or in the applicable Award Agreement;

 

(d)        shall not have an aggregate Fair Market Value (as of the Grant Date)
of the Shares with respect to which Incentive Stock Options (whether granted
under the Plan or any other stock option plan of the Grantee’s employer or any
parent or Subsidiary Corporation (“Other Plans”)) are exercisable for the first
time by such Grantee during any calendar year (“Current Grant”), determined in
accordance with the provisions of Section 422 of the Code, which exceeds
$100,000 (the “$100,000 Limit”);

 

(e)        shall, if the aggregate Fair Market Value of the Shares (determined
on the Grant Date) with respect to the Current Grant and all Incentive Stock
Options previously granted under the Plan and any Other Plans which are
exercisable for the first time during a calendar year (“Prior Grants”) would
exceed the $100,000 Limit, be, as to the portion in excess of the $100,000
Limit, exercisable as a separate option that is not an Incentive Stock Option at
such date or dates as are provided in the Current Grant;

 

(f)         shall require the Grantee to notify the Committee of any disposition
of any Shares delivered pursuant to the exercise of the Incentive Stock Option
under the circumstances described in Section 421(b) of the Code (relating to
holding periods and certain disqualifying dispositions) (“Disqualifying
Disposition”) within 10 days of such a Disqualifying Disposition;

 

(g)        shall by its terms not be assignable or transferable other than by
will or the laws of descent and distribution and may be exercised, during the
Grantee’s lifetime, only by the Grantee; provided, however, that the Grantee
may, to the extent provided in the Plan in any manner specified by the
Committee, designate in writing a beneficiary to exercise his or her Incentive
Stock Option after the Grantee’s death; and

 

(h)        shall, if such Option nevertheless fails to meet the foregoing
requirements, or otherwise fails to meet the requirements of Section 422 of the
Code for an Incentive Stock Option, be treated for all purposes of this Plan,
except as otherwise provided in subsections (d) and (e) above, as an Option that
is not an Incentive Stock Option.

 

Notwithstanding the foregoing and Section 3.2, the Committee may, without the
consent of the Grantee, at any time before the exercise of an Option (whether or
not an Incentive Stock Option), take any action necessary to prevent such Option
from being treated as an Incentive Stock Option.

 

6.5       Payment of Exercise Price.  Except as otherwise provided by the
Committee in an Award Agreement, Options shall be exercised by the delivery of a
written notice of exercise to the Company, setting forth the number of Shares
with respect to which the Option is to be exercised, accompanied by full payment
for the Shares made by any one or more of the following means:

 

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(a)      cash, personal check or wire transfer;

 

(b)      delivery of Shares owned by the Grantee prior to exercise, valued at
their Fair Market Value on the date of exercise;

 

(c)      with the approval of the Committee, Shares acquired upon the exercise
of such Option, such Shares valued at their Fair Market Value on the date of
exercise;

 

(d)     with the approval of the Committee, Restricted Shares held by the
Grantee prior to the exercise of the Option, each such share valued at the Fair
Market Value of a Share on the date of exercise; or

 

(e)      subject to applicable law (including the prohibited loan provisions of
Section 402 of the Sarbanes Oxley Act of 2002), through the sale of the Shares
acquired on exercise of the Option through a broker-dealer to whom the Grantee
has submitted an irrevocable notice of exercise and irrevocable instructions to
deliver promptly to the Company the amount of sale proceeds sufficient to pay
for such Shares, together with, if requested by the Company, the amount of
federal, state, local or foreign withholding taxes payable by Grantee by reason
of such exercise.

 

The Committee may in its discretion specify that, if any Restricted Shares
(“Tendered Restricted Shares”) are used to pay the Exercise Price, (x) all the
Shares acquired on exercise of the Option shall be subject to the same
restrictions as the Tendered Restricted Shares, determined as of the date of
exercise of the Option, or (y) a number of Shares acquired on exercise of the
Option equal to the number of Tendered Restricted Shares shall be subject to the
same restrictions as the Tendered Restricted Shares, determined as of the date
of exercise of the Option.

