Exhibit 10.1
FLOW INTERNATIONAL CORPORATION
2005 EQUITY INCENTIVE PLAN
AS AMENDED AND RESTATED—SEPTEMBER 10, 2009
     1. Purposes of the Plan. The purposes of this Plan are to further the
growth, development and financial success of the Company by attracting and
retaining the most talented Employees, Consultants and Directors available, and
by aligning the long-term interests of Employees, Consultants and Directors with
those of the shareholders by providing an opportunity to acquire an ownership
interest in the Company and by providing both performance rewards and long term
incentives for future contributions to the success of the Company.
          The Plan permits the grant of Incentive Stock Options, Nonqualified
Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation
Rights, or cash awards, at the discretion of the Committee and as reflected in
the terms of the Award Agreement. Each Award will be subject to conditions
specified in the Plan, such as continued employment or satisfaction of
performance criteria, as well as any conditions specified in the Award
Agreement.
          This Plan will serve as a framework for the Committee to establish
sub-plans or procedures governing the grants to Employees, Directors,
Consultants and Employees working for the Company outside of the United States.
The options granted under the Former Plan shall continue to be administered
under the Former Plan until such time as those options are exercised, expire or
become unexercisable for any reason.
     2. Definitions. As used herein, the following definitions shall apply:
          (a) “Award” shall mean any award or benefits granted under the Plan,
including Options, Shares, Restricted Stock, Restricted Stock Units, SARs and
cash.
          (b) “Award Agreement” shall mean a written or electronic agreement
between the Company and the Participant setting forth the terms of the Award.
          (c) “Beneficial Ownership” shall have the meaning set forth in
Rule 13d-3 promulgated under the Exchange Act.
          (d) “Board” shall mean the Board of Directors of the Company.
          (e) “Change in Control” shall mean any of the following: (1) Approval
by the holders of the Company’s Common Stock of any merger or consolidation of
the Company in which the Company is not the continuing or surviving corporation
or pursuant to which shares of common stock are converted into cash, securities
or other property, other than a merger of the Company in which the holders of
the Common Stock immediately prior to the merger have substantially the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger; (2) Approval by the holders of the common stock of any sale,
lease, exchange or other transfer in one transaction or a series of related
transactions of all or substantially all of the Company’s assets other than a
transfer of the Company’s assets to a majority-owned subsidiary of the Company;
or (3) Approval by the holders of the Common Stock of any plan or proposal for
the liquidation or dissolution of the Company.
          (f) “Code” shall mean the Internal Revenue Code of 1986, as amended.
          (g) “Committee” shall mean the Compensation and Plan Administrator
Committee of the Board, which at all times shall consist of two (2) or more
members of the Board, each of whom must qualify as an Independent Director.
          (h) “Common Stock” shall mean the common stock of the Company, $0.01
par value per share.
          (i)“Company” shall mean Flow International Corporation., a Washington
corporation and any successor thereto.
          (j) “Consultant” shall mean any person, except an Employee, engaged by
the Company or any Subsidiary of the Company, to render personal services to
such entity,

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including as an advisor, pursuant to the terms of a written agreement.
          (k) “Continuous Status as a Participant” shall mean (i) for Employees,
the absence of any interruption or termination of service as an Employee,
(ii) for Directors, the absence of any interruption or termination of service as
a Director, and (iii) for Consultants, the absence of any interruption,
expiration, or termination of such person’s consulting or advisory relationship
with the Company or the occurrence of any termination event as set forth in such
person’s Award Agreement. Continuous Status as a Participant shall not be
considered interrupted (A) for an Employee on leave under any recognized form of
leave under policies of the Company or any applicable Subsidiary as may be in
effect from time to time, and (B) for a Consultant, in the case of any temporary
interruption in such person’s availability to provide services to the Company
which has been authorized in writing by a vice president of the Company prior to
its commencement.
          (l) “Director” shall mean a member of the Board.
          (m) “Disability” shall mean (i) in the case of a Participant whose
employment with the Company or a Subsidiary is subject to the terms of an
employment or consulting agreement that includes a definition of “Disability” as
used in this Plan shall have the meaning set forth in such employment or
consulting agreement during the period that such employment or consulting
agreement remains in effect; and (ii) in all other cases, the term “Disability”
as used in this Plan shall mean a “permanent and total disability” as the term
is defined for purposes of Section 22(e)(3) of the Code.
          (n) “Effective Date” shall mean the date on which the Company’s
shareholders have approved this Plan in accordance with applicable NASDAQ rules.
          (o) “Employee” shall mean any person, including an officer, who is a
common law employee of, receives remuneration for personal services to, is
reflected on the official human resources database as an employee of, and is on
the payroll of the Company or any Subsidiary of the Company. A person is on the
payroll if he or she is paid from or at the direction of the payroll department
of the Company, or any Subsidiary of the Company. Persons providing services to
the Company, or to any Subsidiary of the Company, pursuant to an agreement with
a staff leasing organization, temporary workers engaged through or employed by
temporary or leasing agencies, and workers who hold themselves out to the
Company, or a Subsidiary to which they are providing services as being
independent contractors, or as being employed by or engaged through another
company while providing the services, and persons covered by a collective
bargaining agreement (unless the collective bargaining agreement applicable to
the person specifically provides for participation in this Plan) are not
Employees for purposes of this Plan and do not and cannot participate in this
Plan, whether or not such persons are, or may be reclassified by the courts, the
Internal Revenue Service, the U. S. Department of Labor, or other person or
entity, as common law employees of the Company, or any Subsidiary, either solely
or jointly with another person or entity.
          (p) “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.
          (q) “Executive Officers” shall mean the officers of the Company as
such term is defined in Rule 16a-1 under the Exchange Act.
          (r) “Fair Market Value” shall mean the closing price per share of the
Common Stock on the Nasdaq National Market or the Nasdaq SmallCap Market as to
the date specified (or the previous trading day if the date specified is a day
on which no trading occurred), or if the Nasdaq National Market or the Nasdaq
SmallCap Market shall cease to be the principal exchange or quotation system
upon which the shares of Common Stock are listed or quoted, then such exchange
or quotation system as the

