EXHIBIT 10.11

 

 

 

 

 

 

 

 

 

HUNGARIAN TELEPHONE AND CABLE CORP.

 

 

2004 Long-Term Incentive Plan

 

 

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HUNGARIAN TELEPHONE AND CABLE CORP.

 

2004 LONG-TERM INCENTIVE PLAN

 

Table of Contents

 

 

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ARTICLE I PURPOSE AND EFFECTIVE DATE

   3  

ARTICLE II DEFINITIONS

   3  

ARTICLE III ADMINISTRATION

   6  

ARTICLE IV AWARDS

   7  

ARTICLE V STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

   9  

ARTICLE VI RESTRICTED STOCK AND RESTRICTED STOCK UNITS

   13

ARTICLE VII AWARDS FOR NON-EMPLOYEE DIRECTORS

   15

ARTICLE VIII UNRESTRICTED HTCC STOCK AWARDS FOR EMPLOYEES

   15

ARTICLE IX AWARD OF PERFORMANCE UNITS

   15

ARTICLE X DEFERRAL OF PAYMENTS

   17

ARTICLE XI MISCELLANEOUS PROVISIONS

   17

ARTICLE XII CHANGE IN CONTROL OF THE COMPANY

   19

 

 

 

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ARTICLE I

PURPOSE AND EFFECTIVE DATE

 

1.1    Purpose. The purpose of the Plan is to provide financial incentives for
selected Employees of Hungarian Telephone and Cable Corp. (“HTCC”) and its
Subsidiaries and for the non-employee Directors of HTCC, thereby promoting the
long-term growth and financial success of the Company by (1) attracting and
retaining employees and Directors of outstanding ability, (2) strengthening the
Company’s capability to develop, maintain, and direct a competent management
team, (3) providing an effective means for selected Employees and non-employee
Directors to acquire and maintain ownership of HTCC Stock, (4) motivating
Employees to achieve long-range Performance Goals and objectives, and (5)
providing incentive compensation opportunities competitive with those of other
corporations.

 

1.2    Effective Date and Expiration of Plan. The Plan is subject to approval by
a majority of the votes cast at the annual meeting of Shareholders to be held on
May 19, 2004, or at any adjournment thereof by the holders of shares of HTCC
stock entitled to vote thereon. If so approved, the Plan shall be effective as
of such date. Unless earlier terminated by the Board pursuant to Section 11.3,
the Plan shall terminate on the tenth anniversary of its Effective Date. No
Award shall be made pursuant to the Plan after its termination date, but Awards
made prior to the termination date may extend beyond that date.

 

ARTICLE II

DEFINITIONS

 

The following words and phrases, as used in the Plan, shall have these meanings:

 

2.1    “Administrator” means the individual or individuals to whom the Committee
delegates authority under the Plan in accordance with Section 3.3.

 

2.2    “Award” means, individually or collectively, any Option, SAR, Restricted
Stock, Restricted Stock Unit, Restricted Performance Stock, unrestricted HTCC
Stock or Performance Unit Award or any other form of Award authorized pursuant
to Section 4.1(b).

 

2.3    “Award Statement” means a written confirmation of an Award under the Plan
furnished to the Participant.

 

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

 

2.5    “Cause” except for purposes of Article XII, with respect to any
Participant, means (i) the definition of “Cause” as set forth in any individual
employment agreement applicable to such Participant, or (ii) in the case of a
Participant who does not have an individual employment agreement that defines
Cause, and unless the Committee shall authorize a different definition of
“Cause” for such Participant, then “Cause” means the termination of a
Participant’s employment by reason of his or her (1) engaging in gross
misconduct that is injurious to the Company, monetarily or otherwise, (2)
misappropriation of funds, (3) willful misrepresentation to the directors or
officers of the Company regarding matters relating to the business of the
Company, (4) gross negligence in the performance of the Participant’s duties
that has or may reasonably be expected to have an adverse effect on the
business, operations, assets, properties or financial

 

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condition of the Company, (5) commission of a felony or any crime involving
moral turpitude, or (6) entering into competition with the Company. The
determination of whether a Participant’s employment was terminated for Cause
shall be made by the Company in its sole discretion.

 

2.6    “Code” means the Internal Revenue Code of 1986, as amended.

 

2.7    “Committee” means the Stock Option—Compensation Committee of the Board or
a subcommittee thereof.

 

2.8    “Company” means Hungarian Telephone and Cable Corp. and all of its
Subsidiaries on and after the Effective Date.

 

2.9    “Deferred Account” means an account established for a Participant under
Section 10.1.

 

2.10    “Deferred Compensation Plan” means any deferred compensation plan
established by the Company in which the Participants may participate.

 

2.11    “Director” means a member of the Board of Directors of HTCC.

 

2.12    “Effective Date” means the date on which the Plan is approved by the
shareholders of HTCC, as provided in Section 1.2.

 

2.13    “Employee” means a salaried employee of the Company.

 

2.14    “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

2.15    “Fair Market Value” means, when used with reference to HTCC Stock, “fair
market value” determined pursuant to a valuation methodology approved by the
Committee or, if the Committee does not approve a different valuation
methodology, means, on any day, the daily closing price of a share of HTCC Stock
on the American Stock Exchange, or, if the shares are not listed or admitted to
trading on such exchange, on the principal United States securities exchange or
on the NASDAQ/NMS on which the shares are listed or admitted to trading, or if
the shares are not listed or admitted to trading on any such exchange or on the
NASDAQ/NMS, the mean between the closing high bid and low asked quotations with
respect to a share on such dates on the National Association of Securities
Dealers, Inc. Automated Quotations System, or any similar system then in use, or
if no such quotations are available, the fair market value on such date of a
share as the Committee shall determine.

 

2.16    “Fiscal Year” means the fiscal year of the Company, which, as of the
date the Plan was approved by the Board, is the year ending December 31.

 

2.17    “HTCC” means Hungarian Telephone and Cable Corp., a Delaware
corporation.

 

2.18    “HTCC Stock” means common stock, par value $0.001 of Hungarian Telephone
and Cable Corp.

 

2.19    “Incentive Stock Option” means an option within the meaning of Section
422 of the Code.

 

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2.20    “Nonqualified Stock Option” means an option granted under the Plan other
than an Incentive Stock Option.

 

2.21    “Option” means either a Nonqualified Stock Option or an Incentive Stock
Option to purchase HTCC Stock.

 

2.22    “Option Price” means the price at which HTCC Stock may be purchased
under an Option as provided in Section 5.4, or in the case of a SAR granted
under Section 5.8, the price determined in such Section 5.8.

 

2.23    “Participant” means a Employee or a non-employee Director to whom an
Award has been made under the Plan or a Transferee.

 

2.24    “Performance Goals” means goals established by the Committee pursuant to
Section 4.5.

 

2.25    “Performance Period” means a period of time over which performance is
measured.

 

2.26    “Performance Unit” means the unit of measure determined under Article IX
by which is expressed the value of a Performance Unit Award.

 

2.27    “Performance Unit Award” means an Award granted under Article IX.

 

2.28    “Personal Representative” means the person or persons who, upon the
death, disability, or incompetency of a Participant, shall have acquired, by
will or by the laws of descent and distribution or by other legal proceedings,
the right to exercise an Option or SAR or the right to any Restricted Stock
Award, Restricted Stock Unit Award or Performance Unit Award theretofore granted
or made to such Participant.