 

Article 7.
Stock Appreciation Rights

 

7.1        Issuance.  Subject to and consistent with the provisions of the Plan,
the Committee, at any time and from time to time, may grant SARs to any Eligible
Person either alone or in addition to other Awards granted under the Plan. Such
SARs may, but need not, be granted in connection with a specific Option granted
under Article 6. The Committee may impose such conditions or restrictions on the
exercise of any SAR as it shall deem appropriate.

 

7.2       Award Agreements.  Each SAR grant shall be evidenced by an Award
Agreement in such form as the Committee may approve and shall contain such terms
and conditions not inconsistent with other provisions of the Plan as shall be
determined from time to time by the Committee.

 

7.3       SAR Exercise Price.  The Exercise Price of a SAR shall be determined
by the Committee in its sole discretion; provided that the Exercise Price shall
not be less than 100% of the Fair Market Value of a Share on the date of the
grant of the SAR.

 

7.4       Exercise and Payment.  Upon the exercise of an SAR, a Grantee shall be
entitled to receive payment from the Company in an amount determined by
multiplying:

 

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(a)        The excess of the Fair Market Value of a Share on the date of
exercise over the Exercise Price; by

 

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

 

SARs shall be deemed exercised on the date written notice of exercise in a form
acceptable to the Committee is received by the Secretary of the Company. The
Company shall make payment in respect of any SAR within five (5) days of the
date the SAR is exercised. Any payment by the Company in respect of a SAR may be
made in cash, Shares, other property, or any combination thereof, as the
Committee, in its sole discretion, shall determine.

 

7.5       Grant Limitations.  The Committee may at any time impose any other
limitations upon the exercise of SARs which, in the Committee's sole discretion,
are necessary or desirable in order for Grantees to qualify for an exemption
from Section 16(b) of the Exchange Act.

 

Article 8.
Restricted Shares

 

8.1       Grant of Restricted Shares.  Subject to and consistent with the
provisions of the Plan, the Committee, at any time and from time to time, may
grant Restricted Shares to any Eligible Person in such amounts as the Committee
shall determine.

 

8.2       Award Agreement.  Each grant of Restricted Shares shall be evidenced
by an Award Agreement that shall specify the Period(s) of Restriction, the
number of Restricted Shares granted, and such other provisions as the Committee
shall determine. The Committee may impose such conditions and/or restrictions on
any Restricted Shares granted pursuant to the Plan as it may deem advisable,
including restrictions based upon the achievement of specific performance goals,
time-based restrictions on vesting following the attainment of the performance
goals, and/or restrictions under applicable securities laws; provided that such
conditions and/or restrictions may lapse, if so determined by the Committee, in
the event of the Grantee’s Termination of Affiliation due to death, Disability,
or involuntary termination by the Company or an Affiliate without “cause.”

 

8.3       Consideration for Restricted Shares.  The Committee shall determine
the amount, if any, that a Grantee shall pay for Restricted Shares.

 

8.4       Effect of Forfeiture.  If Restricted Shares are forfeited, and if the
Grantee was required to pay for such shares or acquired such Restricted Shares
upon the exercise of an Option, the Grantee shall be deemed to have resold such
Restricted Shares to the Company at a price equal to the lesser of (x) the
amount paid by the Grantee for such Restricted Shares, or (y) the Fair Market
Value of a Share on the date of such forfeiture. The Company shall pay to the
Grantee the deemed sale price as soon as is administratively practical. Such
Restricted Shares shall cease to be outstanding and shall no longer confer on
the Grantee thereof any rights as a shareholder of the Company, from and after
the date of the event causing the forfeiture, whether or not the Grantee accepts
the Company’s tender of payment for such Restricted Shares.

 

8.5       Escrow; Legends.  The Committee may provide that the certificates for
any Restricted Shares (x) shall be held (together with a stock power executed in
blank by the Grantee) in escrow by the Secretary of the Company until such
Restricted Shares become nonforfeitable or are forfeited and/or (y) shall bear
an appropriate legend restricting the transfer of such Restricted Shares under
the Plan. If any Restricted Shares become nonforfeitable, the Company shall
cause certificates for such shares to be delivered without such legend.