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Company elects to list or quote its shares of Common Stock and that the
Committee designates as the Company’s principal exchange or quotation system.
          (s) “Former Plan” shall mean the 1995 Long-Term Incentive Compensation
Plan.
          (t) “Incentive Stock Option” shall mean any Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
          (u) “Independent Director” shall mean a Director who: (1) meets the
independence requirements set forth in NASD Rule 4200(a)(15), or any successor
rule, as in effect from time to time; (2) qualifies as an “outside director”
under Section 162(m) of the Code and the Treasury Regulations promulgated
thereunder; (3) qualifies as a “non-employee director” under Rule 16b-3
promulgated under the Exchange Act; and (4) satisfies independence criteria
under any other applicable laws or regulations relating to the issuance of
Shares to Employees.
          (v) “Maximum Annual Cash Award” shall have the meaning set forth in
Section 10.
          (w) “Maximum Annual Participant Stock Award” shall have the meaning
set forth in Section 6(b).
          (x) “Non-Employee Director” shall mean a Director who is not an
Employee.
          (y) “Nonqualified Stock Option” shall mean an Option that is not an
Incentive Stock Option.
          (z) “Option” shall mean a stock option granted pursuant to Section 7
of the Plan.
          (aa) “Option Price” shall mean the per share purchase price of a Share
purchased pursuant to an Option.
          (bb) “Parent” shall mean a “parent corporation,” whether now or
hereafter existing, as defined in Section 424(e) of the Code.
          (cc) “Participant” shall mean an Employee, Director or Consultant.

          (dd) “Performance Criteria” shall have the meaning set forth in
Section 8(c).
          (ee) “Plan” shall mean this Flow International Corporation 2005 Equity
Incentive Plan, including any amendments thereto.
          (ff) “Reprice” shall mean the adjustment or amendment of the exercise
price of Options or SARs previously awarded whether through amendment,
cancellation, replacement of grants or any other means.
          (gg) “Restricted Stock” shall mean a grant of Shares pursuant to
Section 8 of the Plan.
          (hh) “Restricted Stock Units” shall mean a grant of the right to
receive Shares in the future or their cash equivalent (or both) pursuant to
Section 8 of the Plan.
          (ii) “SAR” shall mean a stock appreciation right awarded pursuant to
Section 9 of the Plan.
          (jj) “SEC” shall mean the Securities and Exchange Commission.
          (kk) “Share” shall mean one share of Common Stock, as adjusted in
accordance with Section 4 of the Plan.
          (ll) “Stand-Alone SARs” shall have the meaning set forth in Section
9(c) of the Plan.

          (mm) “Subcommittee” shall have the meaning set forth in Section 5(d).
          (nn) “Subsidiary” shall mean (1) in the case of an Incentive Stock
Option a “subsidiary corporation,” whether now or hereafter existing, as defined
in Section 424(f) of the Code, and (2) in the case of a Nonqualified Stock
Option, Restricted Stock, a Restricted Stock Unit or a SAR, in addition to a
subsidiary corporation as defined in (1), (A) a limited liability company,
partnership or other entity in which the Company controls fifty percent (50%) or
more of the voting power or equity interests, or (B) an entity with respect to
which the Company possesses the power, directly or indirectly, to direct or
cause the direction of the management and policies of that entity, whether
through the Company’s ownership of voting securities, by contract or otherwise.

