Exhibit 10.3

rue21, inc.

 

 

AMENDED AND RESTATED

2009 OMNIBUS INCENTIVE PLAN

 

 

 

 

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TABLE OF CONTENTS

 

          Page  

Article I

  

PURPOSE

     A-1   

Article II

  

DEFINITIONS

     A-1   

Article III

  

ADMINISTRATION

     A-6   

Article IV

  

SHARE LIMITATION

     A-8   

Article V

  

ELIGIBILITY

     A-10   

Article VI

  

STOCK OPTIONS

     A-10   

Article VII

  

STOCK APPRECIATION RIGHTS

     A-13   

Article VIII

  

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

     A-14   

Article IX

  

PERFORMANCE AWARDS

     A-16   

Article X

  

OTHER STOCK-BASED AND CASH-BASED AWARDS

     A-18   

Article XI

  

CHANGE IN CONTROL PROVISIONS

     A-19   

Article XII

  

TERMINATION OR AMENDMENT OF PLAN

     A-21   

Article XIII

  

UNFUNDED STATUS OF PLAN

     A-21   

Article XIV

  

GENERAL PROVISIONS

     A-22   

Article XV

  

EFFECTIVE DATE OF PLAN

     A-25   

Article XVI

  

TERM OF PLAN

     A-25   

Article XVII

  

NAME OF PLAN

     A-25   

 

A-i

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rue21, inc.

 

 

AMENDED AND RESTATED

2009 OMNIBUS INCENTIVE PLAN

 

 

ARTICLE I

PURPOSE

The purpose of this Amended and Restated rue21, inc. 2009 Omnibus Incentive Plan
is to enhance the profitability and value of the Company for the benefit of its
stockholders by enabling the Company to offer Eligible Individuals cash and
stock-based incentives in order to attract, retain and reward such individuals
and strengthen the mutuality of interests between such individuals and the
Company’s stockholders. The Plan is effective as of the date set forth in
Article XV.

ARTICLE II

DEFINITIONS

For purposes of this Plan, the following terms shall have the following
meanings:

2.1 “Affiliate” means each of the following: (a) any Subsidiary; (b) any Parent;
(c) any corporation, trade or business (including, without limitation, a
partnership or limited liability company) which is directly or indirectly
controlled 50% or more (whether by ownership of stock, assets or an equivalent
ownership interest or voting interest) by the Company or one of its Affiliates;
(d) any trade or business (including, without limitation, a partnership or
limited liability company) which directly or indirectly controls 50% or more
(whether by ownership of stock, assets or an equivalent ownership interest or
voting interest) of the Company; and (e) any other entity in which the Company
or any of its Affiliates has a material equity interest and which is designated
as an “Affiliate” by resolution of the Committee; provided that, unless
otherwise determined by the Committee, the Common Stock subject to any Award
constitutes “service recipient stock” for purposes of Section 409A of the Code
or otherwise does not subject the Award to Section 409A of the Code.

2.2 “Award” means any award under the Plan of any Stock Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award,
Other Stock-Based Award or Other Cash-Based Award. All Awards shall be granted
by, confirmed by, and subject to the terms of, an Award Agreement.

2.3 “Award Agreement” means the written or electronic agreement setting forth
the terms and conditions applicable to an Award.

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

2.5 “Cause” means, unless otherwise determined by the Committee in the
applicable Award Agreement, with respect to a Participant’s Termination of
Employment or Termination of Consultancy, the following: (a) in the case where
there is no employment agreement, consulting agreement, change in control
agreement or similar agreement in effect between the Company or an Affiliate and
the Participant at the time of the grant of the Award (or where there is such an
agreement but it does not define “cause” (or words of like import)), termination
due to a Participant’s insubordination, dishonesty, fraud, incompetence, moral
turpitude, willful misconduct, refusal to perform his or her duties or
responsibilities for any reason other than illness or incapacity or materially
unsatisfactory performance of his or her duties for the Company or an Affiliate,
as determined by the Committee in its reasonable discretion; or (b) in the case
where there is an employment agreement, consulting agreement, change in control
agreement or similar agreement in effect between the Company or an Affiliate and
the Participant at the time of the grant of the Award that defines “cause” (or
words of like import), “cause” as

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defined under such agreement; provided, however, that with regard to any
agreement under which the definition of “cause” only applies on occurrence of a
change in control, such definition of “cause” shall not apply until a change in
control actually takes place and then only with regard to a termination
thereafter. With respect to a Participant’s Termination of Directorship, “cause”
means an act or failure to act that constitutes cause for removal of a director
under applicable Delaware law.

2.6 “Change in Control” has the meaning set forth in 11.2.

2.7 “Change in Control Price” has the meaning set forth in Section 11.1.

2.8 “Code” means the Internal Revenue Code of 1986, as amended. Any reference to
any section of the Code shall also be a reference to any successor provision and
any Treasury Regulation promulgated thereunder.

2.9 “Committee” means any committee of the Board duly authorized by the Board to
administer the Plan in accordance with Section 3.1. If no committee is duly
authorized by the Board to administer the Plan, the term “Committee” shall be
deemed to refer to the Board for all purposes under the Plan.

2.10 “Common Stock” means the Common Stock, $0.001 par value per share, of the
Company.

2.11 “Company” means rue21, inc., a Delaware corporation, and its successors by
operation of law.

2.12 “Consultant” means any natural person who is an advisor or consultant to
the Company or its Affiliates.