 

 20 

   

 

Article 9.
Performance Units and Performance Shares

 

9.1       Grant of Performance Units and Performance Shares.  Subject to and
consistent with the provisions of the Plan, Performance Units or Performance
Shares may be granted to any Eligible Person in such amounts and upon such
terms, and at any time and from time to time, as shall be determined by the
Committee.

 

9.2       Value/Performance Goals.  The Committee shall set performance goals in
its discretion which, depending on the extent to which they are met, will
determine the number or value of Performance Units or Performance Shares that
will be paid to the Grantee. With respect to Covered Employees and to the extent
the Committee deems it appropriate to comply with Section 162(m) of the Code,
all performance goals shall be objective Performance Measures satisfying the
requirements for the Performance-Based Exception and shall be set by the
Committee within the time period prescribed by Section 162(m) of the Code and
related regulations.

 

(a)        Performance Unit. Each Performance Unit shall have an initial value
that is established by the Committee at the time of grant.

 

(b)        Performance Share. Each Performance Share shall have an initial value
equal to the Fair Market Value of a Share on the date of grant.

 

9.3       Earning of Performance Units and Performance Shares.  After the
applicable Performance Period has ended, the holder of Performance Units or
Performance Shares shall be entitled to payment based on the level of
achievement of performance goals set by the Committee. If a Performance Unit or
Performance Share Award is intended to comply with the Performance-Based
Exception, the Committee shall certify the level of achievement of the
performance goals in writing before the Award is settled.

 

At the discretion of the Committee, the settlement of Performance Units or
Performance Shares may be in cash, Shares of equivalent value, or in some
combination thereof, as set forth in the Award Agreement.

 

If a Grantee is promoted, demoted or transferred to a different business unit of
the Company during a Performance Period, then, to the extent the Committee
determines that the Award, the performance goals, or the Performance Period are
no longer appropriate, the Committee may adjust, change, eliminate or cancel the
Award, the performance goals, or the applicable Performance Period, as it deems
appropriate in order to make them appropriate and comparable to the initial
Award, the performance goals, or the Performance Period.

 

At the discretion of the Committee, a Grantee may be entitled to receive any
dividends or Dividend Equivalents declared with respect to Shares deliverable in
connection with grants of Performance Units or Performance Shares which have
been earned, but not yet delivered to the Grantee.

 

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Article 10.
Deferred Stock and Restricted Stock Units

 

10.1     Grant of Deferred Stock and Restricted Stock Units.  Subject to and
consistent with the provisions of the Plan, the Committee, at any time and from
time to time, may grant Deferred Stock and/or Restricted Stock Units to any
Eligible Person, in such amount and upon such terms as the Committee shall
determine. Deferred Stock must conform in form and substance with applicable
regulations promulgated under Section 409A of the Code and with Article 17 to
ensure that the Grantee is not subjected to tax penalties under Section 409A of
the Code with respect to such Deferred Stock.

 

10.2     Vesting and Delivery.

 

(a)        Delivery With Respect to Deferred Stock. Delivery of Shares subject
to a Deferred Stock grant will occur upon expiration of the deferral period or
upon the occurrence of one or more of the distribution events described in
Section 409A(a)(2) of the Code as specified by the Committee in the Grantee’s
Award Agreement for the Award of Deferred Stock. An Award of Deferred Stock may
be subject to such substantial risk of forfeiture conditions as the Committee
may impose, which conditions may lapse at such times or upon the achievement of
such objectives as the Committee shall determine at the time of grant or
thereafter. Unless otherwise determined by the Committee, to the extent that the
Grantee has a Termination of Affiliation while the Deferred Stock remains
subject to a substantial risk of forfeiture, such Deferred Shares shall be
forfeited, unless the Committee determines that such substantial risk of
forfeiture shall lapse in the event of the Grantee’s Termination of Affiliation
due to death, Disability, or involuntary termination by the Company or an
Affiliate without “cause.”