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          (oo) “Tandem SARs” shall have the meaning set forth in Section 9(a) of
the Plan.
          (pp) “Ten Percent Shareholder” shall mean a person who owns (or is
deemed to own pursuant to Section 424(d) of the Code) stock comprising more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or any Parent or Subsidiary.
3. Shares Subject to the Plan.
          (a) Reservation of Shares. The shares of Common Stock reserved under
this Plan will include reserved shares of Common Stock that are not subject to a
grant or as to which the option award granted has been forfeited under the
Former Plan, and an additional Four Million Two Hundred Thousand (4,200,000)
Shares of Common Stock. Subject to the provisions of Section 4, the maximum
aggregate number of Shares which may be awarded and delivered under the Plan
shall not exceed Five Million (5,000,000) Shares (adjusted, proportionately, in
the event of any stock split or stock dividend with respect to the Shares), and
the maximum number which may be granted as Incentive Stock Options under the
Plan shall not exceed One Million (1,000,000) Shares. The Company, during the
term of this Plan, will at all times reserve and keep available such number of
Shares as shall be sufficient to satisfy the requirements of the Plan. Shares
available for issuance under the Plan shall be increased by any shares of Common
Stock subject to outstanding awards under the Former Plan on the date of
shareholder approval of the Plan that later cease to be subject to such awards
for any reason other than such awards having been exercised, subject to
adjustment from time to time as provided in Section 5, which shares of Common
Stock shall, as of the date such shares cease to be subject to such awards,
cease to be available for grant and issuance under the Former Plan, but shall be
available for issuance under the Plan. The number of shares of Common Stock
underlying an Award not issued as a result of any of the following actions shall
again be available for issuance under the Plan: (i) a payout of a Stand-Alone
SAR, or a performance-based award of Restricted Stock or Restricted Stock Units
in the form of cash; (ii) a cancellation, termination, expiration, forfeiture,
or lapse for any reason (with the exception of the termination of a Tandem SAR
upon exercise of the related Options, or the termination of a related Option
upon exercise of the corresponding Tandem SAR) of any Stock Award; or (iii)
payment of the Option exercise price and/or payment of any taxes arising upon
exercise of the Option by withholding shares of Common Stock which otherwise
would be acquired on exercise or issued upon such payout. The Shares may be
authorized but unissued, or reacquired shares of Common Stock.
          (b) Substitutions and Assumptions. The Board or the Committee shall
have the right to substitute or assume Awards in connection with mergers,
reorganizations, separations, or other transactions to which Section 424(a) of
the Code applies, provided such substitutions and assumptions are permitted by
Section 424 of the Code and the regulations promulgated thereunder. The number
of Shares reserved pursuant to Section 3(a) (but not the maximum number of
Shares which may be granted as Incentive Stock Options under the Plan) may be
increased by a corresponding number of Awards assumed and, in the case of
substitution, by the net increase in the number of Shares subject to Awards
before and after the substitution.
          (c) Securities Law Compliance. Shares shall not be issued pursuant to
the exercise of an Award unless the exercise of such Award and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated under either
such Act, and the requirements of any stock exchange or quotation system upon
which the Shares may then be listed or quoted, and shall be further subject to
the approval of counsel

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for the Company with respect to such compliance.
          4. Adjustments to Shares Subject to the Plan.
          (a) Capitalization Adjustments. If any change is made to the Shares by
reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Shares as a
class without the Company’s receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan, (ii) the number and/or class of securities and/or the price per
Share covered by outstanding Awards under the Plan, (iii) the Maximum Annual
Participant Stock Award and (iv) the maximum number of Shares which may be
granted as Incentive Stock Options under the Plan. The Committee may also make
adjustments described in (i)-(iv) of the previous sentence in the event of any
distribution of assets to shareholders other than a normal cash dividend. In
determining adjustments to be made under this Section 4, the Committee may take
into account such factors as it deems appropriate, including the restrictions of
applicable law and the potential tax consequences of an adjustment, and in light
of such factors may make adjustments that are not uniform or proportionate among
outstanding Awards. Adjustments, if any, and any determinations or
interpretations, including any determination of whether a distribution is other
than a normal cash dividend, made by the Committee shall be final, binding and
conclusive. The Committee in its discretion may provide holders of Restricted
Stock or Restricted Stock Units a dividend equivalent right with respect to the
Shares the Participant shall be entitled to receive or purchase. For purposes of
this Section 4, conversion of any convertible securities of the Company shall
not be deemed to have been “effected without receipt of consideration.”
          (b) Change in Control. In the event of Change in Control, then, to the
extent permitted by applicable law: (1) any surviving corporation may assume any
Awards outstanding under the Plan or may substitute similar stock awards
(including an award to acquire the same consideration paid to the shareholders
in the transaction described in this Section 4(b)) for those outstanding under
the Plan, or (2) in the event any surviving corporation does not agree to assume
or continue such Awards, or to substitute similar stock awards for those
outstanding under the Plan in accordance with the preceding clause, then the
time during which such Awards may be exercised automatically will be accelerated
and become fully vested and exercisable immediately prior to the consummation of
such transaction, and the Awards shall automatically terminate upon consummation
of such transaction if not exercised prior to such event.
          (c) No Limitations. Except as expressly provided herein, no issuance
by the Company of shares of any class, or securities convertible into shares of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an Award.
5. Plan Administration.
          (a) Authority. The Plan shall be administered by the Committee. The
Committee shall have full and exclusive power to administer the Plan on behalf
of the Board, subject to such terms and conditions as the Committee may
prescribe. Notwithstanding anything herein to the contrary, the Committee’s
power to administer the Plan, and actions the Committee takes under the Plan,
shall be consistent with the provisions set forth in the Committee’s charter, as
such charter may be amended from time to time.
          (b) Powers of the Committee. Subject to the other provisions of this
Plan, the Committee shall have the authority, in its discretion:

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          (i) to grant Incentive Stock Options, Nonqualified Stock Options,
Shares, Restricted Stock, Restricted Stock Units, cash awards and SARs to
Participants and to determine the terms and conditions of such Awards, including
the determination of the Fair Market Value of the Shares and the exercise price
(subject to Section 7(b)), and to modify or amend each Award, with the consent
of the Participant when required;
          (ii) to determine the Participants to whom Awards, if any, will be
granted hereunder, additional eligibility requirements for such awards, the
timing of such Awards, and the number of Shares (if any) to be represented by
each Award;
          (iii) to construe and interpret the Plan, the Awards granted
hereunder, and any Award Agreement;
          (iv) to prescribe, amend, and rescind rules and regulations relating
to the Plan, including the form of Award Agreement, and manner of acceptance of
an Award, such as correcting a defect or supplying any omission, or reconciling
any inconsistency so that the Plan or any Award Agreement complies with
applicable law, regulations and listing requirements and to avoid unanticipated
consequences deemed by the Committee to be inconsistent with the purposes of the
Plan or any Award Agreement;
          (v) to establish performance, conduct and other criteria for Awards
made pursuant to the Plan in accordance with a methodology established by the
Committee, and to determine whether performance, conduct and other goals have
been attained;
          (vi) to accelerate or defer (with the consent of the Participant) the
exercise or vested date of any Award;
          (vii) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Award previously granted by
the Committee;
          (viii) to establish subplans, procedures or guidelines for the grant
of Awards to Employees, Directors and Consultants;
          (ix) to determine eligibility for an Award and to authorize the
cancellation, forfeiture or suspension of an Award; and
          (x) to make all other determinations deemed necessary or advisable for
the administration of the Plan;
          Provided that, no consent of a Participant is necessary under clauses
(i) or (vi) if a modification, amendment, acceleration, or deferral, in the
reasonable judgment of the Committee confers a benefit on the Participant or is
made pursuant to an adjustment in accordance with Section 4. Furthermore, with
respect to outstanding Awards granted to a Participant who violates any legal
obligation owed to the Company, including contractual obligations, or who
otherwise acts in a manner detrimental to the Company’s interests, the Committee
has the authority to cancel any such outstanding Awards as of the date such
violation is discovered and to have the Participant return any gains realized
with respect to such Awards in the twelve months prior to the violation.
          (c) Effect of Committee’s Decision. All decisions, determinations, and
interpretations of the Committee shall be final, conclusive and binding on all
Participants, the Company, any shareholder and all other persons.
          (d) Delegation and Administration. Consistent with the Committee’s
charter, as such charter may be amended from time to time, the Committee may
delegate to one or more subcommittees consisting of members of the Committee or
other Directors who are Independent Directors (any such committee a
“Subcommittee”) the administration of the Plan, and such administrator(s) may
have the authority to directly, or under their supervision, execute and
distribute agreements or other documents evidencing or relating to Awards
granted by the Committee under this Plan, to maintain records relating to the
grant, vesting, exercise, forfeiture or expiration of Awards, to process or
oversee the issuance of Shares upon the exercise,