 

2.29    “Plan” means this Hungarian Telephone and Cable Corp. 2004 Long-Term
Incentive Plan.

 

2.30    “Predecessor Plans” means the Hungarian Telephone and Cable Corp. 2002
Incentive Stock Option Plan, as amended, and the Hungarian Telephone and Cable
Corp. Non-Employee Director Stock Option Plan, as amended.

 

2.31    “Restricted Performance Stock” means HTCC Stock subject to Performance
Goals.

 

2.32    “Restricted Stock” means HTCC Stock subject to the terms and conditions
provided in Article VI and including Restricted Performance Stock.

 

2.33    “Restricted Stock Award” means an Award of Restricted Stock granted
under Article VI.

 

2.34    “Restricted Stock Unit” means a contractual undertaking by the Company
to deliver to the Participant one share of HTCC Stock (or its equivalent value
in cash) on a

 

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specified settlement date, subject to the terms and conditions provided in
Article VI. Each Restricted Stock Unit awarded to a Participant shall correspond
to one share of HTCC Stock.

 

2.35    “Restricted Stock Unit Award” means an Award of a Restricted Stock Unit
granted under Article VI

 

2.36    “Restriction Period” means a period of time determined under Section 6.2
during which Restricted Stock or Restricted Stock Awards, or Restricted Stock
Units or Restricted Stock Unit Awards, are subject to the terms and conditions
provided in either Section 6.3 or Section 6.4.

 

2.37    “SAR” means a stock appreciation right granted under Section 5.8.

 

2.38    “Shares” means shares of HTCC Stock.

 

2.39    “Shareholders” means the Shareholders of HTCC.

 

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

 

2.41    “Subsidiary” means a corporation or other entity the majority of the
voting stock of which is owned directly or indirectly by HTCC.

 

2.42    “Transferee” means a person to whom a Participant has transferred his or
her rights to an Award under the Plan in accordance with Section 11.1 and
procedures and guidelines adopted by the Company.

 

ARTICLE III

ADMINISTRATION

 

3.1    Committee to Administer. The Plan shall be administered by the Committee.

 

3.2    Powers of Committee.

 

(a) The Committee shall have full power and authority to interpret and
administer the Plan and to establish and amend rules and regulations for its
administration. The Committee’s decisions shall be final and conclusive with
respect to the interpretation of the Plan and any Award made under it.

 

(b) Subject to the provisions of the Plan, the Committee shall have authority,
in its discretion, to determine those Employees who shall receive an Award, the
time or times when such Award shall be made, the vesting schedule, if any, for
the Award and the type of Award to be granted, the number of shares to be
subject to each Award of Options, SARs, Restricted Stock, Restricted Stock
Units, and unrestricted HTCC Stock and the value of each Performance Unit.

 

(c) The Committee shall determine and set forth in an Award Statement the terms
of each Award. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any Award Statement, in such
manner and to the extent the Committee shall determine in order to carry out the
purposes of the Plan. The

 

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Committee may, in its discretion, accelerate (i) the date on which any Option or
SAR may be exercised, (ii) the date of termination of the restrictions
applicable to a Restricted Stock Award or a Restricted Stock Unit Award, or
(iii) the end of a Performance Period under a Performance Unit Award, if the
Committee determines that to do so will be in the best interests of the Company
and the Participants in the Plan.

 

3.3    Delegation by Committee. The Committee may, but need not, from time to
time delegate some or all of its authority under the Plan to an Administrator
consisting of one or more members of the Committee or of one or more officers of
the Company; provided, however, that the Committee may not delegate its
authority (i) to make Awards to Employees (A) who are subject on the date of the
Award to the reporting rules under Section 16(a) of the Exchange Act, (B) whose
compensation for such fiscal year may be subject to the limit on deductible
compensation pursuant to Section 162(m) of the Code, or (C) who are officers of
the Company who are delegated authority by the Committee hereunder, or (ii) to
interpret the Plan or any Award, or (iii) under Section 11.3 of the Plan. Any
delegation hereunder shall be subject to the restrictions and limits that the
Committee specifies at the time of such delegation or thereafter. Nothing in the
Plan shall be construed as obligating the Committee to delegate authority to an
Administrator, and the Committee may at any time rescind the authority delegated
to an Administrator appointed hereunder or appoint a new Administrator. At all
times the Administrator appointed under this Section 3.3 shall serve in such
capacity at the pleasure of the Committee. Any action undertaken by the
Administrator in accordance with the Committee’s delegation of authority shall
have the same force and effect as if undertaken directly by the Committee, and
any reference in the Plan to the Committee shall, to the extent consistent with
the terms and limitations of such delegation, be deemed to include a reference
to the Administrator.

 

ARTICLE IV

AWARDS

4.1    Awards.

 

(a) Awards under the Plan shall consist of Incentive Stock Options, Nonqualified
Stock Options, SARs, Restricted Stock, Restricted Stock Units, Restricted
Performance Stock, unrestricted HTCC Stock and Performance Units and any other
form of Award that the Committee authorizes pursuant to Section 4.1(b). All
Awards shall be subject to the terms and conditions of the Plan and to such
other terms and conditions consistent with the Plan as the Committee deems
appropriate. Awards under a particular section of the Plan need not be uniform
and Awards under two or more sections may be combined in one Award Statement.
Any combination of Awards may be granted at one time and on more than one
occasion to the same Employee. Awards of Performance Units and Restricted
Performance Stock shall be earned solely upon attainment of Performance Goals
and the Committee shall have no discretion to increase such Awards.

 

(b) The Committee shall have the authority to specify the terms and provisions
of other forms of equity-based or equity-related Awards not described above
which the Committee determines to be consistent with the purpose of the Plan and
the interests of the Company, which Awards may provide for cash payments based
in whole, or in part, on the value or future value of HTCC Stock, for the
acquisition or future acquisition by Participants of HTCC

 

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Stock, or any combination thereof. Other Awards shall also include cash payments
(including the cash payment of dividend equivalents) under the Plan which may be
based on one or more criteria determined by the Committee which are unrelated to
the value of HTCC Stock and which may be granted in tandem with, or independent
of, other Awards under the Plan.

 

4.2    Eligibility for Awards. An Award may be made to any Employee selected by
the Committee. In making this selection and in determining the form and amount
of the Award, the Committee may give consideration to the functions and
responsibilities of the respective Employee, his or her present and potential
contributions to the success of the Company, the value of his or her services to
the Company, and such other factors deemed relevant by the Committee.
Non-employee Directors are eligible to receive Awards pursuant to Article VII.

 

4.3    Shares Available Under the Plan.

 

(a)    Subject to rules set forth in Section 4.3(b) and to adjustment as
provided in Section 11.2, the total number of Shares that may be issued pursuant
to the Plan (the “Section 4.3(a) Limit”) shall not exceed (i) 1,000,000 plus
(ii) the number of Shares that remain available for issuance under the
Predecessor Plans as of the date this Plan is approved by Shareholders
(increased by any shares of HTCC Stock subject to any award (or portion thereof)
outstanding under the Predecessor Plans on such date which lapses, expires or is
otherwise terminated without the issuance of such HTCC Stock or is settled by
delivery of consideration other than HTCC Stock).