 

(b)        Delivery With Respect to Restricted Stock Units. Delivery of Shares
subject to a grant of Restricted Stock Units shall occur no later than the 15th
day of the third month following the end of the taxable year of the Grantee or
the fiscal year of the Company in which the Grantee’s rights under such
Restricted Stock Units are no longer subject to a substantial risk of forfeiture
as defined in final regulations under Section 409A of the Code. Unless otherwise
determined by the Committee, to the extent that the Grantee has a Termination of
Affiliation while the Restricted Stock Units remains subject to a substantial
risk of forfeiture, such Restricted Stock Units shall be forfeited, unless the
Committee determines that such substantial risk of forfeiture shall lapse in the
event of the Grantee’s Termination of Affiliation due to death, Disability, or
involuntary termination by the Company or an Affiliate without “cause.”

 

10.3     Voting and Dividend Equivalent Rights Attributable to Deferred Stock
and Restricted Stock Units.  A Grantee awarded Deferred Stock or Restricted
Stock Units will have no voting rights with respect to such Deferred Stock or
Restricted Stock Units prior to the delivery of Shares in settlement of such
Deferred Stock and/or Restricted Stock Units. Unless otherwise determined by the
Committee, a Grantee will have the rights to receive Dividend Equivalents in
respect of Deferred Stock and/or Restricted Stock Units, which Dividend
Equivalents shall be deemed reinvested in additional Shares of Deferred Stock or
Restricted Stock Units, as applicable, which shall remain subject to the same
forfeiture conditions applicable to the Deferred Stock or Restricted Stock Units
to which such Dividend Equivalents relate.

 

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Article 11.
Dividend Equivalents

 

The Committee is authorized to grant Awards of Dividend Equivalents alone or in
conjunction with other Awards; provided, however, that no Dividend Equivalents
may be granted in conjunction with any grant of Options or SARs. The Committee
may provide that Dividend Equivalents shall be paid or distributed when accrued
or shall be deemed to have been reinvested in additional Shares or additional
Awards or otherwise reinvested.

 

Article 12.
Bonus Shares

 

Subject to the terms of the Plan, the Committee may grant Bonus Shares to any
Eligible Person, in such amount and upon such terms and at any time and from
time to time as shall be determined by the Committee.

 

Article 13.
Other Stock-Based Awards

 

The Committee is authorized, subject to limitations under applicable law, to
grant such other Awards that are denominated or payable in, valued in whole or
in part by reference to, or otherwise based on, or related to, Shares, as deemed
by the Committee to be consistent with the purposes of the Plan, including
Shares awarded which are not subject to any restrictions or conditions,
convertible or exchangeable debt securities or other rights convertible or
exchangeable into Shares, and Awards valued by reference to the value of
securities of or the performance of specified Affiliates. Subject to and
consistent with the provisions of the Plan, the Committee shall determine the
terms and conditions of such Awards. Except as provided by the Committee, Shares
delivered pursuant to a purchase right granted under this Article 13 shall be
purchased for such consideration, paid for by such methods and in such forms,
including cash, Shares, outstanding Awards or other property, as the Committee
shall determine.

 

Article 14.
Non-Employee Director Awards

 

Subject to the terms of the Plan, the Board may grant Awards to any Non-Employee
Director, in such amount and upon such terms and at any time and from time to
time as shall be determined by the full Board in its sole discretion. Except as
otherwise provided in Section 5.6(b), a Non-Employee Director may not be granted
Awards with respect to more than 400,000 Shares in a single calendar year,
subject to adjustment as provided in Section 4.2(a).

 

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Article 15.
Cash Incentive Awards

 

15.1     Cash Incentive Awards.  Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Cash Incentive
Awards to any Eligible Person in such amounts and upon such terms, including the
achievement of specific performance goals during the Performance Period, as the
Committee may determine. With respect to Covered Employees and to the extent the
Committee deems it appropriate to comply with Section 162(m) of the Code, all
performance goals shall be objective Performance Measures satisfying the
requirements for the Performance-Based Exception and shall be set by the
Committee within the time period prescribed by Section 162(m) of the Code and
related regulations. An Eligible Person may have more than one Cash Incentive
Award outstanding at any time. For instance, the Committee may grant an Eligible
Person one Cash Incentive Award with a calendar year or fiscal year Performance
Period (an annual incentive bonus) and a separate Cash Incentive Award with a
Performance Period that covers more than one calendar or fiscal year (a
long-term cash incentive bonus).