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vesting and/or settlement of an Award, to interpret the terms of Awards and to
take such other actions as the Committee may specify. Any action by any such
Subcommittee within the scope of such delegation shall be deemed for all
purposes to have been taken by the Committee.
6. General Eligibility.
          (a) Awards. Awards may be granted to Participants, provided that
additional eligibility requirements may be set forth in specific arrangements
that limit or narrow the category of Participants, and further provided that
Incentive Stock Options may only granted to Employees. A Consultant shall not be
eligible for the grant of an Award (other than a cash award) if, at the time of
grant, a Form S-8 Registration Statement under the Securities Act (“Form S-8”)
is not available to register either the offer or the sale of the Company’s
securities to such Consultant because of the nature of the services that the
Consultant is providing to the Company, or because the Consultant is not a
natural person, or as otherwise provided by the rules governing the use of Form
S-8, unless the Company determines both (i) that such grant (1) shall be
registered in another manner under the Securities Act (e.g., on a Form S-3
Registration Statement) or (2) does not require registration under the
Securities Act in order to comply with the requirements of the Securities Act,
if applicable, and (ii) that such grant complies with the securities laws of all
other relevant jurisdictions. Form S-8 generally is available to consultants and
advisors only if (I) they are natural persons, (II) they provide bona fide
services to the issuer, its parents, its majority-owned subsidiaries or
majority-owned subsidiaries of the issuer’s parent, and (III) the services are
not in connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the issuer’s securities.
          (b) Maximum Annual Participant Stock Award. The aggregate number of
Shares with respect to which an Award or Awards may be granted to any one
Participant in any one fiscal year of the Company (the “Maximum Annual
Participant Stock Award”) shall not exceed one million (1,000,000) shares of
Common Stock (adjusted, proportionately, in the event of any stock split or
stock dividend with respect to the Shares). If an Option is in tandem with a
SAR, such that the exercise of the Option or SAR with respect to a Share cancels
the tandem SAR or Option right, respectively, with respect to each Share, the
tandem Option and SAR rights with respect to each Share shall be counted as
covering but one Share for purposes of the Maximum Annual Participant Stock
Award. If the number of Shares that will be issued under an Award depends upon
the performance of the Company or the individual receiving the Award, then for
purposes of applying the Maximum Annual Participant Stock Award, the number of
Shares considered granted under the Award shall be the maximum number of shares
that the individual could receive under the Award, and those Shares shall be
considered granted at the beginning of the performance period over which the
Award is earned, not during or after the end of the performance period when the
amount of Shares actually earned by the Participant is determined and Shares are
issued to the Participant. However, for purposes of Section 3, only the number
of Shares actually issued to the Participant, and not the maximum potential
number of Shares that could have been earned by and issued to the Participant
under the Award, will count against the reserve amount. This one million
(1,000,000) Share maximum per Company fiscal year is in addition to (and not
reduced by) cash incentives awarded pursuant to Section 10 or Shares granted in
satisfaction of such cash Awards. The Maximum Annual Participant Stock Award
limit shall only apply to awards made after April 30, 2005.
          (c) No Employment/Service Rights. Nothing in the Plan shall confer
upon any Participant the right to an Award or to continue in service as an
Employee or Consultant for any period of specific duration, or interfere with or
otherwise

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restrict in any way the rights of the Company (or any Subsidiary employing or
retaining such person), or of any Participant, which rights are hereby expressly
reserved by each, to terminate such person’s services at any time for any
reason, with or without cause (as such term is defined in a Company subplan or
an Award Agreement, as applicable).
7. Grant, Terms and Conditions of Options.
          (a) Designation. Each Option shall be designated in an Award Agreement
as either an Incentive Stock Option or a Nonqualified Stock Option. However,
notwithstanding the foregoing, if an Option is not designated as an Incentive
Stock Option, such Option will be deemed to be a Nonqualified Stock Option. To
the extent that the aggregate Fair Market Value (determined at the time of
grant) of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any Employee during any calendar
year exceeds $100,000, such excess Options shall be treated as Nonqualified
Stock Options. For this purpose, Options shall be taken into account in the
order in which they were granted.
          (b) Option Price. The per Share exercise price under an Incentive
Stock Option (i) granted to a Ten Percent Shareholder, shall be no less than
110% of the Fair Market Value per Share on the date of grant, or (ii) granted to
any other Participant, shall be no less than 100% of the Fair Market Value per
Share on the date of grant. The per Share exercise price under a Nonqualified
Stock Option or SAR shall be no less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant. In no event shall the Board or the
Committee be permitted to Reprice an Option after the date of grant.
          (c) Term of Options. The term of each Incentive Stock Option shall be
no more than ten (10) years from the date of grant. However, in the case of an
Incentive Stock Option granted to a Ten Percent Shareholder, the term of the
Option shall be no more than five (5) years from the date of grant. The term of
all Nonqualified Options shall be seven (7) years unless otherwise provided by
the Committee in its discretion.
          (d) Vesting. To the extent Options vest and become exercisable in
increments, unless otherwise provided in the applicable Award Agreement or any
severance agreement (i) such Options shall cease to vest upon a Participant’s
Disability or termination of such Participant’s Continuous Status as a
Participant (other than upon a Participant’s death), and (ii) such Options shall
immediately vest in full upon a Participant’s death.
          (e) Substitution of SARs for Options. The Committee may provide in the
Award Agreement evidencing the grant of an Option that the Committee shall have
the sole discretion to substitute without receiving Participants’ permission,
SARs paid only in stock for outstanding Options; provided, the terms of the
substituted stock SARs are the same as the terms of the Options, the number of
shares underlying the number of stock SARs equals the number of shares
underlying the Options and the difference between the Fair Market Value of the
underlying Shares and the grant price of the SARs is equivalent to the
difference between the Fair Market Value of the underlying Shares and the
exercise price of the Options.
          (f) Exercise. Any Option granted hereunder shall be exercisable at
such times and under such conditions as determined by the Committee at the time
of grant, and as shall be permissible under the terms of the Plan. No fractional
Shares may be issued or delivered pursuant to the Plan or any Award.
8. Grant, Terms and Conditions of Stock Awards.
          (a) Designation. Restricted Stock or Restricted Stock Units may be
granted under the Plan. Restricted Stock or Restricted Stock Units may include a
dividend equivalent right, as permitted by Section 4. After the Committee
determines that it will offer Restricted Stock or Restricted Stock Units, it