2.13 “Detrimental Activity” means, unless otherwise determined by the Committee
in the applicable Award Agreement: (a) the disclosure to anyone outside the
Company or its Affiliates, or the use in any manner other than in the
furtherance of the Company’s or its Affiliate’s business, without written
authorization from the Company, of any confidential information, trade secrets
or proprietary information, relating to the business of the Company or its
Affiliates that is acquired by a Participant prior to the Participant’s
Termination; (b) activity while employed or performing services that results, or
if known could result, in the Participant’s Termination that is classified by
the Company as a termination for Cause; (c) any attempt, directly or indirectly,
to solicit, induce or hire (or the identification for solicitation, inducement
or hiring of) any non-clerical employee of the Company or its Affiliates to be
employed by, or to perform services for, the Participant or any person or entity
with which the Participant is associated (including, but not limited to, due to
the Participant’s employment by, consultancy for, equity interest in, or
creditor relationship with such person or entity) or any person or entity from
which the Participant receives direct or indirect compensation or fees as a
result of such solicitation, inducement or hire (or the identification for
solicitation, inducement or hire) without, in all cases, written authorization
from the Company; (d) any attempt, directly or indirectly, to solicit in a
competitive manner any customer or prospective customer of the Company or its
Affiliates at the time of a Participant’s Termination, without, in all cases,
written authorization from the Company; (e) the Participant’s Disparagement, or
inducement of others to do so, of the Company or its Affiliates or their past
and present officers, directors, employees or products; (f) without written
authorization from the Company, the rendering of services for any organization,
or engaging, directly or indirectly, in any business, which is competitive with
the Company or its Affiliates, or the rendering of services to such organization
or business if such organization or business is otherwise prejudicial to or in
conflict with the interests of the Company or its Affiliates provided, however,
that competitive activities shall only be those competitive with any business
unit or Affiliate of the Company with regard to which the Participant performed
services at any time within the two years prior to the Participant’s
Termination; or (g) breach of any agreement between the Participant and the
Company or an Affiliate (including, without limitation, any employment agreement
or noncompetition or nonsolicitation agreement). For purposes of sub-sections
(a), (c), (d) and (f) above, the General Counsel or the Chief Executive Officer
of the Company shall have authority to provide the Participant with written
authorization to engage in the activities contemplated thereby and no other
person shall have authority to provide the Participant with such authorization.

 

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2.14 “Disability” means, unless otherwise determined by the Committee in the
applicable Award Agreement, with respect to a Participant’s Termination, a
permanent and total disability as defined in Section 22(e)(3) of the Code. A
Disability shall only be deemed to occur at the time of the determination by the
Committee of the Disability. Notwithstanding the foregoing, for Awards that are
subject to Section 409A of the Code, Disability shall mean that a Participant is
disabled under Section 409A(a)(2)(C)(i) or (ii) of the Code.

2.15 “Disparagement” means making comments or statements to the press, the
Company’s or its Affiliates’ employees, consultants or any individual or entity
with whom the Company or its Affiliates has a business relationship which could
reasonably be expected to adversely affect in any manner: (a) the conduct of the
business of the Company or its Affiliates (including, without limitation, any
products or business plans or prospects); or (b) the business reputation of the
Company or its Affiliates, or any of their products, or their past or present
officers, directors or employees.

2.16 “Dividend Equivalents” means an Award of cash or other Awards with a Fair
Market Value equal to the dividends which would have been paid on the Common
Stock underlying an outstanding Award had such Common Stock been outstanding.

2.17 “Effective Date” means the effective date of the Plan as defined in Article
XV.

2.18 “Eligible Employees” means each employee of the Company or an Affiliate.

2.19 “Eligible Individual” means an Eligible Employee, Non-Employee Director or
Consultant who is designated by the Committee in its discretion as eligible to
receive Awards subject to the conditions set forth herein.

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

2.21 “Fair Market Value” means, for purposes of the Plan, unless otherwise
required by any applicable provision of the Code or any regulations issued
thereunder, as of any date and except as provided below, the last sales price
reported for the Common Stock on the applicable date: (a) as reported on the
principal national securities exchange in the United States on which it is then
traded or (b) if the Common Stock is not traded, listed or otherwise reported or
quoted, the Committee shall determine in good faith the Fair Market Value in
whatever manner it considers appropriate taking into account the requirements of
Section 409A of the Code. For purposes of the grant of any Award, the applicable
date shall be the trading day immediately prior to the date on which the Award
is granted. For purposes of the exercise of any Award, the applicable date shall
be the date a notice of exercise is received by the Committee or, if not a day
on which the applicable market is open, the next day that it is open.

2.22 “Family Member” means “family member” as defined in Section A.1(a)(5) of
the general instructions of Form S-8.

2.23 “Incentive Stock Option” means any Stock Option awarded to an Eligible
Employee of the Company, its Subsidiaries and its Parents (if any) under this
Plan intended to be and designated as an “Incentive Stock Option” within the
meaning of Section 422 of the Code.

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

2.25 “Non-Qualified Stock Option” means any Stock Option awarded under the Plan
that is not an Incentive Stock Option.

 

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2.26 “Other Cash-Based Award” means an Award granted pursuant to Section 10.3 of
the Plan and payable in cash at such time or times and subject to such terms and
conditions as determined by the Committee in its sole discretion.

2.27 “Other Stock-Based Award” means an Award under Article X of the Plan that
is valued in whole or in part by reference to, or is payable in or otherwise
based on, Common Stock, including, without limitation, an Award valued by
reference to an Affiliate.

2.28 “Parent” means any parent corporation of the Company within the meaning of
Section 424(e) of the Code.

2.29 “Participant” means an Eligible Individual to whom an Award has been
granted pursuant to the Plan.

2.30 “Performance Award” means an Award granted to a Participant pursuant to
Article IX hereof contingent upon achieving certain Performance Goals.

2.31 “Performance Goals” means goals established by the Committee as
contingencies for Awards to vest and/or become exercisable or distributable
based on one or more of the performance goals set forth in Exhibit A hereto.

2.32 “Performance Period” means the designated period during which the
Performance Goals must be satisfied with respect to the Award to which the
Performance Goals relate.

2.33 “Plan” means this rue21, inc. Amended and Restated 2009 Omnibus Incentive
Plan, as further amended and restated from time to time.

2.34 “Restricted Stock” means an Award of shares of Common Stock under the Plan
that is subject to restrictions under Article VIII.

2.35 “Restricted Stock Unit” means an Award of the right to receive either (as
the Committee determines) Common Stock or cash equal to the Fair Market Value of
a share of Common Stock on the payment date, issued subject, in part, to the
terms, conditions and restrictions described in Article VIII.

2.36 “Restriction Period” has the meaning set forth in Section 8.3 with respect
to Restricted Stock.

2.37 “Retirement” means, unless otherwise determined by the Committee in the
applicable Award Agreement, a Termination of Employment or Termination of
Consultancy (other than a termination for Cause) at or after age 65 or such
earlier date after age 50 as may be approved by the Committee with regard to
such Participant, in its sole discretion, at the time of grant, or thereafter
provided that the exercise of such discretion does not make the applicable Award
subject to Section 409A of the Code. With respect to a Participant’s Termination
of Directorship, Retirement means the failure to stand for reelection or the
failure to be reelected on or after a Participant has attained age 65 or, with
the consent of the Board, provided that the exercise of such discretion does not
make the applicable Award subject to Section 409A of the Code, before age 65 but
after age 50.