 

(b)    For purposes of determining the number of Shares that remain available
for issuance pursuant to the Plan, the following rules shall apply:

 

(i)    In connection with the granting of an Award (other than an Award
denominated in dollars), the number of Shares in respect of which the Award is
granted or denominated shall be counted against the Section 4.3(a) Limit;

 

(ii)    If any Shares subject to an Award are forfeited or if any Award based on
Shares is settled for cash, or expires or otherwise is terminated without
issuance of such Shares (excluding Shares subject to an Option cancelled upon
the exercise of a related SAR), the Shares subject to such Award shall, to the
extent of such cash settlement, forfeiture or termination, be added back to the
Section 4.3(a) Limit and be available for future Awards under the Plan;

 

(iii)    There shall be added back to the Section 4.3(a) Limit, and there shall
again be available for future Awards, Shares that are

 

(A)    tendered in payment of the Option Price of Options or the exercise price
of other Awards or the tax or other withholding obligations arising upon
exercise, vesting or settlement of an Award;

 

(B)    withheld from any Award to satisfy a Participant’s tax or other
withholding obligations or, if applicable, to pay the Option Price of an Option
or the exercise price of other Awards; or

 

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(C)    acquired by the Company on the open market using the cash proceeds
received by the Company from the exercise of Options granted under the Plan;
provided, however, that there shall not be added back to the Section 4.3(a)
Limit pursuant to this Section 4.3(b)(iii)(C) in respect of any Option a number
of Shares greater than (x) the amount of such cash proceeds, divided by (y) the
Fair Market Value on the date of exercise of the Option;

 

(iv)    Anything to the contrary in this Section 4.3(b) notwithstanding, if a
SAR is settled in whole or in part in Shares, the excess, if any, of the number
of Shares subject to the SAR over the number of Shares delivered to the
Participant upon exercise of the SAR shall be added back to the Section 4.3(a)
Limit and shall again be available for future Awards.

 

(c)    Any shares of HTCC Stock issued hereunder may consist, in whole or in
part, of authorized and unissued shares, treasury shares or Shares purchased in
the open market or otherwise.

 

4.4    Limitation on Awards. The maximum aggregate dollar value of Restricted
Stock, Restricted Stock Units and Performance Units awarded to any Employee with
respect to a Performance Period may not exceed $5 million for each Fiscal Year
included in such Performance Period. The maximum number of shares for which
Options may be granted to any Participant in any one Fiscal Year shall not
exceed 500,000.

 

4.5    General Performance Goals. Prior to the beginning of a Performance Period
the Committee will establish in writing Performance Goals for the Company. The
goals will be comprised of specified levels of one or more of the following
performance criteria as the Committee may deem appropriate: earnings per share,
net earnings, operating earnings, EBITDA, unit volume, number of access lines,
net sales, market share, balance sheet measurements, revenue, customers,
economic profit, cash flow, cash return on assets, shareholder return, return on
equity, and return on capital. In addition, for any Awards not intended to meet
the requirements of Section 162(m) of the Code, the Committee may establish
goals based on other performance criteria as it deems appropriate. The Committee
may disregard or offset the effect of any special charges or gains or cumulative
effect of a change in accounting in determining the attainment of Performance
Goals.

 

4.6    Awards in Lieu of Salary or Bonus. The Committee may, in its sole
discretion, and on such terms and conditions as the Committee may prescribe,
give Participants the opportunity to receive Awards in lieu of future salary,
bonus or other compensation.

 

ARTICLE V

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

 

5.1    Award of Stock Options. The Committee may, from time to time, and on such
terms and conditions as the Committee may prescribe, award Stock Options (which
may, in the discretion of the Committee be Incentive Stock Options or
Nonqualified Stock Options) to any Employee.

 

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5.2    Period of Option.

 

(a)    An Option granted under the Plan shall be exercisable in accordance with
any vesting schedule approved by the Committee. The Committee may in its
discretion prescribe additional conditions, restrictions or terms on the vesting
of an Option, including the full or partial attainment of Performance Goals
pursuant to Section 4.5. After the Option vests, the Option may be exercised at
any time during the term of the Option, in whole or in installments, as
specified in the related Award Statement (but exercise may be subject to a
Participant’s compliance with employee trading or similar policies adopted by
the Company). Subject to Section 5.6, the duration of each Option shall not be
more than ten years from the date of grant.

 

(b)    Except as provided in Section 5.6, a Participant may not exercise an
Option unless such Participant is then, and continually (except for sick leave,
military service, or other approved leave of absence) after the grant of the
Option has been, an employee or Director of the Company.

 

5.3    Award Statement or Agreement. Each Option shall be evidenced by an Award
Statement or an option agreement.

 

5.4    Option Price, No Repricing, Exercise and Payment. The Option Price of
HTCC Stock under each Option shall be determined by the Committee but shall be a
price not less than 100 percent of the average Fair Market Value of HTCC Stock
for the twenty (20) trading days immediately prior to the date such Option is
granted, as determined by the Committee.

 

The Committee may not (i) amend an Option to reduce its Option Price, (ii)
cancel an Option and regrant an Option with a lower Option Price than the
original Option Price of the cancelled Option, or (iii) take any other action
(whether in the form of an amendment, cancellation or replacement grant) that
has the effect of repricing an Option, provided that nothing in this Section 5.4
shall prevent the Committee from making adjustments pursuant to Section 11.2.

 

Vested Options may be exercised from time to time by giving written notice to
the Treasurer, Secretary, or General Counsel of the Company, or his or her
designee, specifying the number of shares to be purchased. The Option Price for
every Share purchased through the exercise of a Stock Option shall be paid for
in full on or before the settlement date of the Shares issued pursuant to the
exercise of the Option (i) in cash or in whole or in part through the transfer
to the Company of shares of HTCC Stock in accordance with procedures established
by the Committee from time to time. A Participant may also pay the Option Price
in whole or in part pursuant to a “net share settlement” (“net exercise”)
pursuant to which the participant elects to have shares of HTCC Stock withheld
upon exercise to pay the Option Price in accordance with procedures established
by the Committee from time to time. In addition, in accordance with the rules
and procedures established by the Committee for this purpose, an Option may also
be exercised through a “cashless exercise” procedure involving a broker or
dealer, that affords Participants the opportunity to sell immediately some or
all of the Shares underlying the exercised portion of the Option in order to
generate sufficient cash to pay the Option Price and/or to satisfy withholding
tax obligations related to the Option.

 

In the event such Option Price is paid in whole or in part with Shares, the
portion of the Option Price so paid shall be equal to the value, as of the date
of exercise of the Option, of such

 

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Shares. The value of such Shares shall be equal to the number of such Shares
multiplied by the Fair Market Value of such Shares on the trading day coincident
with the date of exercise of such Option (or the immediately preceding trading
day if the date of exercise is not a trading day). The Company shall not issue
or transfer HTCC Stock upon exercise of an Option until the Option Price is
fully paid. Subject to such rules as the Committee may determine from time to
time, a Participant may satisfy any amounts required to be withheld by the
Company under applicable federal, state and local tax laws in effect from time
to time, by electing to have the Company withhold a portion of the Shares to be
delivered for the payment of such taxes.