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will advise the Participant in writing or electronically, by means of an Award
Agreement, of the terms, conditions and restrictions, including vesting, if any,
related to the offer, including the number of Shares that the Participant shall
be entitled to receive or purchase, the price to be paid, if any, and, if
applicable, the time within which the Participant must accept the offer. The
offer shall be accepted by execution of an Award Agreement or as otherwise
directed by the Committee. Restricted Stock Units may be paid as permitted by
Section 11(b). The term of each award of Restricted Stock or Restricted Stock
Units shall be at the discretion of the Committee.
          (b) Restrictions. Subject to Section 8(c), the Committee may impose
such conditions or restrictions on the Restricted Stock or Restricted Stock
Units granted pursuant to the Plan as it may determine advisable, including the
achievement of specific performance goals, time based restrictions on vesting,
conduct criteria or others. If the Committee established performance or other
goals, the Committee shall determine whether a Participant has satisfied the
performance of such goals.
          (c) Performance Criteria. Restricted Stock, Restricted Stock Units and
cash awards granted pursuant to the Plan that are intended to qualify as
“performance based compensation” under Section 162(m) of the Code shall be
subject to the attainment of performance goals relating to the Performance
Criteria selected by the Committee and specified at the time such Restricted
Stock, Restricted Stock Units and cash awards are granted. For purposes of this
Plan, “Performance Criteria” means one or more of the following (as selected by
the Committee): (i) cash flow; (ii) earnings per share; (iii) earnings per share
growth; (iv) earnings before interest, taxes, and amortization; (v) return on
equity; (vi) market share; (vii) total shareholder return; (viii) share price
performance; (ix) return on capital; (x) return on assets, net assets or
invested assets; (xi) revenue; (xii) revenue growth; (xiii) earnings growth;
(xiv) operating income; (xvi) operating profit; (xvii) growth in operating
income or profit; (xviii) profit margin; (xix) return on operating revenue;
(xx) return on invested capital; (xxi) market price of Shares; (xxii) brand
recognition; (xxiii) customer satisfaction; (xxiv) operating efficiency;
(xxv) productivity; or (xxvi) reduction in costs. Any of these Performance
Criteria may be used to measure the performance of the Company as a whole or any
business unit or division of the Company.
          (d) Vesting. Unless the Committee determines otherwise, the Award
Agreement shall provide for the forfeiture of the non-vested Shares underlying
Restricted Stock or the termination of Restricted Stock Units upon cessation of
a Participant’s Continuous Status as a Participant. Unless the Committee
determines otherwise, non-vested Shares underlying Restricted Stock and
Restricted Stock Units shall vest in full immediately upon death. To the extent
that the Participant purchased the Shares granted under any such Restricted
Stock award and any such Shares remain non-vested at the time of cessation of a
Participant’s Continuous Status as a Participant, the cessation of Participant’s
Continuous Status as a Participant shall cause an immediate sale of such
non-vested Shares to the Company at the original price per Share paid by the
Participant.
9. Grant, Terms and Conditions of SARs.
          (a) Grants. The Committee shall have the full power and authority,
exercisable in its sole discretion, to grant SARs to selected Participants. The
Committee is authorized to grant both tandem stock appreciation rights
consisting of SARs with underlying Options (“Tandem SARs”) and stand-alone stock
appreciation rights consisting of SARs not tied to underlying Options
(“Stand-Alone SARs”). The term of a SAR shall be at the discretion of the
Committee. In no event shall the Board or the Committee be permitted to Reprice
a SAR after the date of grant without shareholder approval.