2.38 “Rule 16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act as
then in effect or any successor provision.

2.39 “Section 162(m) of the Code” means the exception for performance-based
compensation under Section 162(m) of the Code and any applicable treasury
regulations thereunder.

2.40 “Section 409A of the Code” means the nonqualified deferred compensation
rules under Section 409A of the Code and any applicable Treasury Regulations and
other official guidance thereunder.

 

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2.41 “Securities Act” means the Securities Act of 1933, as amended and all rules
and regulations promulgated thereunder. Reference to a specific section of the
Securities Act or regulation thereunder shall include such section or
regulation, any valid regulation or interpretation promulgated under such
section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such section or regulation.

2.42 “Stock Appreciation Right” means an Award of a right to receive (without
payment to the Company) cash, shares of Common Stock or other property, or other
forms of payment, or any combination thereof, as determined by the Committee,
based on the increase in the value of the number of shares of Common Stock
specified in the Stock Appreciation Right. Stock Appreciation Rights are
subject, in part, to the terms, conditions and restrictions described in Article
VII.

2.43 “Stock Option” or “Option” means any option to purchase shares of Common
Stock granted to Eligible Individuals granted pursuant to Article VI.

2.44 “Subsidiary” means any subsidiary corporation of the Company within the
meaning of Section 424(f) of the Code.

2.45 “Ten Percent Stockholder” means a person owning stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company, its Subsidiaries or its Parent.

2.46 “Termination” means a Termination of Consultancy, Termination of
Directorship or Termination of Employment, as applicable.

2.47 “Termination of Consultancy” means: (a) that the Consultant is no longer
acting as a consultant to the Company or an Affiliate; or (b) when an entity
which is retaining a Participant as a Consultant ceases to be an Affiliate
unless the Participant otherwise is, or thereupon becomes, a Consultant to the
Company or another Affiliate at the time the entity ceases to be an Affiliate.
In the event that a Consultant becomes an Eligible Employee or a Non-Employee
Director upon the termination of his or her consultancy, unless otherwise
determined by the Committee, in its sole discretion, no Termination of
Consultancy shall be deemed to occur until such time as such Consultant is no
longer a Consultant, an Eligible Employee or a Non-Employee Director.
Notwithstanding the foregoing, the Committee may otherwise define Termination of
Consultancy in the Award Agreement or, if no rights of a Participant are
reduced, may otherwise define Termination of Consultancy thereafter, provided
that any such change to the definition of the term “Termination of Consultancy”
does not subject the applicable Stock Option to Section 409A of the Code.

2.48 “Termination of Directorship” means that the Non-Employee Director has
ceased to be a director of the Company; except that if a Non-Employee Director
becomes an Eligible Employee or a Consultant upon the termination of his or her
directorship, his or her ceasing to be a director of the Company shall not be
treated as a Termination of Directorship unless and until the Participant has a
Termination of Employment or Termination of Consultancy, as the case may be.

2.49 “Termination of Employment” means: (a) a termination of employment (for
reasons other than a military or personal leave of absence granted by the
Company) of a Participant from the Company and its Affiliates; or (b) when an
entity which is employing a Participant ceases to be an Affiliate, unless the
Participant otherwise is, or thereupon becomes, employed by the Company or
another Affiliate at the time the entity ceases to be an Affiliate. In the event
that an Eligible Employee becomes a Consultant or a Non-Employee Director upon
the termination of his or her employment, unless otherwise determined by the
Committee, in its sole discretion, no Termination of Employment shall be deemed
to occur until such time as such Eligible Employee is no longer an Eligible
Employee, a Consultant or a Non-Employee Director. Notwithstanding the
foregoing, the Committee may otherwise define Termination of Employment in the
Award Agreement or, if no rights of a Participant are reduced, may otherwise
define Termination of Employment thereafter, provided that any such change to
the definition of the term “Termination of Employment” does not subject the
applicable Stock Option to Section 409A of the Code.

 

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2.50 “Transfer” means: (a) when used as a noun, any direct or indirect transfer,
sale, assignment, pledge, hypothecation, encumbrance or other disposition
(including the issuance of equity in any entity), whether for value or no value
and whether voluntary or involuntary (including by operation of law), and
(b) when used as a verb, to directly or indirectly transfer, sell, assign,
pledge, encumber, charge, hypothecate or otherwise dispose of (including the
issuance of equity in any entity) whether for value or for no value and whether
voluntarily or involuntarily (including by operation of law). “Transferred” and
“Transferable” shall have a correlative meaning.

ARTICLE III

ADMINISTRATION

3.1 The Committee. The Plan shall be administered and interpreted by the
Committee; provided, however, that at any time such authority may be
administered by the Board or one or more Company officers and/or directors
designated by the Committee, on such terms and conditions as it may determine,
in compliance with applicable law or rule. To the extent required by applicable
law, rule or regulation, each member of the Committee shall qualify as (a) a
“non-employee director” under Rule 16b-3, (b) an “outside director” under Code
Section 162(m) and (c) an “independent director” under the rules of any national
securities exchange or national securities association, as applicable. If it is
later determined that one or more members of the Committee do not so qualify,
actions taken by the Committee prior to such determination shall be valid
despite such failure to qualify.

3.2 Grants of Awards. The Committee shall have full authority to grant, pursuant
to the terms of this Plan, to Eligible Individuals: (i) Stock Options,
(ii) Stock Appreciation Rights, (iii) Restricted Stock and Restricted Stock
Units, (iv) Performance Awards; (v) Other Stock-Based Awards; and (vi) Other
Cash-Based Awards. In particular, the Committee shall have the authority,
including, without limitation:

(a) to select the Eligible Individuals to whom Awards may from time to time be
granted hereunder;

(b) to determine whether and to what extent Awards, or any combination thereof,
are to be granted hereunder to one or more Eligible Individuals;

(c) to determine the number of shares of Common Stock to be covered by each
Award granted hereunder;

(d) to determine the terms and conditions, not inconsistent with the terms of
the Plan, of any Award granted hereunder (including, but not limited to, the
exercise or purchase price (if any), any restriction or limitation, any vesting
schedule or acceleration thereof, or any forfeiture restrictions or waiver
thereof, regarding any Award and the shares of Common Stock relating thereto,
based on such factors, if any, as the Committee shall determine, in its sole
discretion);

(e) to determine whether, to what extent and under what circumstances grants of
Options and other Awards under the Plan are to operate on a tandem basis and/or
in conjunction with or apart from other awards made by the Company under this
Plan or outside of this Plan;

(f) to determine whether and under what circumstances a Stock Option may be
settled in cash, Common Stock and/or Restricted Stock under Section 6.4(d);

(g) to determine whether a Stock Option is an Incentive Stock Option or
Non-Qualified Stock Option;

(h) to determine whether to require a Participant, as a condition of the
granting of any Award, to not sell or otherwise dispose of shares acquired
pursuant to the exercise of an Award for a period of time as determined by the
Committee, in its sole discretion, following the date of the acquisition of such
Award; and

 

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(i) to modify, extend or renew an Award, except as otherwise provided herein;
provided, however, that such action does not subject the Award to Section 409A
of the Code without the consent of the Participant.