 

15.2     Value of Cash Incentive Awards.  Each Cash Incentive Award shall
specify a payment amount or payment range as determined by the Committee. The
Committee shall establish performance goals applicable to each Cash Incentive
Award in its discretion and the amount that will be paid to the Grantee pursuant
to such Cash Incentive Award if the applicable performance goals for the
Performance Period are met.

 

15.3     Payment of Cash Incentive Awards.  Payment, if any, with respect to a
Cash Incentive Awards shall be made in cash in accordance with the terms of the
Award Agreement; provided, however, that if the Award Agreement does not specify
a payment date with respect to a Cash Incentive Award, payment of the Cash
Incentive Award will be made no later than the 15th day of the third month
following the end of the taxable year of the Grantee or the fiscal year of the
Company during which the Performance Period ends.

 

15.4     Termination of Affiliation.  The Committee shall determine the extent
to which a Grantee shall have the right to receive Cash Incentive Awards
following his or her Termination of Affiliation. Such provisions shall be
determined in the sole discretion of the Committee, such provisions may be
included in an Award Agreement entered into with each Grantee, but need not be
uniform among all Cash Incentive Awards granted pursuant to the Plan, and may
reflect distinctions based on the reasons for termination.

 

Article 16.
Amendment, Modification, and Termination

 

16.1     Amendment, Modification, and Termination.  Subject to Section 16.2, the
Board may, at any time and from time to time, alter, amend, suspend, discontinue
or terminate the Plan in whole or in part without the approval of the Company’s
shareholders, except that (a) any amendment or alteration shall be subject to
the approval of the Company’s shareholders if such shareholder approval is
required by any federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the Shares may then be listed or
quoted, and (b) the Board may otherwise, in its discretion, determine to submit
other such amendments or alterations to shareholders for approval.

 

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16.2     Awards Previously Granted.  Except as otherwise specifically permitted
in the Plan or an Award Agreement, no termination, amendment, or modification of
the Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the written consent of the Grantee of such Award.

 

Article 17.
Compliance with Code Section 409A

 

17.1     Awards Subject to Code Section 409A.  The provisions of this Article 17
shall apply to any Award or portion thereof that is or becomes deferred
compensation subject to Code Section 409A (a “409A Award”), notwithstanding any
provision to the contrary contained in the Plan or the Award Agreement
applicable to such Award.

 

17.2     Deferral and/or Distribution Elections.  Except as otherwise permitted
or required by Code Section 409A, the following rules shall apply to any
deferral and/or elections as to the form or timing of distributions (each, an
“Election”) that may be permitted or required by the Committee with respect to a
409A Award:

 

(a)        Any Election must be in writing and specify the amount being
deferred, and the time and form of distribution (i.e., lump sum or installments)
as permitted by this Plan. An Election may but need not specify whether payment
will be made in cash, Shares or other property.

 

(b)        Any Election shall become irrevocable as of the deadline specified by
the Committee, which shall not be later than December 31 of the year preceding
the year in which services relating to the Award commence; provided, however,
that if the Award qualifies as “performance-based compensation” for purposes of
Code Section 409A and is based on services performed over a period of at least
twelve (12) months, then the deadline may be no later than six (6) months prior
to the end of such Performance Period.

 

(c)        Unless otherwise provided by the Committee, an Election shall
continue in effect until a written election to revoke or change such Election is
received by the Committee, prior to the last day for making an Election for the
subsequent year.

 

17.3     Subsequent Elections.  Except as otherwise permitted or required by
Code Section 409A, any 409A Award which permits a subsequent Election to further
defer the distribution or change the form of distribution shall comply with the
following requirements:

 

(a)        No subsequent Election may take effect until at least twelve (12)
months after the date on which the subsequent Election is made;

 

(b)        Each subsequent Election related to a distribution upon separation
from service, a specified time, or a change in control as defined in Section
17.4(e) must result in a delay of the distribution for a period of not less than
five (5) years from the date such distribution would otherwise have been made;
and

 

(c)        No subsequent Election related to a distribution to be made at a
specified time or pursuant to a fixed schedule shall be made less than twelve
(12) months prior to the date the first scheduled payment would otherwise be
made.