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          (b) Tandem SARs.
          (i) Participants may be granted a Tandem SAR, exercisable upon such
terms and conditions as the Committee shall establish, to elect between the
exercise of the underlying Option for Shares or the surrender of the Option in
exchange for a distribution from the Company in an amount equal to the excess of
(A) the Fair Market Value (on the Option surrender date) of the number of Shares
in which the Participant is at the time vested under the surrendered Option (or
surrendered portion thereof) over (B) the aggregate exercise price payable for
such vested Shares.
          (ii) No such Option surrender shall be effective unless it is approved
by the Committee, either at the time of the actual Option surrender or at any
earlier time. If the surrender is so approved, then the distributions to which
the Participant shall become entitled under this Section 9(b) may be made in
Shares valued at Fair Market Value (on the Option surrender date), in cash, or
partly in Shares and partly in cash, as the Committee shall deem appropriate.
          (iii) If the surrender of an Option is not approved by the Committee,
then the Participant shall retain whatever rights he or she had under the
surrendered Option (or surrendered portion thereof) on the Option surrender date
and may exercise such rights at any time prior to the later of (A) five
(5) business days after the receipt of the rejection notice or (B) the last day
on which the Option is otherwise exercisable in accordance with the terms of the
instrument evidencing such Option, but in no event may such rights be exercised
more than ten (10) years after the date of the Option grant.
(c) Stand-Alone SARs.
          (i) A Participant may be granted a Stand-Alone SAR not tied to any
underlying Option under Section 7 of the Plan. The Stand-Alone SAR shall cover a
specified number of Shares and shall be exercisable upon such terms and
conditions as the Committee shall establish. Upon exercise of the Stand-Alone
SAR, the holder shall be entitled to receive a distribution from the Company in
an amount equal to the excess of (A) the aggregate Fair Market Value (on the
exercise date) of the Shares underlying the exercised right over (B) the
aggregate base price in effect for those Shares.
          (ii) The number of Shares underlying each Stand-Alone SAR and the base
price in effect for those Shares shall be determined by the Committee at the
time the Stand-Alone SAR is granted. In no event, however, may the base price
per Share be less than the Fair Market Value per underlying Share on the grant
date.
          (iii) The distribution with respect to an exercised Stand-Alone SAR
may be made in Shares valued at Fair Market Value on the exercise date, in cash,
or partly in Shares and partly in cash, as the Committee shall deem appropriate.
          10. Cash Awards. Cash awards that are intended to qualify as
“performance based compensation” under Section 162(m) of the Code may be made
under the Plan and will be paid in cash upon the achievement, in whole or part,
of performance goals relating to one or more of the Performance Criteria
selected by the Committee and specified at the time such cash awards are
granted. These criteria shall be selected and calculated under a methodology
established in writing by the Committee prior to the issuance of a cash Award.
Such writing may be a plan or other arrangement established by the Committee
hereunder, which shall set forth the terms and conditions of the
performance-based cash Awards, and may combine cash Awards with other forms of
grants described in this Plan. Such plan or arrangement shall not expand the
class of individuals entitled to participate under the Plan, add to any of the
Performance Criteria, or increase the maximum amount payable to any single
Participant with respect to any fiscal year of the Company, as set forth below.
The maximum amount of total payments of cash (or Shares in lieu of cash) that
can be awarded under plans or arrangements established by the Committee pursuant
to this Section 10 to any single Participant in any fiscal year of the Company

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will not exceed a value of two million dollars ($2,000,000) (the “Maximum Annual
Cash Award”). For purposes of applying the Maximum Annual Cash Award, cash
Awards shall be considered awarded at the beginning of the performance period
over which the Award is earned, not during or after the end of the performance
period when the amount of cash actually earned by the Participant is determined
and cash is paid (or Shares are issued) to the Participant. For incentive
programs (other than SARs) where the final amount of the Award is first
calculated in cash and then paid in whole or in part in Shares, the entire
amount of the Award shall be treated as a cash incentive award that is subject
to the Maximum Annual Cash Award limitation in this Section 10, not the Maximum
Annual Participant Stock Award limitation in Section 6(b).
11. Procedure for Exercise; Rights as a Shareholder.
          (a) Procedure. An Award shall be exercised when written, electronic or
verbal notice of exercise has been given to the Company, or the brokerage firm
or firms approved by the Company to facilitate exercises and sales under this
Plan, in accordance with the terms of the Award by the person entitled to
exercise the Award and full payment for the Shares with respect to which the
Award is exercised has been received by the Company or the brokerage firm or
firms, as applicable. The notification to the brokerage firm shall be made in
accordance with procedures of such brokerage firm approved by the Company. Full
payment may, as authorized by the Committee, consist of any consideration and
method of payment allowable under the terms of this Plan. The Company shall
issue (or cause to be issued) such share certificate promptly upon exercise of
the Award. In the event that the exercise of an Award is treated in part as the
exercise of an Incentive Stock Option and in part as the exercise of a
Nonqualified Stock Option pursuant to Section 7(a), the Company shall issue a
share certificate evidencing the Shares treated as acquired upon the exercise of
an Incentive Stock Option and a separate share certificate evidencing the Shares
treated as acquired upon the exercise of a Nonqualified Stock Option, and shall
identify each such certificate accordingly in its share transfer records. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the share certificate is issued, except as provided in
Section 4 of the Plan.
          (b) Method of Payment. The consideration to be paid for any Shares to
be issued upon exercise or other required settlement of an Award, including a
method of payment, shall be determined by the Committee at the time of
settlement, and which forms may include: (i) check; (ii) wire transfer;
(iii) tender of shares of Common Stock owned by the Participant in accordance
with rules established by the Committee from time to time; and (iv) a request
that the Company or a designated brokerage firm conduct a cashless exercise of
the Option. Shares used to pay the Option Price shall be valued at their Fair
Market Value on the exercise date. Payment of the aggregate Option Price by
means of tendering previously-owned shares of Common Stock shall not be
permitted when the same may, in the reasonable opinion of the Company, cause the
Company to record a loss or expense as a result thereof.
          (c) Withholding Obligations. To the extent required by applicable
federal, state, local or foreign law, the Committee may and/or a Participant
shall make arrangements satisfactory to the Company for the satisfaction of any
withholding tax obligations that arise with respect to any Incentive Stock
Option, Nonqualified Stock Option, SAR, Restricted Stock or Restricted Stock
Units, cash awards or any sale of Shares. The Company shall not be required to
issue Shares or to recognize the disposition of such Shares until such
obligations are satisfied. These obligations may be satisfied by having the
Company withhold a portion of the Shares that otherwise would be issued to a
Participant under such Award (provided,