3.3 Guidelines. Subject to Article XII hereof, the Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan and perform all acts, including the delegation of
its responsibilities (to the extent permitted by applicable law and applicable
stock exchange rules), as it shall, from time to time, deem advisable; to
construe and interpret the terms and provisions of the Plan and any Award issued
under the Plan (and any agreements relating thereto); and to otherwise supervise
the administration of the Plan. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or in any agreement relating
thereto in the manner and to the extent it shall deem necessary to effectuate
the purpose and intent of the Plan. The Committee may adopt special guidelines
and provisions for persons who are residing in or employed in, or subject to,
the taxes of, any domestic or foreign jurisdictions to comply with applicable
tax and securities laws of such domestic or foreign jurisdictions.
Notwithstanding the foregoing, no action of the Committee under this Section 3.3
shall materially impair the rights of any Participant without the Participant’s
consent, except as otherwise provided in the Plan. To the extent applicable,
this Plan is intended to comply with the applicable requirements of Rule 16b-3,
and with respect to Awards intended to be “performance-based,” the applicable
provisions of Section 162(m) of the Code, and the Plan shall be limited,
construed and interpreted in a manner so as to comply therewith. Although it is
the intent of the Company that this Plan and Awards hereunder, to the extent the
Committee deems appropriate and to the extent applicable, comply with Rule 16b-3
and Sections 162(m), 409A and 422; (i) the Company does not warrant that any
Award under the Plan will qualify for favorable tax treatment under any
provision of the federal, state, local or non-United States law; and (ii) in no
event shall any member of the Committee or the Company (or its employees,
officers or directors) have any liability to any Participant (or any other
person) due to the failure of an Award to satisfy the requirements of Rule 16b-3
and Sections 162(m), 409A and 422 or for any tax, interest, or penalties the
Participant might owe as a result of the grant, holding, vesting, exercise, or
payment of any Award under the Plan.

3.4 Decisions Final. Any decision, interpretation or other action made or taken
in good faith by or at the direction of the Company, the Board or the Committee
(or any of its members or designees) arising out of or in connection with the
Plan shall be within the absolute discretion of all and each of them, as the
case may be, and shall be final, binding and conclusive on the Company and all
employees and Participants and their respective heirs, executors,
administrators, successors and assigns.

3.5 Designation of Consultants/Liability.

(a) The Committee may designate employees of the Company and professional
advisors to assist the Committee in the administration of the Plan and (to the
extent permitted by applicable law and applicable exchange rules) may grant
authority to officers to grant Awards and/or execute agreements or other
documents on behalf of the Committee.

(b) The Committee may employ such legal counsel, consultants and agents as it
may deem desirable for the administration of the Plan and may rely upon any
opinion received from any such counsel or consultant and any computation
received from any such consultant or agent. Expenses incurred by the Committee
or the Board in the engagement of any such counsel, consultant or agent shall be
paid by the Company. To the maximum extent permitted by law, neither the Board,
the Committee, their current or former respective members nor and any person
designated pursuant to sub-section (a) or Section 3.1 above shall be liable for
any action or determination made in good faith with respect to the Plan or any
Award granted under it.

3.6 Indemnification. To the maximum extent permitted by applicable law and the
Certificate of Incorporation and By-Laws of the Company and to the extent not
covered by insurance directly insuring such person, each officer or employee of
the Company or any Affiliate and member or former member of the Committee or the
Board shall be indemnified and held harmless by the Company against any cost or
expense

 

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(including reasonable fees of counsel reasonably acceptable to the Committee) or
liability (including any sum paid in settlement of a claim with the approval of
the Committee), and advanced amounts necessary to pay the foregoing at the
earliest time and to the fullest extent permitted, arising out of any act or
omission to act in connection with the administration of the Plan, except to the
extent arising out of such officer’s, employee’s, member’s or former member’s
own fraud or bad faith. Such indemnification shall be in addition to any right
of indemnification the employees, officers, directors or members or former
officers, directors or members may have under applicable law or under the
Certificate of Incorporation or By-Laws of the Company or any Affiliate.
Notwithstanding anything else herein, this indemnification will not apply to the
actions or determinations made by an individual with regard to Awards granted to
him or her under this Plan.

ARTICLE IV

SHARE LIMITATION

4.1 Shares. (a) The aggregate number of shares of Common Stock that may be
issued or used for reference purposes or with respect to which Awards may be
granted under the Plan shall be 5,626,000 shares (subject to any increase or
decrease pursuant to Section 4.2), which may be either authorized and unissued
Common Stock or Common Stock held in or acquired for the treasury of the Company
or both. The maximum number of shares of Common Stock with respect to which
Incentive Stock Options may be granted under the Plan shall be 5,626,000 shares.
If any Award is forfeited or cancelled, or terminates unexercised, or if an
Award is otherwise settled without the delivery of the full number of shares of
Common Stock underlying the Award, then such shares of Common Stock shall be or
become available for issuance under this Plan; provided, however, that shares of
Common Stock (i) delivered in payment of the exercise price of a Stock Option,
(ii) not issued upon settlement of Stock Appreciation Rights, or (iii) delivered
to or withheld by the Company to pay withholding taxes shall not become
available again for issuance under this Plan. Any Award under the Plan settled
in cash shall not be counted against the foregoing maximum share limitations.

(b) Individual Participant Limitations. To the extent required by Section 162(m)
of the Code for Awards under the Plan to qualify as “performance-based
compensation,” the following individual Participant limitations shall apply:

(i) The maximum number of shares of Common Stock subject to any Award of Stock
Options, or Stock Appreciation Rights, or shares of Restricted Stock, Restricted
Stock Units or Other Stock-Based Awards for which the grant of such Award or the
lapse of the relevant Restriction Period is subject to the attainment of
Performance Goals which may be granted under the Plan during any fiscal year of
the Company to any Participant shall be 750,000 shares per type of Award (which
shall be subject to any further increase or decrease pursuant to Section 4.2),
provided that the maximum number of shares of Common Stock for all types of
Awards does not exceed 750,000 shares (which shall be subject to any further
increase or decrease pursuant to Section 4.2) during any fiscal year of the
Company.