 

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17.4     Distributions Pursuant to Deferral Elections.  Except as otherwise
permitted or required by Code Section 409A, no distribution in settlement of a
409A Award may commence earlier than:

 

(a)        Separation from Service;

 

(b)       The date the Participant becomes Disabled (as defined in Section
2.14(b));

 

(c)       The Participant’s death;

 

(d)        A specified time (or pursuant to a fixed schedule) that is either (i)
specified by the Committee upon the grant of the Award and set forth in the
Award Agreement or (ii) specified by the Grantee in an Election complying with
the requirements of Section 17.2 and/or 17.3, as applicable; or

 

(e)        A change in control of the Company within the meaning of Treasury
Regulation Section 1.409A-3(h)(5).

 

17.5     Six Month Delay.  Notwithstanding anything herein or in any Award
Agreement or Election to the contrary, to the extent that distribution of a 409A
Award is triggered by a Grantee’s Separation from Service, if the Grantee is
then a “specified employee” (as defined in Treasury Regulation Section
1.409A-1(i)), no distribution may be made before the date which is six (6)
months after such Grantee’s Separation from Service, or, if earlier, the date of
the Grantee’s death.

 

17.6     Death or Disability.  Unless the Award Agreement otherwise provides, if
a Grantee dies or becomes Disabled before complete distribution of amounts
payable upon settlement of a 409A Award, such undistributed amounts, to the
extent vested, shall be distributed as provided in the Participants Election. If
the Participant has made no Election with respect to distributions upon death or
Disability, all such distributions shall be paid in a lump sum within 90 days
following the date of the Participant’s death or Disability.

 

17.7     No Acceleration of Distributions.  This Plan does not permit the
acceleration of the time or schedule of any distribution under a 409A Award,
except as provided by Code Section 409A and/or applicable regulations or rulings
issued thereunder.

 

Article 18.
Withholding

 

18.1     Required Withholding.

 

(a)        The Committee in its sole discretion may provide that when taxes are
to be withheld in connection with the exercise of an Option or SAR, or upon the
lapse of restrictions on Restricted Shares, or upon the transfer of Shares, or
upon payment of any other benefit or right under this Plan (the date on which
such exercise occurs or such restrictions lapse or such payment of any other
benefit or right occurs hereinafter referred to as the “Tax Date”), the Grantee
may elect to make payment for the withholding of federal, state and local taxes,
including Social Security and Medicare (“FICA”) taxes by one or a combination of
the following methods:

 

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(i)       payment of an amount in cash equal to the amount to be withheld
(including cash obtained through the sale of the Shares acquired on exercise of
an Option or SAR, upon the lapse of restrictions on Restricted Shares, or upon
the transfer of Shares, through a broker-dealer to whom the Grantee has
submitted an irrevocable instructions to deliver promptly to the Company, the
amount to be withheld);

 

(ii)      delivering part or all of the amount to be withheld in the form of
Shares valued at its Fair Market Value on the Tax Date;

 

(iii)     requesting the Company to withhold from those Shares that would
otherwise be received upon exercise of the Option or SAR, upon the lapse of
restrictions on Restricted Stock, or upon the transfer of Shares, a number of
Shares having a Fair Market Value on the Tax Date equal to the amount to be
withheld; or

 

(iv)     withholding from any compensation otherwise due to the Grantee.

 

The Committee in its sole discretion may provide that the maximum amount of tax
withholding upon exercise of an Option or SARs, upon the lapse of restrictions
on Restricted Shares, or upon the transfer of Shares, to be satisfied by
withholding Shares upon exercise of such Option or SAR, upon the lapse of
restrictions on Restricted Shares, or upon the transfer of Shares, pursuant to
clause (iii) above shall not exceed the minimum amount of taxes, including FICA
taxes, required to be withheld under federal, state and local law. An election
by Grantee under this subsection is irrevocable. Any fractional share amount and
any additional withholding not paid by the withholding or surrender of Shares
must be paid in cash. If no timely election is made, the Grantee must deliver
cash to satisfy all tax withholding requirements.