 

5.5    Limitations on Incentive Stock Options. Each provision of the Plan and
each Award Statement relating to an Incentive Stock Option shall be construed so
that each Incentive Stock Option shall be an “incentive stock option” as defined
in Section 422 of the Code, and any provisions of the Award Statement thereof
that cannot be so construed shall be disregarded.

 

5.6    Termination of Employment. Subject to Article XII, the following
provisions will govern the ability of a Participant to exercise any outstanding
Options or SARs following the Participant’s termination of employment with the
Company unless the Committee determines otherwise with respect to any individual
Option or SAR.

 

(a) If the employment of a Participant with the Company is terminated for
reasons other than (i) death, (ii) discharge for Cause, (iii) retirement, or
(iv) resignation, such Participant’s outstanding SARs or Options may be
exercised at any time within three years after such termination, to the extent
of the number of shares covered by such Options or SARs which were exercisable
at the date of such termination; except that an Option or SAR shall not be
exercisable on any date beyond the expiration date of such Option or SAR.

 

(b) If the employment of a Participant with the Company is terminated for Cause,
any Options or SARs of such Participant (whether or not then exercisable) shall
expire and any rights thereunder shall terminate immediately.

 

(c) If the employment of a Participant is terminated due to resignation and the
Participant is not eligible to retire under any Company pension plan, such
Participant’s outstanding Options or SARs may be exercised at any time within
three years of such resignation to the extent that the number of shares covered
by such Options or SARs were exercisable at the date of such resignation, except
that an Option or SAR shall not be exercisable on any date beyond the expiration
date of such Option or SAR.

 

(d) Should a Participant, who is not eligible to retire under any Company
pension plan, die either while in the employ of the Company or after termination
of such employment (other than discharge for Cause), the SARs or Options of such
deceased Participant may be exercised by his or her Personal Representative at
any time within three years after the Participant’s death to the extent of the
number of shares covered by such Options or SARs which were exercisable at the
date of such death, except that an Option or SARs shall not be exercisable on
any date beyond the expiration date of such Option or SAR.

 

(e) Should a Participant who is eligible to retire under any Company pension
plan die prior to the vesting of his or her outstanding Options or SARs, any
installment or installments not then exercisable shall become fully exercisable
as of the date of the Participant’s

 

 

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death and the SARs or Options may be exercised by the Participant’s Personal
Representative at any time prior to the expiration date of such Options or SARs.

 

(f) Should a Participant who has retired die prior to exercising all of his or
her outstanding Options or SARs, then such SARs and Options may be exercised by
the Participant’s Personal Representative at any time prior to the expiration
date of such Options or SARs.

 

(g) If a Participant who was granted an Option or SAR dies within 180 days of
the expiration date of such Option or SAR, and if on the date of death the
Participant was entitled to exercise such Option or SAR, including Options and
SARs vested pursuant to Section 5.6(e), and if the Option or SAR expired without
being exercised, the Personal Representative of the Participant shall receive in
settlement a cash payment from the Company of a sum equal to the amount, if any,
by which the Fair Market Value (determined on the expiration date of the Option
or SAR) of HTCC Stock subject to the Option or SAR exceeds the Option Price.

 

(h) Notwithstanding any other provision of this Section 5.6, if a Participant’s
employment with the Company terminates (except for a termination for Cause which
is governed by Section 5.6(b)) prior to the vesting of all Options and SARs, and
if the Participant is eligible to retire under any Company pension plan at the
date of such termination, any installment or installments not then exercisable
shall become fully exercisable as of the effective date of such termination and
may be exercised at any time prior to the expiration date of such Options or
SARs. If the Participant receives severance payments from the Company and
becomes eligible to retire during the severance payment period, all of the
Participant’s Options and SARs shall become fully exercisable as of the date of
such Participant’s retirement eligibility date and may be exercised at any time
prior to the expiration date of such Options or SARs.

 

5.7    Shareholder Rights and Privileges. A Participant shall have no rights as
a Shareholder with respect to any Shares covered by an Option until the issuance
of such Shares to the Participant.

 

5.8    Award of SARs.

 

(a) The Committee may award to a Participant to whom it awards an Option a SAR
related to the Option. The Committee may also award SARs that are unrelated to
any Option. For a SAR related to an Option, the Option Price of the SAR shall be
the same as the Option Price of the related Option as determined in Section 5.4.
For a SAR unrelated to any Option, the Option Price of the SAR shall be
determined by the Committee but shall be a price not less than 100 percent of
the average Fair Market Value of HTCC Stock for the twenty (20) trading days
immediately prior to the date such SAR is granted, as determined by the
Committee.

 

(b) The SAR shall represent the right to receive payment of an amount equal to
the amount by which the Fair Market Value of one share of HTCC Stock on the
trading day immediately preceding the date of exercise of the SAR exceeds the
Option Price of such SAR multiplied by the number of Shares covered by the SAR.

 

(c) SARs awarded under the Plan shall be evidenced by an Award Statement or
agreement between the Company and the Participant.

 

 

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(d) The Committee may prescribe conditions and limitations on the exercise or
transferability of any SAR, including the full or partial attainment of
Performance Goals pursuant to Section 4.5. SARs may be exercised only when the
value of a share of HTCC Stock exceeds the Option Price. Such value shall be
determined in the manner specified in Section 5.8(b).

 

(e) A SAR shall be exercisable by written notice to the Treasurer, Secretary, or
General Counsel of the Company or his or her designee or by such other procedure
as the Committee may determine.

 

(f) To the extent not previously exercised, all SARs shall automatically be
exercised on the last trading day prior to their expiration, so long as the
value of a share of HTCC Stock exceeds the Option Price, unless prior to such
day the holder instructs the Treasurer otherwise in writing. Such value shall be
determined in the manner specified in Section 5.8(b).

 

(g) Payment of the amount to which a Participant is entitled upon the exercise
of a SAR shall be made in cash, HTCC Stock, or partly in cash and partly in HTCC
Stock at the discretion of the Committee. The Shares shall be valued in the
manner specified in Section 5.8(b). If paid in HTCC Stock, the Participant may
satisfy any amounts required to be withheld by the Company under applicable
federal, state and local tax laws in effect from time to time, by electing to
have the Company withhold a portion of the shares of HTCC Stock to be delivered
for the payment of such taxes.

 

(h) Each SAR shall expire on a date determined by the Committee at the time of
grant. No SAR shall have a term of more than 10 years from the date of grant.

 

ARTICLE VI

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

 

6.1    Award of Restricted Stock and Restricted Stock Units. The Committee may
make a Restricted Stock Award and/or a Restricted Stock Unit Award to any
Employee, subject to this Article VI and to such other terms and conditions as
the Committee may prescribe.

 

6.2    Restriction Period. At the time of making a Restricted Stock Award or a
Restricted Stock Unit Award, the Committee shall establish the Restriction
Period applicable to such Award. The Committee may establish different
Restriction Periods from time to time and each such Award may have a different
Restriction Period, in the discretion of the Committee.