(ii) There are no annual individual share limitations applicable to Participants
on Restricted Stock, Restricted Stock Units or Other Stock-Based Awards for
which the grant, vesting or payment (as applicable) of any such Award is not
subject to the attainment of Performance Goals.

(iii) The maximum number of shares of Common Stock subject to any Performance
Award which may be granted under the Plan during any fiscal year of the Company
to any Participant shall be 750,000 shares (which shall be subject to any
further increase or decrease pursuant to Section 4.2) with respect to any fiscal
year of the Company.

(iv) The maximum value of a cash payment made under a Performance Award which
may be granted under the Plan with respect to any fiscal year of the Company to
any Participant shall be $5,000,000.

 

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(v) The individual Participant limitations set forth in this Section 4.1(b)
(other than Section 4.1(b)(iii)) shall be cumulative; that is, to the extent
that shares of Common Stock for which Awards are permitted to be granted to a
Participant during a fiscal year are not covered by an Award to such Participant
in a fiscal year, the number of shares of Common Stock available for Awards to
such Participant shall automatically increase in the subsequent fiscal years
during the term of the Plan until used.

(c) Non-Employee Director Share Limitation. No Non-Employee Director may be
granted Awards (denominated in shares of Common Stock) in excess of 50,000
shares of Common Stock under this Plan in any one fiscal year of the Company.

4.2 Changes.

(a) The existence of the Plan and the Awards granted hereunder shall not affect
in any way the right or power of the Board or the stockholders of the Company to
make or authorize (i) any adjustment, recapitalization, reorganization or other
change in the Company’s capital structure or its business, (ii) any merger or
consolidation of the Company or any Affiliate, (iii) any issuance of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Common
Stock, (iv) the dissolution or liquidation of the Company or any Affiliate,
(v) any sale or transfer of all or part of the assets or business of the Company
or any Affiliate or (vi) any other corporate act or proceeding.

(b) Subject to the provisions of Section 4.2(d), if there shall occur any such
change in the capital structure of the Company by reason of any stock split,
reverse stock split, stock dividend, subdivision, combination or
reclassification of shares that may be issued under the Plan, any
recapitalization, any merger, any consolidation, any spin off, any
reorganization or any partial or complete liquidation, or any other corporate
transaction or event having an effect similar to any of the foregoing (a
“Section 4.2 Event”), then (i) the aggregate number and/or kind of shares that
thereafter may be issued under the Plan, (ii) the individual maximum number of
shares of Common Stock that may be granted as any Award (denominated in shares)
hereunder; (iii) the number and/or kind of shares or other property (including
cash) subject to outstanding Awards granted under the Plan, and/or (iv) the
grant or exercise price with respect to any outstanding Award granted under the
Plan, shall be appropriately adjusted. In addition, subject to Section 4.2(d),
if there shall occur any change in the capital structure or the business of the
Company that is not a Section 4.2 Event (an “Other Extraordinary Event”),
including by reason of any extraordinary dividend (whether cash or stock), any
conversion, any adjustment, any issuance of any class of securities convertible
or exercisable into, or exercisable for, any class of stock, or any sale or
transfer of all or substantially all of the Company’s assets or business, then
the Committee, in its sole discretion, may adjust any Award and make such other
adjustments to the Plan. Any adjustment pursuant to this Section 4.2 shall be
consistent with the applicable Section 4.2 Event or the applicable Other
Extraordinary Event, as the case may be, and in such manner as the Committee
may, in its sole discretion, deem appropriate and equitable to prevent
substantial dilution or enlargement of the rights granted to, or available for,
Participants under the Plan. Any such adjustment determined by the Committee
shall be final, binding and conclusive on the Company and all Participants and
their respective heirs, executors, administrators, successors and permitted
assigns. Except as expressly provided in this Section 4.2 or in the applicable
Award Agreement, a Participant shall have no rights by reason of any Section 4.2
Event or any Other Extraordinary Event.

(c) Fractional shares of Common Stock resulting from any adjustment in Awards
pursuant to Section 4.2(a) or 4.2(b) shall be aggregated until, and eliminated
at, the time of exercise by rounding-down for fractions less than one-half and
rounding-up for fractions equal to or greater than one-half. No cash settlements
shall be made with respect to fractional shares eliminated by rounding. Notice
of any adjustment shall be given by the Committee to each Participant whose
Award has been adjusted and such adjustment (whether or not such notice is
given) shall be effective and binding for all purposes of the Plan.

(d) In addition, the Committee may, if deemed appropriate, in its discretion,
determine that in connection with any merger, consolidation, sale of all or
substantially all of the Company’s assets, Change in Control, dissolution,
liquidation, or any other transaction or event having a similar effect to any of
the foregoing,

 

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(i) provide for an equivalent Award or substitute Award in respect of securities
of the surviving entity of any such transaction, (ii) upon advance notice to the
affected Participants, cancel any outstanding Stock Options or Stock
Appreciation Rights and pay to the holders thereof, in cash, stock, or other
property (including the property, if any, payable in such transaction) (or any
combination thereof), an amount equal to the excess of the fair market value of
the shares of Common Stock covered by the Award, based on the price per share of
Common Stock received or to be received by other stockholders of the Company in
such a transaction or such other value as determined by the Committee (the
“Transaction Fair Market Value”), over the exercise price of the Award, or
(iii) make provision for a cash payment or payment of other property (including
the property, if any, payable in such transaction) to the holder of any other
outstanding Award in settlement of such Award; provided that, in the case of a
Stock Option or Stock Appreciation Right with an exercise price that equals or
exceeds the Transaction Fair Market Value of a share of Common Stock, the
Committee may cancel such Stock Option or Stock Appreciation Right without
payment or consideration therefor.

Any such adjustment or other actions taken by the Committee pursuant to this
Section 4.2 shall be performed in accordance with the applicable provisions of
the Code and the treasury regulations issued thereunder so as to not affect the
status of (i) any Award intended to qualify as performance-based compensation
under Section 162(m) of the Code, unless the Committee determines otherwise,
(ii) any Award intended to qualify as an Incentive Stock Option under
Section 422 of the Code, unless the Committee determines otherwise, or (iii) any
Award intended to comply with, or qualify for, an exception to Section 409A of
the Code.