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however, that no Shares are withheld with a value exceeding the minimum amount
of tax required to be withheld by law) or by tendering Shares previously
acquired by the Participant in accordance with rules established by the
Committee from time to time.
          (d) Shareholder Rights. Except as otherwise provided in this Plan,
until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the share
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Shares subject to
the Award, notwithstanding the exercise of the Award.
          (e) Non-Transferability of Awards. An Award may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in exchange for
consideration, and may not be transferred other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Participant, only by the Participant; unless the Committee permits further
transferability, on a general or specific basis, in which case the Committee may
impose conditions and limitations on any permitted transferability.
12. Expiration of Awards.
          (a) Expiration, Termination or Forfeiture of Awards. Unless otherwise
provided in the applicable Award Agreement or any severance agreement, vested
Awards granted under this Plan shall expire, terminate, or otherwise be
forfeited as follows:
          (i) ninety (90) days after the date of termination of a Participant’s
Continuous Status as a Participant other than in circumstances covered by (ii),
(iii), (iv) or (v) below;
          (ii) immediately upon termination of a Participant’s Continuous Status
as a Participant for cause (as defined in a Company subplan or Award Agreement,
as applicable);
          (iii) twelve (12) months after the date on which a Participant ceased
performing services as a result of his or her Disability; and
          (iv) twelve (12) months after the date of the death of a Participant
who was a Participant whose Continuous Status as a Participant terminated as a
result of his or her death.
          (b) Extension of Term. Notwithstanding subsection (a) above, the
Committee shall have the authority to extend the expiration date of any
outstanding Options or SARs other than an Incentive Stock Option in
circumstances in which it deems such action to be appropriate (provided that no
such extension shall extend the term of an Option or SAR beyond the date on
which the Award would have expired or been forfeited if there had been no
termination of the Employee’s Continuous Status as a Participant).
13. Term, Amendment and Termination of the Plan.
          (a) Term of Plan. The Plan shall become effective as of the Effective
Date. It shall continue in effect until the tenth anniversary of the Effective
Date or until terminated under this Section 13 of the Plan or extended by an
amendment approved by the shareholders of the Company pursuant to Section 13(a).
          (b) Amendment and Termination. The Board or the Committee may amend or
terminate the Plan from time to time in such respects as the Board may deem
advisable (including, but not limited to amendments which the Board deems
appropriate to enhance the Company’s ability to claim deductions related to
stock option exercises); provided that to the extent required by the Code or any
Nasdaq or SEC requirements, shareholder approval shall be required for any
amendment of the Plan. Subject to the foregoing, it is specifically intended
that the Board or Committee may amend the Plan without shareholder approval to
comply with legal, regulatory and listing requirements and to avoid
unanticipated

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consequences deemed by the Committee to be inconsistent with the purpose of the
Plan or any Award Agreement.
          (c) Participants in Foreign Countries. The Committee shall have the
authority to adopt such modifications, procedures, and subplans as may be
necessary or desirable to comply with provisions of the laws of foreign
countries in which the Company or its Subsidiaries may operate to assure the
viability of the benefits from Awards granted to Participants performing
services in such countries and to meet the objectives of the Plan.
          (d) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Awards already granted and such Awards
shall remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Participant and the
Committee, which agreement must be in writing and signed by the Participant and
the Company.
          (e) Code Section 409A. Notwithstanding anything to the contrary in
this Section 13, the Committee may amend the Plan and the Award Agreements
without any additional consideration to affected Participants to the extent
necessary to avoid penalties arising under Code Section 409A, even if those
amendments reduce, restrict or eliminate rights granted under the Plan or Award
Agreement (or both) before those amendments.
14. Shareholder Approval. The Plan is subject to approval by the shareholders of
the Company in accordance with applicable Nasdaq rules.

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