 

6.3    Settlement of Restricted Stock Units; Other Terms. On the date on which
Restricted Stock Units vest, all restrictions contained in the Agreement
covering such Restricted Stock Units and in the Plan shall lapse as to such
Restricted Stock Units and the Restricted Stock Units will be payable, at the
discretion of the Committee, in HTCC Common Stock, in cash equal to the Fair
Market Value of the Shares subject to such Restricted Stock Units or in a
combination of HTCC Common Stock and cash. Restricted Stock Units paid in HTCC
Common Stock may be evidenced in such manner as the Committee in its discretion
shall deem appropriate, including, without limitation, book-entry registration
or issuance of one or more stock certificates. If stock certificates are issued,
such certificates shall be delivered to the Participant or such certificates
shall be credited to a brokerage account if the Participant so

 

 

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directs; provided, however, that such certificates shall bear such legends as
the Committee, in its sole discretion, may determine to be necessary or
advisable in order to comply with applicable federal or state securities laws.
Subject to such rules as the Committee may determine from time to time, a
Participant may satisfy any amounts required to be withheld by the Company under
applicable federal, state and local tax laws in effect from time to time, by
electing to have the Company withhold a portion of the Restricted Stock Unit
Award to be delivered for the payment of such taxes. The Committee may, in
addition, prescribe additional restrictions, terms, or conditions upon or to the
Restricted Stock Unit Award including the attainment of Performance Goals in
accordance with Section 4.5. The Committee may also provide for the Participants
to receive payment of dividend equivalents on outstanding Restricted Stock
Units.

 

6.4    Other Terms and Conditions of Restricted Stock. HTCC Stock, when awarded
pursuant to a Restricted Stock Award, will be represented in a book entry
account in the name of the Participant who receives the Restricted Stock Award,
unless the Participant has elected to defer pursuant to Section 10.1. The
Participant shall be entitled to receive dividends during the Restriction Period
and shall have the right to vote such Restricted Stock and shall have all other
Shareholder’s rights, with the exception that (i) the Participant will not be
entitled to delivery of the stock certificate during the Restriction Period,
(ii) the Company will retain custody of the Restricted Stock during the
Restriction Period, and (iii) a breach of a restriction or a breach of the terms
and conditions established by the Committee pursuant to the Restricted Stock
Award will cause a forfeiture of the Restricted Stock Award. Subject to such
rules as the Committee may determine from time to time, a Participant may
satisfy any amounts required to be withheld by the Company under applicable
federal, state and local tax laws in effect from time to time, by electing to
have the Company withhold a portion of the Restricted Stock Award to be
delivered for the payment of such taxes. The Committee may, in addition,
prescribe additional restrictions, terms, or conditions upon or to the
Restricted Stock Award including the attainment of Performance Goals in
accordance with Section 4.5.

 

6.5    Restricted Stock/Restricted Stock Unit Award Statement or Agreement. Each
Restricted Stock Award and Restricted Stock Unit Award shall be evidenced by an
Award Statement or an agreement.

 

6.6    Termination of Employment. Subject to Article XII, the Committee may, in
its sole discretion, establish rules pertaining to the Restricted Stock Award or
the Restricted Stock Unit Award in the event of termination of employment (by
retirement, disability, death, or otherwise) of a Participant prior to the
expiration of the Restriction Period. If the employment of a Participant with
the Company is terminated for Cause, any non-vested Restricted Stock Awards and
Restricted Stock Unit Awards of such Participant shall immediately be forfeited
and any rights thereunder shall terminate.

 

6.7    Payment for Restricted Stock and Restricted Stock Units. Restricted Stock
Awards and Restricted Stock Unit Awards may be made by the Committee under which
the Participant shall not be required to make any payment for the HTCC Stock or,
in the alternative, under which the Participant, as a condition to the
Restricted Stock Award or Restricted Stock Unit Award, shall pay all (or any
lesser amount than all) of the Fair Market Value of the HTCC Stock, determined
as of the date the Restricted Stock Award or Restricted Stock Unit Award is
made. If the latter, such purchase price shall be paid in cash or such other
form of consideration as provided in the Award Statement.

 

 

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ARTICLE VII

AWARDS FOR NON-EMPLOYEE DIRECTORS

 

7.1    Award to Non-Employee Directors. The Board will approve the compensation
of non-employee Directors and such compensation may consist of Awards under the
Plan. The Board retains the discretionary authority to make Awards to
non-employee Directors. All such Awards shall be subject to the terms and
conditions of the Plan and to such other terms and conditions consistent with
the Plan as the Board deems appropriate. The Board may, in its sole discretion,
subject to such terms and conditions as the Board may prescribe, give
non-employee Directors the opportunity to receive an Option Award in lieu of
future cash compensation or other types of Awards.

 

7.2    Election by Non-employee Directors to Receive HTCC Stock. Each
non-employee Director may elect to receive all or a portion of any cash
compensation for service on the Board or any committee of the Board in shares of
HTCC Stock, which will be issued quarterly. Only whole numbers of Shares will be
issued. For purposes of computing the number of shares earned and their taxable
value each quarter, the value of each Share shall be equal to the Fair Market
Value of a Share of HTCC Stock on the last business day of the quarter. If a
Participant dies prior to payment of all shares earned, the balance due shall be
payable in full to the Participant’s designated beneficiary under the Deferred
Compensation Plan, or, if none, to the Participant’s estate, in cash.

 

7.3    No Right to Continuance as a Director. None of the actions of the Company
in establishing the Plan, the actions taken by the Company, the Board, the
Committee or the Administrator under the Plan, or the granting of any Award
under the Plan shall be deemed (i) to create any obligation on the part of the
Board to nominate any Director for reelection by the Company’s Shareholders or
(ii) to be evidence of any agreement or understanding, express or implied, that
the Director has a right to continue as a Director for any period of time or at
any particular rate of compensation.

 

ARTICLE VIII

UNRESTRICTED HTCC STOCK AWARDS FOR EMPLOYEES

 

8.1    The Committee may make awards of unrestricted HTCC Stock to Employees in
recognition of outstanding achievements or as an additional award for Employees
who receive Restricted Stock Awards or Restricted Stock Unit Awards when
Performance Goals are exceeded. Subject to such rules as the Committee may
determine from time to time, a Participant may satisfy any amounts required to
be withheld by the Company under applicable federal, state and local tax laws in
effect from time to time, by electing to have the Company withhold a portion of
the shares of HTCC Stock to be delivered for the payment of such taxes.

 

ARTICLE IX

AWARD OF PERFORMANCE UNITS

 

9.1    Award of Performance Units. The Committee may award Performance Units to
any Employee. Each Performance Unit shall represent the right of a Participant
to receive an amount equal to the value of the Performance Unit, determined in
the manner established by the Committee at the time of Award.

 

 

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9.2    Performance Period. At the time of each Performance Unit Award, the
Committee shall establish, with respect to each such Award, a Performance Period
during which performance shall be measured. There may be more than one
Performance Unit Award in existence at any one time, and Performance Periods may
differ.

 

9.3    Performance Measures. Performance Units shall be awarded to a Participant
and earned contingent upon the attainment of Performance Goals in accordance
with Section 4.5.

 

9.4    Performance Unit Value. Each Performance Unit shall have a maximum dollar
value established by the Committee at the time of the Award. Performance Units
earned will be determined by the Committee in respect of a Performance Period in
relation to the degree of attainment of Performance Goals. The measure of a
Performance Unit may, in the discretion of the Committee, be equal to the Fair
Market Value of one share of HTCC Stock.

 

9.5    Award Criteria. In determining the number of Performance Units to be
granted to any Participant, the Committee shall take into account the
Participant’s responsibility level, performance, potential, cash compensation
level, other incentive awards, and such other considerations as it deems
appropriate.