Any such termination, adjustment or other action taken by the Committee will be
final, conclusive and binding for all purposes of this Plan.

4.3 Minimum Purchase Price. Notwithstanding any provision of the Plan to the
contrary, if authorized but previously unissued shares of Common Stock are
issued under the Plan, such shares shall not be issued for a consideration that
is less than as permitted under applicable law.

ARTICLE V

ELIGIBILITY

5.1 General Eligibility. All current and prospective Eligible Individuals are
eligible to be granted Awards. Eligibility for the grant of Awards and actual
participation in the Plan shall be determined by the Committee (or its designee)
in its sole discretion.

5.2 Incentive Stock Options. Notwithstanding the foregoing, only Eligible
Employees of the Company, its Subsidiaries and its Parent (if any) are eligible
to be granted Incentive Stock Options under the Plan. Eligibility for the grant
of an Incentive Stock Option and actual participation in the Plan shall be
determined by the Committee in its sole discretion.

5.3 General Requirement. The vesting and exercise of Awards granted to a
prospective Eligible Individual are conditioned upon such individual actually
becoming an Eligible Employee, Consultant or Non-Employee Director,
respectively.

ARTICLE VI

STOCK OPTIONS

6.1 Options. Stock Options may be granted alone or in addition to other Awards
granted under the Plan. Each Stock Option granted under the Plan shall be of one
of two types: (a) an Incentive Stock Option or (b) a Non-Qualified Stock Option.

 

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6.2 Grants. The Committee shall have the authority to grant to any Eligible
Employee one or more Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options. The Committee shall have the authority to grant any
Consultant or Non-Employee Director one or more Non-Qualified Stock Options. To
the extent that any Stock Option does not qualify as an Incentive Stock Option
(whether because of its provisions or the time or manner of its exercise or
otherwise), such Stock Option or the portion thereof which does not so qualify
shall constitute a separate Non-Qualified Stock Option.

6.3 Incentive Stock Options. Notwithstanding anything in the Plan to the
contrary, no term of the Plan relating to Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code, or, without the consent of the Participants affected, to disqualify
any Incentive Stock Option under such Section 422.

6.4 Terms of Options. Options granted under the Plan shall be subject to the
following terms and conditions and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Committee shall deem desirable:

(a) Exercise Price. The exercise price per share of Common Stock subject to a
Stock Option shall be determined by the Committee at the time of grant, provided
that the per share exercise price of a Stock Option shall not be less than 100%
(or, in the case of an Incentive Stock Option granted to a Ten Percent
Stockholder, 110%) of the Fair Market Value of the Common Stock at the time of
grant.

(b) Stock Option Term and Vesting. The term of each Stock Option shall be fixed
by the Committee, provided that no Stock Option shall be exercisable more than
10 years after the date the Option is granted; and provided further that the
term of an Incentive Stock Option granted to a Ten Percent Stockholder shall not
exceed five years. The standard vesting schedule applicable to Awards of Stock
Options shall provide for vesting of such Awards, in one or more increments,
over a service period of no less than three years (not including special vesting
terms set forth therein); provided, however, this limitation shall not apply to
(i) Awards granted to Non-Employee Directors of the Board that are received
pursuant to the Company’s compensation program applicable to Non-Employee
Directors, (ii) adversely affect a Participant’s rights under another plan or
agreement with the Company, (iii) apply to substitute Awards or any other Awards
granted in exchange for the surrender of, or substitution of, another company’s
awards to its employees, directors or any other persons, or (iv) apply to
350,000 shares of Common Stock relating to Awards of Stock Options granted
pursuant to this Article VI.

(c) Exercisability. Unless otherwise provided by the Committee in accordance
with the provisions of this Section 6.4, Stock Options granted under the Plan
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at the time of grant. If the
Committee provides, in its discretion, that any Stock Option is exercisable
subject to certain limitations (including, without limitation, that such Stock
Option is exercisable only in installments or within certain time periods), the
Committee may waive such limitations on the exercisability at any time at or
after the time of grant in whole or in part (including, without limitation,
waiver of the installment exercise provisions or acceleration of the time at
which such Stock Option may be exercised), based on such factors, if any, as the
Committee shall determine, in its sole discretion. Unless otherwise determined
by the Committee, at the time of grant, the Option agreement shall provide that
(i) in the event that the Participant engages in Detrimental Activity prior to
any exercise of the Stock Option (whether vested or unvested), all Stock Options
held by the Participant shall thereupon terminate and expire, (ii) as a
condition of the exercise of a Stock Option, the Participant shall be required
to certify (or shall be deemed to have certified) at the time of exercise in a
manner acceptable to the Company that the Participant is in compliance with the
terms and conditions of the Plan and that the Participant has not engaged in,
and does not intend to engage in, any Detrimental Activity, and (iii) in the
event that the Participant engages in Detrimental Activity during the one-year
period commencing on the date that the Stock Option is exercised or becomes
vested, the Company shall be entitled to recover from the Participant at any
time within one year after such exercise or vesting, and the Participant shall
pay over to the Company, an amount equal to any gain realized as a result of the
exercise (whether at the time of exercise or thereafter). The foregoing
provisions described in subsections (i), (ii) and (iii) shall cease to apply
upon a Change in Control.

 

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(d) Method of Exercise. Subject to whatever installment exercise and waiting
period provisions apply under Section 6.4(c), to the extent vested, Stock
Options may be exercised in whole or in part at any time during the Option term,
by giving written notice of exercise to the Company specifying the number of
shares of Common Stock to be purchased. Such notice shall be accompanied by
payment in full of the purchase price as follows: (i) in cash or by check, bank
draft or money order payable to the order of the Company; (ii) solely to the
extent permitted by applicable law, if the Common Stock is traded on a national
securities exchange, and the Committee authorizes, through a procedure whereby
the Participant delivers irrevocable instructions to a broker reasonably
acceptable to the Committee to deliver promptly to the Company an amount equal
to the purchase price; or (iii) on such other terms and conditions as may be
acceptable to the Committee (including, without limitation, the relinquishment
of Stock Options or by payment in full or in part in the form of Common Stock
owned by the Participant based on the Fair Market Value of the Common Stock on
the payment date as determined by the Committee). No shares of Common Stock
shall be issued until payment therefore, as provided herein, has been made or
provided for.