 

(b)        Any Grantee who makes a Disqualifying Disposition (as defined in
Section 6.4(f)) or an election under Section 83(b) of the Code shall remit to
the Company an amount sufficient to satisfy all resulting tax withholding
requirements in the same manner as set forth in subsection (a).

 

18.2     Notification under Code Section 83(b).  If the Grantee, in connection
with the exercise of any Option, or the grant of Restricted Shares, makes the
election permitted under Section 83(b) of the Code to include in such Grantee’s
gross income in the year of transfer the amounts specified in Section 83(b) of
the Code, then such Grantee shall notify the Company of such election within 10
days of filing the notice of the election with the Internal Revenue Service, in
addition to any filing and notification required pursuant to regulations issued
under Section 83(b) of the Code. The Committee may, in connection with the grant
of an Award or at any time thereafter, prohibit a Grantee from making the
election described above.

 

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Article 19.
Additional Provisions

 

19.1     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 of all or substantially all of the
business and/or assets of the Company.

 

19.2     Severability.  If any part of the Plan is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not invalidate any other part of the Plan. Any Section or part
of a Section so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will give effect to the terms of such Section or
part of a Section to the fullest extent possible while remaining lawful and
valid.

 

19.3     Requirements of Law.  The granting of Awards and the delivery of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required. Notwithstanding any provision of the Plan or any
Award, Grantees shall not be entitled to exercise, or receive benefits under,
any Award, and the Company (and any Affiliate) shall not be obligated to deliver
any Shares or deliver benefits to a Grantee, if such exercise or delivery would
constitute a violation by the Grantee or the Company of any applicable law or
regulation.

 

19.4     Securities Law Compliance.

 

(a)        If the Committee deems it necessary to comply with any applicable
securities law, or the requirements of any stock exchange upon which Shares may
be listed, the Committee may impose any restriction on Awards or Shares acquired
pursuant to Awards under the Plan as it may deem advisable. In addition, if
requested by the Company and any underwriter engaged by the Company, Shares
acquired pursuant to Awards may not be sold or otherwise transferred or disposed
of for such period following the effective date of any registration statement of
the Company filed under the Securities Act as the Company or such underwriter
shall specify reasonably and in good faith, not to exceed 180 days in the case
of the Company’s initial public offering or 90 days in the case of any other
public offering. All certificates for Shares delivered under the Plan pursuant
to any Award or the exercise thereof shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the SEC, any stock exchange upon
which Shares are then listed, any applicable securities law, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions. If so requested by the Company, the
Grantee shall make a written representation to the Company that he or she will
not sell or offer to sell any Shares unless a registration statement shall be in
effect with respect to such Shares under the Securities Act of 1933, as amended,
and any applicable state securities law or unless he or she shall have furnished
to the Company an opinion of counsel, in form and substance satisfactory to the
Company, that such registration is not required.

 

(b)        If the Committee determines that the exercise or nonforfeitability
of, or delivery of benefits pursuant to, any Award would violate any applicable
provision of securities laws or the listing requirements of any national
securities exchange or national market system on which are listed any of the
Company’s equity securities, then the Committee may postpone any such exercise,
nonforfeitability or delivery, as applicable, but the Company shall use all
reasonable efforts to cause such exercise, nonforfeitability or delivery to
comply with all such provisions at the earliest practicable date.

 

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19.5     Awards Subject to Claw-Back Policies.  Notwithstanding any provisions
herein to the contrary, if the Company has a class of stock that is registered
under Section 12 of the Exchange Act, all Awards granted hereunder shall be
subject to the terms of any recoupment policy currently in effect or
subsequently adopted by the Board to implement Section 304 of the Sarbanes-Oxley
Act of 2002 ("Sarbanes-Oxley Act") or Section 10D of the Exchange Act (or with
any amendment or modification of such recoupment policy adopted by the Board) to
the extent that such Award (whether or not previously exercised or settled) or
the value of such Award is required to be returned to the Company pursuant to
the terms of such recoupment policy.