 

9.6    Payment.

 

(a) Following the end of Performance Period, a Participant holding Performance
Units will be entitled to receive payment of an amount, not exceeding the
maximum value of the Performance Units, based on the achievement of the
Performance Goals for such Performance Period, as determined by the Committee.
The Committee shall have discretion to decrease (but not to increase) the amount
paid to a Participant based upon achievement of the Performance Goals.

 

(b) Payment of Performance Units shall be made in cash, whether payment is made
at the end of the Performance Period or is deferred pursuant to Section 10.1,
except that Performance Units which are measured using HTCC Stock shall be paid
in HTCC Stock. Payment shall be made in a lump sum or in installments and shall
be subject to such other terms and conditions as shall be determined by the
Committee.

 

9.7    Termination of Employment.

 

(a) Subject to Article XII, a Performance Unit Award shall terminate for all
purposes if the Participant does not remain continuously in the employ of the
Company at all times during the applicable Performance Period, except as may
otherwise be determined by the Committee.

 

(b) In the event that a Participant holding a Performance Unit ceases to be an
employee of the Company following the end of the applicable Performance Period
but prior to full payment according to the terms of the Performance Unit Award,
payment shall be made in accordance with terms established by the Committee for
the payment of such Performance Unit.

 

9.8    Performance Unit Award Statements or Agreements. Each Performance Unit
Award shall be evidenced by an Award Statement or agreement.

 

 

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ARTICLE X

DEFERRAL OF PAYMENTS

 

10.1    Election to Defer. Subject to such rules as the Committee may prescribe
from time to time, a Participant may elect to defer all or a portion of any
earned Performance Units, Restricted Stock, Restricted Stock Units, unrestricted
HTCC Stock or gain on any exercised Option or SAR pursuant to the terms of any
Deferred Compensation Plan. The value of the Performance Units, Restricted
Stock, Restricted Stock Units, unrestricted HTCC Stock or Option or SAR gain so
deferred shall be allocated to a Deferred Account established for the
Participant under any Deferred Compensation Plan.

 

ARTICLE XI

MISCELLANEOUS PROVISIONS

 

11.1    Limits as to Transferability.

 

(a) The Committee, may, in its discretion, permit a Nonqualified Stock Option to
be transferred by the Participant, subject to such terms and conditions as the
Committee shall specify. Any Nonqualified Stock Option so transferred may not be
subsequently transferred by the Transferee except by will or the laws of descent
and distribution. Such transferred Nonqualified Stock Option shall continue to
be governed by and subject to the terms and conditions of the Plan and the
corresponding Award Statement.

 

(b) Incentive Stock Options shall not be transferable by the Participant other
than by will or the laws of descent and distribution, and shall be exercisable
during the Participant’s lifetime only by the Participant. Notwithstanding the
previous sentence, the Committee may in its discretion permit the transfer of an
Incentive Stock Option by the Participant to a trust if, under Section 671 of
the Code and applicable state law, the Participant is the sole beneficial owner
of such Incentive Stock Option while it is held in trust.

 

(c) Unless otherwise provided by the Committee, no SAR (except for any SAR
issued in tandem with an Option), share of Restricted Stock, Restricted Stock
Unit, or Performance Unit under the Plan shall be transferable by the
Participant other than by will or the laws of descent and distribution.

 

(d) Any transfer or purported transfer contrary to this Section 11.1 will
nullify the Option, SAR, Performance Unit, Restricted Stock Unit, or share of
Restricted Stock.

 

11.2    Adjustments Upon Corporate Changes. In case of any reorganization,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend, extraordinary cash dividend, distribution, combination of shares,
merger, consolidation, spin-off, rights offering, or any other changes in the
corporate structure or shares of the Company, appropriate adjustments may be
made by the Committee (or if the Company is not the surviving corporation in any
such transaction, the board of directors of the surviving corporation) in
Deferred Accounts and in the aggregate number and kind of shares subject to the
Plan, and the number and kind of shares and the price per share subject to
outstanding Options or which may be issued under outstanding Restricted Stock
Awards or Restricted Stock Unit Awards or pursuant to unrestricted HTCC Stock
Awards. The Committee may also make such adjustments as it considers

 

 

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appropriate to the terms of any Awards under the Plan, subject to Article XII,
to reflect such changes and to modify any other terms of outstanding Awards on
an equitable basis, including modifications of Performance Goals and changes in
the length of Performance Periods. Any such adjustments made by the Committee
pursuant to this Section 11.2 shall be conclusive and binding for all purposes
under the Plan.

 

11.3    Amendment, Suspension, and Termination of Plan.

 

(a) The Board may suspend or terminate the Plan or any portion thereof at any
time, and may amend the Plan from time to time in such respects as the Board may
deem advisable in order that any Awards thereunder shall conform to any change
in applicable laws or regulations or in any other respect the Board may deem to
be in the best interests of the Company; provided, however, that no amendment
will be effective without Shareholder approval if such approval is required by
law or under the rules of the American Stock Exchange or other principal stock
exchange on which the HTCC Stock is listed. No such amendment, suspension, or
termination shall materially adversely alter or impair any outstanding Options,
SARs, shares of Restricted Stock, or Performance Units without the consent of
the Participant affected thereby.

 

(b) Subject to Sections 4.1 and 5.4, the Committee may amend or modify any
outstanding Options, SARs, Restricted Stock Awards, Restricted Stock Unit
Awards, or Performance Unit Awards in any manner to the extent that the
Committee would have had the authority under the Plan initially to award such
Options, SARs, Restricted Stock Awards, Restricted Stock Unit Awards, or
Performance Unit Awards as so modified or amended, including without limitation,
to change the date or dates as of which such Options or SARs may be exercised,
to remove the restrictions on shares of Restricted Stock, to remove the
restrictions on Restricted Stock Units, or to modify the manner in which
Performance Units are determined and paid.

 

11.4    Nonuniform Determinations. The Committee’s determinations under the
Plan, including without limitation, (i) the determination of the Employees to
receive Awards, (ii) the form, amount, and timing of such Awards, (iii) the
terms and provisions of such Awards and (iv) the Award Statements evidencing the
same, need not be uniform and may be made by it selectively among Employees who
receive, or who are eligible to receive, Awards under the Plan, whether or not
such Employees are similarly situated.

 

11.5    General Restriction. Each Award under the Plan shall be subject to the
condition that, if at any time the Committee shall determine that (i) the
listing, registration, or qualification of the shares of HTCC Stock subject or
related thereto upon any securities exchange or under any state or federal law
(ii) the consent or approval of any government or regulatory body, or (iii) an
agreement by the Participant with respect thereto, is necessary or desirable,
then such Award shall not become exercisable in whole or in part unless such
listing, registration, qualification, consent, approval, or agreement shall have
been effected or obtained free of any conditions not acceptable to the
Committee.

 

11.6    No Right To Employment. None of the actions of the Company in
establishing the Plan, the action taken by the Company, the Board, the Committee
or the Administrator under the Plan, or the granting of any Award under the Plan
shall be deemed (i) to create any obligation on the part of the Company to
retain any person in the employ of the Company, or (ii) to be

 

 

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evidence of any agreement or understanding, express or implied, that the person
has a right to continue as an employee for any period of time or at any
particular rate of compensation.