(e) Non-Transferability of Options. No Stock Option shall be Transferable by the
Participant otherwise than by will or by the laws of descent and distribution,
and all Stock Options shall be exercisable, during the Participant’s lifetime,
only by the Participant. Notwithstanding the foregoing, the Committee may
determine, in its sole discretion, at the time of grant or thereafter that a
Non-Qualified Stock Option that is otherwise not Transferable pursuant to this
Section is Transferable to a Family Member in whole or in part and in such
circumstances, and under such conditions, as specified by the Committee. A
Non-Qualified Stock Option that is Transferred to a Family Member pursuant to
the preceding sentence (i) may not be subsequently Transferred otherwise than by
will or by the laws of descent and distribution and (ii) remains subject to the
terms of this Plan and the applicable Award Agreement. Any shares of Common
Stock acquired upon the exercise of a Non-Qualified Stock Option by a
permissible transferee of a Non-Qualified Stock Option or a permissible
transferee pursuant to a Transfer after the exercise of the Non-Qualified Stock
Option shall be subject to the terms of this Plan and the applicable Award
Agreement.

(f) Termination by Death, Disability or Retirement. Unless otherwise determined
by the Committee at the time of grant, or if no rights of the Participant are
reduced, thereafter, if a Participant’s Termination is by reason of death,
Disability or Retirement, all Stock Options that are held by such Participant
that are vested and exercisable at the time of the Participant’s Termination may
be exercised by the Participant at any time within a period of one year from the
date of such Termination, but in no event beyond the expiration of the stated
term of such Stock Options; provided, however, that if the Participant dies
within such exercise period, all unexercised Stock Options held by such
Participant shall thereafter be exercisable, to the extent to which they were
exercisable at the time of death, for a period of one year from the date of such
death, but in no event beyond the expiration of the stated term of such Stock
Options.

(g) Involuntary Termination Without Cause. Unless otherwise determined by the
Committee at the time of grant, or if no rights of the Participant are reduced,
thereafter, if a Participant’s Termination is by involuntary termination without
Cause, all Stock Options that are held by such Participant that are vested and
exercisable at the time of the Participant’s Termination may be exercised by the
Participant at any time within a period of 90 days from the date of such
Termination, but in no event beyond the expiration of the stated term of such
Stock Options.

(h) Voluntary Termination. Unless otherwise determined by the Committee at the
time of grant, or if no rights of the Participant are reduced, thereafter, if a
Participant’s Termination is voluntary (other than a voluntary termination
described in Section 6.4(i)(y) hereof), all Stock Options that are held by such
Participant that are vested and exercisable at the time of the Participant’s
Termination may be exercised by the Participant at any time within a period of
30 days from the date of such Termination, but in no event beyond the expiration
of the stated term of such Stock Options.

(i) Termination for Cause. Unless otherwise determined by the Committee at the
time of grant, or if no rights of the Participant are reduced, thereafter, if a
Participant’s Termination (x) is for Cause or (y) is a

 

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voluntary Termination (as provided in Section 6.4(h)) after the occurrence of an
event that would be grounds for a Termination for Cause, all Stock Options,
whether vested or not vested, that are held by such Participant shall thereupon
terminate and expire as of the date of such Termination.

(j) Unvested Stock Options. Unless otherwise determined by the Committee at the
time of grant, or if no rights of the Participant are reduced, thereafter, Stock
Options that are not vested as of the date of a Participant’s Termination for
any reason shall terminate and expire as of the date of such Termination.

(k) Incentive Stock Option Limitations. To the extent that the aggregate Fair
Market Value (determined as of the time of grant) of the Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by
an Eligible Employee during any calendar year under this Plan and/or any other
stock option plan of the Company, any Subsidiary or any Parent exceeds $100,000,
such Options shall be treated as Non-Qualified Stock Options. Should any
provision of this Plan not be necessary in order for the Stock Options to
qualify as Incentive Stock Options, or should any additional provisions be
required, the Committee may amend this Plan accordingly, without the necessity
of obtaining the approval of the stockholders of the Company.

(l) Form, Modification, Extension and Renewal of Stock Options. Subject to the
terms and conditions and within the limitations of the Plan, Stock Options shall
be evidenced by such form of agreement or grant as is approved by the Committee,
and the Committee may (i) modify, extend or renew outstanding Stock Options
granted under the Plan (provided that the rights of a Participant are not
reduced without his or her consent and provided further that such action does
not subject the Stock Options to Section 409A of the Code without the consent of
the Participant), and (ii) accept the surrender of outstanding Stock Options (up
to the extent not theretofore exercised) and authorize the granting of new Stock
Options in substitution therefore (to the extent not theretofore exercised or
otherwise prohibited by the Plan).

(m) Other Terms and Conditions. Stock Options may contain such other provisions,
which shall not be inconsistent with any of the terms of the Plan, as the
Committee shall deem appropriate.

ARTICLE VII

STOCK APPRECIATION RIGHTS

7.1 Stock Appreciation Rights. The Committee may grant Stock Appreciation
Rights. Each Award of Stock Appreciation Rights granted under this Plan shall be
evidenced by an Award Agreement in such form as the Committee shall prescribe
from time to time in accordance with this Plan and shall comply with the
applicable terms and conditions of this Article and this Plan, and with such
other terms and conditions, including, but not limited to, restrictions upon the
Award of Stock Appreciation Rights or the shares of Common Stock issuable upon
exercise thereof, as the Committee, in its discretion, shall establish.

7.2 Terms and Conditions of Stock Appreciation Rights. Stock Appreciation Rights
granted hereunder shall be subject to such terms and conditions, not
inconsistent with the provisions of the Plan, as shall be determined from time
to time by the Committee, and the following:

(a) Exercise Price. The exercise price per share of Common Stock subject to a
Stock Appreciation Right shall be determined by the Committee at the time of
grant, provided that the per share exercise price of a Stock Appreciation Right
shall not be less than 100% of the Fair Market Value of the Common Stock at the
time of grant.

(b) Term. The term of each Stock Appreciation Right shall be fixed by the
Committee, but shall not be greater than 10 years after the date the right is
granted.

(c) Exercisability. Unless otherwise provided by the Committee in accordance
with the provisions of this Section 7.2, Stock Appreciation Rights granted under
the Plan shall be exercisable at such time or times and

 

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subject to such terms and conditions as shall be determined by the Committee at
the time of grant. If the Committee provides, in its discretion, that any such
right is exercisable subject to certain limitations (including, without
limitation, that it is exercisable only in installments or within certain time
periods), the Committee may waive such limitations on the exercisability at any
time at or after grant in whole or in part (including, without limitation,
waiver of the installment exercise provisions or acceleration of the time at
which such right may be exercised), based on such factors, if any, as the
Committee shall determine, in its sole discretion.