 

19.6     No Rights as a Shareholder.  No Grantee shall have any rights as a
shareholder of the Company with respect to the Shares (other than Restricted
Shares) which may be deliverable upon exercise or payment of such Award until
such Shares have been delivered to him or her. Restricted Shares, whether held
by a Grantee or in escrow by the Secretary of the Company, shall confer on the
Grantee all rights of a shareholder of the Company, except as otherwise provided
in the Plan or Award Agreement. At the time of a grant of Restricted Shares, the
Committee may require the payment of cash dividends thereon to be deferred and,
if the Committee so determines, reinvested in additional Restricted Shares.
Stock dividends and deferred cash dividends issued with respect to Restricted
Shares shall be subject to the same restrictions and other terms as apply to the
Restricted Shares with respect to which such dividends are issued. The Committee
may in its discretion provide for payment of interest on deferred cash
dividends.

 

19.7     Nature of Payments.  Unless otherwise specified in the Award Agreement,
Awards shall be special incentive payments to the Grantee and shall not be taken
into account in computing the amount of salary or compensation of the Grantee
for purposes of determining any pension, retirement, death or other benefit
under (a) any pension, retirement, profit sharing, bonus, insurance or other
employee benefit plan of the Company or any Affiliate, except as such plan shall
otherwise expressly provide, or (b) any agreement between (i) the Company or any
Affiliate and (ii) the Grantee, except as such agreement shall otherwise
expressly provide.

 

19.8     Non-Exclusivity of Plan.  Neither the adoption of the Plan by the Board
nor its submission to the shareholders of the Company for approval shall be
construed as creating any limitations on the power of the Board to adopt such
other compensatory arrangements for employees or Non-Employee Directors as it
may deem desirable.

 

19.9     Governing Law.  The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Delaware,
other than its laws respecting choice of law.

 

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19.10   Unfunded Status of Awards; Creation of Trusts.  The Plan is intended to
constitute an “unfunded” plan for incentive and deferred compensation. With
respect to any payments not yet made to a Grantee pursuant to an Award, nothing
contained in the Plan or any Award Agreement shall give any such Grantee any
rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts or
make other arrangements to meet the Company’s obligations under the Plan to
deliver cash, Shares or other property pursuant to any Award which trusts or
other arrangements shall be consistent with the “unfunded” status of the Plan
unless the Committee otherwise determines.

 

19.11   Affiliation.  Nothing in the Plan or an Award Agreement shall interfere
with or limit in any way the right of the Company or any Affiliate to terminate
any Grantee’s employment or consulting contract at any time, nor confer upon any
Grantee the right to continue in the employ of or as an officer of or as a
consultant to the Company or any Affiliate.

 

19.12   Participation.  No employee or officer 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.

 

19.13   Military Service.  Awards shall be administered in accordance with
Section 414(u) of the Code and the Uniformed Services Employment and
Reemployment Rights Act of 1994.

 

19.14   Construction.  The following rules of construction will apply to the
Plan: (a) the word “or” is disjunctive but not necessarily exclusive, and (b)
words in the singular include the plural, words in the plural include the
singular, and words in the neuter gender include the masculine and feminine
genders and words in the masculine or feminine gender include the other neuter
genders.

 

19.15   Headings.  The headings of articles and sections are included solely for
convenience of reference, and if there is any conflict between such headings and
the text of this Plan, the text shall control.

 

19.16   Obligations.  Unless otherwise specified in the Award Agreement, the
obligation to deliver, pay or transfer any amount of money or other property
pursuant to Awards under this Plan shall be the sole obligation of a Grantee’s
employer; provided that the obligation to deliver or transfer any Shares
pursuant to Awards under this Plan shall be the sole obligation of the Company.

 

19.17   No Right to Continue as Director.  Nothing in the Plan or any Award
Agreement shall confer upon any Non-Employee Director the right to continue to
serve as a director of the Company.

 

19.18   Shareholder Approval.  All Awards granted on or after the Effective Date
and prior to the date the Company’s shareholders approve the Plan are expressly
conditioned upon and subject to approval of the Plan by the Company’s
shareholders.

 

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