 

11.7    Governing Law. The provisions of the Plan shall take precedence over any
conflicting provision contained in an Award Statement. All matters relating to
the Plan or to Awards granted hereunder shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to the
principles of conflict of laws.

 

11.8    Trust Arrangement. All benefits under the Plan represent an unsecured
promise to pay by the Company. The Plan shall be unfunded and the benefits
hereunder shall be paid only from the general assets of the Company resulting in
the Participants having no greater rights than the Company’s general creditors;
provided, however, nothing herein shall prevent or prohibit the Company from
establishing a trust or other arrangement for the purpose of providing for the
payment of the benefits payable under the Plan.

 

ARTICLE XII

CHANGE IN CONTROL OF THE COMPANY

 

12.1    Contrary Provisions. Notwithstanding anything contained in the Plan to
the contrary, the provisions of this Article XII shall govern and supersede any
inconsistent terms or provisions of the Plan.

 

12.2    Definitions.

 

(a) Change in Control. For purposes of the Plan, “Change in Control” shall mean
any of the following events:

 

(i) The acquisition in one or more transactions by any “Person” (as the term
person is used for purposes of Section 13(d) or 14(d) of the Exchange Act) of
“Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of thirty-five percent (35%) or more of the combined voting power
of the Company’s then outstanding voting securities (the “Voting Securities”);
or

 

(ii) The individuals who, as of May 19, 2004, are members of the Board (the
“Incumbent Board”), cease for any reason to constitute more than fifty percent
of the Board; provided, however, that if the election, or nomination for
election by the Company’s Shareholders, of any new director was approved by a
vote of at least two-thirds of the Incumbent Board, such new director shall, for
purposes of the Plan, be considered as a member of the Incumbent Board, but
excluding for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than the
Board; or

 

(iii) The consummation of a merger or consolidation involving the Company if the
Shareholders of the Company, immediately before such merger or consolidation, do
not own, directly or indirectly immediately following such merger or
consolidation, more than sixty-five percent (65%) of the combined voting power
of the outstanding Voting Securities of the corporation resulting from such
merger or consolidation in substantially the same

 

 

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proportion as their ownership of the Voting Securities immediately before such
merger or consolidation; or

 

(iv) Approval by Shareholders of the Company of a complete liquidation or
dissolution of the Company or an agreement for the sale or other disposition of
all or substantially all of the assets of the Company; or

 

(v) Acceptance of Shareholders of the Company of shares in a share exchange if
the Shareholders of the Company, immediately before such share exchange, do not
own, directly or indirectly immediately following such share exchange, more than
sixty-five percent (65%) of the combined voting power of the outstanding Voting
Securities of the corporation resulting from such share exchange in
substantially the same proportion as their ownership of the Voting Securities
outstanding immediately before such share exchange.

 

Moreover, notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the “Subject Person”) acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional Voting Securities which increases the percentage of the
then outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.

 

Notwithstanding anything contained in this Plan to the contrary, if a
Participant’s employment is terminated by the Company without Cause within one
year prior to a Change in Control and such termination (i) was at the request of
a third party who effectuates a Change in Control or (ii) otherwise occurred in
connection with or in anticipation of, a Change in Control, then for purposes of
this Article XII only, the date of a Change in Control shall mean the date
immediately prior to the date of such Participant’s termination of employment.

 

(b) Cause. For purposes of this Article XII only, with respect to any
Participant, (i) “Cause” shall be defined as set forth in any individual
agreement applicable to a Participant, or (ii) in the case of a Participant who
does not have an individual agreement that defines Cause, then Cause shall mean
the termination of a Participant’s employment by reason of his or her (A)
conviction of a felony or (B) engaging in conduct which constitutes willful
gross misconduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. No act, nor failure to act, on the Participant’s part,
shall be considered “willful” unless he or she has acted, or failed to act, with
an absence of good faith and without a reasonable belief that his or her action
or failure to act was in the best interest of the Company.

 

(c) Good Reason. For purposes of this Article XII, with respect to any
Participant, (i) “Good Reason” shall be defined as set forth in any individual
agreement applicable to a Participant, or (ii) in the case of a Participant who
does not have an individual agreement that defines Good Reason, then Good Reason
shall mean any of the following events or conditions:

 

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(i) a reduction in the Participant’s base salary or any failure to pay the
Participant any compensation or benefits to which he or she is entitled within
thirty (30) days of the date due;

 

(ii) the Company requiring the Participant to be based at any place outside a
50-mile radius from his or her site of employment prior to the Change in
Control, except for reasonably required travel on the Company’s business which
is not greater than such travel requirements prior to the Change in Control;

 

(iii) the failure by the Company to provide the Participant with compensation
and benefits, in the aggregate, substantially equivalent (in terms of benefit
levels and/or reward opportunities) to those provided for under compensation or
employee benefit plans, programs and practices as in effect immediately prior to
the Change in Control (or as in effect following the Change in Control, if
greater);

 

(iv) any purported termination of the Participant’s employment for Cause which
does not comply with the requirements of the definition of “Cause” as set forth
in Section 12.2(b); or

 

(v) the failure of the Company to obtain an agreement from any successor or
assign of the Company to assume and agree to perform the Plan.

 

12.3    Effect of Change in Control on Certain Awards.

 

(a) If the Company is not the surviving corporation following a Change in
Control, and the surviving corporation following such Change in Control or the
acquiring corporation (such surviving corporation or acquiring corporation is
hereinafter referred to as the “Acquiror”) does not assume the outstanding
Options, SARs, Restricted Stock (other than Restricted Performance Stock), or
Restricted Stock Units or does not substitute equivalent equity awards relating
to the securities of such Acquiror or its affiliates for such Awards, then all
such Awards shall become immediately and fully exercisable (or in the case of
Restricted Stock or Restricted Stock Units, fully vested and all restrictions
will immediately lapse). In addition, the Board or its designee may, in its sole
discretion, provide for a cash payment to be made to each Participant for the
outstanding Options, SARs, Restricted Stock (other than Restricted Performance
Stock), or Restricted Stock Units upon the consummation of the Change in
Control, determined on the basis of the fair market value that would be received
in such Change in Control by the holders of the Company’s securities relating to
such Awards. Notwithstanding the foregoing, any Option intended to be an
Incentive Stock Option under Section 422 of the Code shall be adjusted in a
manner to preserve such status.

 

(b) If the Company is the surviving corporation following a Change in Control,
or the Acquiror assumes the outstanding Options, SARs, Restricted Stock (other
than Restricted Performance Stock), or Restricted Stock Units or substitutes
equivalent equity awards relating to the securities of such Acquiror or its
affiliates for such Awards, then all such Awards or such substitutes therefore
shall remain outstanding and be governed by their respective terms and the
provisions of the Plan.

 

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(c) If (i) the employment of a Participant with the Company is terminated (A)
without Cause (as defined in Section 12.2(b)) or (B) by the Participant for Good
Reason, in either case within twenty-four (24) months following a Change in
Control, and (ii) the Company is the surviving corporation following such Change
in Control, or the Acquiror assumes the outstanding Options, SARs, Restricted
Stock (other than Restricted Performance Stock), or Restricted Stock Units or
substitutes equivalent equity awards relating to the securities of such Acquiror
or its affiliates for such Awards, then all outstanding Options, SARs,
Restricted Stock (other than Restricted Performance Stock), or Restricted Stock
Units shall become immediately and fully exercisable (or in the case of
Restricted Stock or Restricted Stock Units, fully vested and all restrictions
will immediately lapse).

 

(d) If (i) the employment of a Participant with the Company is terminated for
Cause within twenty-four (24) months following a Change in Control and (ii) the
Company is the surviving corporation following such Change in Control, or the
Acquiror assumes the outstanding Options, SARs, Restricted Stock (other than
Restricted Performance Stock), or Restricted Stock Units or substitutes
equivalent equity awards relating to the securities of such Acquiror or its
affiliates for such Awards, then any Options or SARs of such Participant shall
expire, and any non-vested Restricted Stock or Restricted Stock Units shall be
forfeited, and any rights under such Awards shall terminate immediately.

 

(e) Outstanding Options or SARs which vest in accordance with Section 12.3, may
be exercised by the Participant in accordance with Section 5.6 or Section 5.7;
provided, however, that a Participant whose Options or SARs become exercisable
in accordance with Section 12.3(c) may exercise a SAR or an Option at any time
within three years after such termination, except that an Option or SAR shall
not be exercisable on any date beyond the expiration date of such Option or SAR,
provided, further that any Participant who is eligible to retire at the date of
such termination (or during any period during which such Participant receives
severance payments) may exercise his or her Options or SARs in accordance with
Section 5.6(h)), and provided, further, that in the event of a Participant’s
death after such termination the exercise of Options and SARs shall be governed
by Sections 5.6(d)(f) or (g), as the case may be.

 

12.4    Effect of Change in Control on Restricted Performance Stock and
Performance Units.

 

(a) If the Company is not the surviving corporation following a Change in
Control, and the Acquiror does not assume the Restricted Performance Stock or
the Performance Units or does not substitute equivalent awards (including, in
the case of equity or equity-related Awards, equivalent equity awards) for such
Awards, then the Participant shall (i) become vested in, and restrictions shall
lapse on, the greater of (A) seventy-five percent (75%) of the Restricted
Performance Stock or Performance Units or (B) a pro rata portion of such
Restricted Performance Stock or Performance Units based on the portion of the
Performance Period that has elapsed to the date of the Change in Control and the
aggregate vesting percentage determined pursuant to this clause (B) shall be
applied to vesting first such Awards granted the farthest in time preceding the
Change in Control and (ii) be entitled to receive (A) in respect of all
Performance Units which become vested and with respect to which the restrictions
lapse as a result of such Change in Control, a cash payment within thirty (30)
days after such Change in Control equal to the product of the then current value
of a Performance Unit multiplied by the

 

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number of Performance Units which become vested and with respect to which
restrictions lapse in accordance with this subparagraph (a) and (B) in respect
of all shares of Performance Restricted Stock which become vested and with
respect to which restrictions lapse as a result of such Change in Control, the
prompt delivery of such Shares; provided, however, that the Board or its
designee may, in its sole discretion, provide for a cash payment to be made to
each Participant for the vested Restricted Performance Stock upon the
consummation of the Change in Control, determined on the basis of the fair
market value that would be received in such Change in Control by the holders of
the Company’s securities relating to such Award.

 

(b) If the Company is the surviving corporation following a Change in Control,
or the Acquiror assumes the Restricted Performance Stock or the Performance
Units or substitutes equivalent awards (including, in the case of equity or
equity-related Awards, equivalent equity awards), then all such Awards or such
substitutes therefore shall remain outstanding and be governed by their
respective terms and the provisions of the Plan.

 

(c) If (i) the employment of a Participant with the Company is terminated (A)
without Cause or (B) by the Participant for Good Reason, in either case within
twenty-four (24) months following a Change in Control, and (ii) the Company is
the surviving corporation following such Change in Control, or the Acquiror
assumes the Restricted Performance Stock or the Performance Units or substitutes
equivalent awards (including, in the case of equity or equity-related Awards,
equivalent equity awards), then the Participant shall (i) become vested in, and
restrictions shall lapse on, the greater of (A) seventy-five percent (75%) of
the Restricted Performance Stock or Performance Units or (B) a pro rata portion
of such Restricted Performance Stock or Performance Units based on the portion
of the Performance Period that has elapsed to the date of the termination of
employment and the aggregate vesting percentage determined pursuant to this
clause (B) shall be applied to vesting first such Awards granted the farthest in
time preceding the termination of employment and (ii) be entitled to receive (A)
in respect of all Performance Units which become vested and with respect to
which the restrictions lapse as a result of such termination of employment, a
cash payment within thirty (30) days after such termination of employment equal
to the product of the then current value of a Performance Unit multiplied by the
number of Performance Units which become vested and with respect to which
restrictions lapse in accordance with this subparagraph (c) and (B) in respect
of all shares of Performance Restricted Stock which become vested and with
respect to which restrictions lapse as a result of such termination of
employment, the prompt delivery of such Shares.

 

(d) If (i) the employment of a Participant with the Company is terminated for
Cause within twenty-four (24) months following a Change in Control and (ii) the
Company is the surviving corporation following such Change in Control, or the
Acquiror assumes the Restricted Performance Stock or the Performance Units or
substitutes equivalent awards (including, in the case of equity or
equity-related Awards, equivalent equity awards), then any non-vested
Performance Restricted Stock or non-vested Performance Units of such Participant
shall immediately be forfeited and any rights thereunder shall terminate.

 

(e) With respect to any shares of Performance Restricted Stock or Performance
Units which do not become vested under Section 12.4(a) (the “Continuing
Awards”), such shares or units (or the proceeds thereof) shall continue to be
outstanding for the remainder of the applicable Performance Period (as if such
shares or units were the only shares

 

 

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or units granted in respect of each such Performance Period) and subject to the
applicable Performance Goals as modified in accordance with the provisions
hereof.

 

12.5    Amendment or Termination.

 

(a) This Article XII shall not be amended or terminated at any time if any such
amendment or termination would adversely affect the rights of any Participant
under the Plan.

 

(b) For a period of twenty-four (24) months following a Change in Control, the
Plan shall not be terminated (unless replaced by a comparable long-term
incentive plan) and during such period the Plan (or such replacement plan) shall
be administered in a manner such that Participants will be provided with
long-term incentive awards producing reward opportunities generally comparable
to those provided prior to the Change in Control. Any amendment or termination
of the Plan prior to a Change in Control which (i) was at the request of a third
party who has indicated an intention or taken steps reasonably calculated to
effect a Change in Control or (ii) otherwise arose in connection with or in
anticipation of a Change in Control, shall be null and void and shall have no
effect whatsoever.

 

(c) Following a Change in Control, the Plan shall be amended as necessary to
make appropriate adjustments to the Performance Goals for the Continuing Awards
for (i) any negative effect that the costs and expenses incurred by the Company
in connection with the Change in Control may have on the achievement of
Performance Goals under the Plan and (ii) any changes to the Company (including,
but not limited to, changes in corporate structure, capitalization and increased
interest expense as a result of the incurrence or assumption by the Company of
acquisition indebtedness) following the Change in Control so as to preserve the
reward opportunities and Performance Goals for comparable performance under the
Plan as in effect on the date immediately prior to the Change in Control.

 

 

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