Unless otherwise determined by the Committee at grant, the Award Agreement shall
provide that (i) in the event that the Participant engages in Detrimental
Activity prior to any exercise of the Stock Appreciation Right, all Stock
Appreciation Rights held by the Participant shall thereupon terminate and
expire, (ii) as a condition of the exercise of a Stock Appreciation Right, the
Participant shall be required to certify (or shall be deemed to have certified)
at the time of exercise in a manner acceptable to the Company that the
Participant is in compliance with the terms and conditions of the Plan and that
the Participant has not engaged in, and does not intend to engage in, any
Detrimental Activity, and (iii) in the event that the Participant engages in
Detrimental Activity during the one-year period commencing on the date the Stock
Appreciation Right is exercised or becomes vested, the Company shall be entitled
to recover from the Participant at any time within one year after such exercise
or vesting, and the Participant shall pay over to the Company, an amount equal
to any gain realized as a result of the exercise (whether at the time of
exercise or thereafter). The foregoing provisions described in subsections (i),
(ii) and (iii) shall cease to apply upon a Change in Control.

(d) Method of Exercise. Subject to whatever installment exercise and waiting
period provisions apply under Section 7.2(c), Stock Appreciation Rights may be
exercised in whole or in part at any time in accordance with the applicable
Award Agreement, by giving written notice of exercise to the Company specifying
the number of Stock Appreciation Rights to be exercised.

(e) Payment. Upon the exercise of a Stock Appreciation Right, a Participant
shall be entitled to receive, for each right exercised, up to, but no more than,
an amount in cash and/or Common Stock (as chosen by the Committee in its sole
discretion) equal in value to the excess of the Fair Market Value of one share
of Common Stock on the date that the right is exercised over the exercise price
attributable to such share under the Stock Appreciation Right.

(f) Termination. Unless otherwise determined by the Committee at grant or, if no
rights of the Participant are reduced, thereafter, subject to the provisions of
the applicable Award Agreement and the Plan, upon a Participant’s Termination
for any reason, Stock Appreciation Rights will remain exercisable following a
Participant’s Termination on the same basis as Stock Options would be
exercisable following a Participant’s Termination in accordance with the
provisions of Sections 6.4(f) through 6.4(j).

(g) Non-Transferability. No Stock Appreciation Rights shall be Transferable by
the Participant otherwise than by will or by the laws of descent and
distribution, and all such rights shall be exercisable, during the Participant’s
lifetime, only by the Participant.

ARTICLE VIII

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

8.1 Restricted Stock and Restricted Stock Units. The Committee may grant Awards
of Restricted Stock and Restricted Stock Units. Each Award of Restricted Stock
or Restricted Stock Units under this Plan shall be evidenced by an Award
Agreement in such form as the Committee shall prescribe from time to time in
accordance with this Plan and shall comply with the applicable terms and
conditions of this Article and this Plan, and with such other terms and
conditions as the Committee, in its discretion, shall establish.

8.2 Awards of Restricted Stock or Restricted Stock Units. The Committee shall
determine the number of shares of Common Stock (or equivalent) to be issued to a
Participant pursuant to the Award of Restricted Stock or Restricted Stock Units,
and the extent, if any, to which they shall be issued in exchange for cash,
other

 

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consideration, or both. Restricted Stock and Restricted Stock Units may be
issued either alone or in addition to other Awards granted under the Plan. The
Committee shall determine the Eligible Individuals, to whom, and the time or
times at which, grants of Restricted Stock and Restricted Stock Units shall be
made, the number of shares (or equivalent) to be awarded and relating to such
Awards, the price (if any) to be paid by the Participant, the time or times
within which such Awards may be subject to forfeiture, the vesting schedule and
rights to acceleration thereof, and all other terms and conditions of the
Awards.

Unless otherwise determined by the Committee at grant, each Award of Restricted
Stock and Restricted Stock Units shall provide that in the event that the
Participant engages in Detrimental Activity prior to, or during the one-year
period after, any vesting of Restricted Stock or Restricted Stock Units, the
Committee may direct that all unvested Restricted Stock and Restricted Stock
Units shall be immediately forfeited to the Company and that the Participant
shall pay over to the Company an amount equal to the Fair Market Value at the
time of vesting of any Restricted Stock or Restricted Stock Units which had
vested in the period referred to above. The foregoing provision shall cease to
apply upon a Change in Control.

8.3 Vesting. The Committee may condition the grant or vesting of Restricted
Stock or Restricted Stock Units upon the attainment of specified performance
targets (including, the Performance Goals) or such other factors as the
Committee may determine in its sole discretion, including to comply with the
requirements of Section 162(m) of the Code. Until the expiration of such period
as the Committee shall determine from the date on which the Award is granted and
subject to such other terms and conditions as the Committee, in its discretion,
shall establish (the “Restriction Period”), a Participant to whom an Award of
Restricted Stock is made shall be issued, but shall not be entitled to the
delivery of, a stock certificate or other evidence of ownership representing the
shares of Common Stock subject to such Award.

The standard vesting schedule applicable to Awards of Restricted Stock and
Restricted Stock Units shall provide for vesting of such Awards, in one or more
increments, over a service period of no less than three years or, in the case of
Performance Awards, a performance period of no less than one year (in each case,
not including special vesting terms set forth therein); provided, however, this
limitation shall not apply to (i) Awards granted to Non-Employee Directors of
the Board that are received pursuant to the Company’s compensation program
applicable to Non-Employee Directors, (ii) adversely affect a Participant’s
rights under another plan or agreement with the Company, (iii) apply to
substitute Awards or any other Awards granted in exchange for the surrender of,
or substitution of, another company’s awards to its employees, directors or any
other persons, or (iv) apply to 350,000 shares of Common Stock relating to
Restricted Stock or Restricted Stock Units granted pursuant to this Article
VIII.

8.4 Stockholder Rights. Unless otherwise determined by the Committee in its
discretion, a Participant to whom an Award of Restricted Stock has been made
(and any Person succeeding to such a Participant’s rights pursuant to this Plan)
shall have, after issuance of a certificate for the number of shares of Common
Stock awarded (or after the Participant’s ownership of such shares of Common
Stock shall have been entered into the books of the registrar in the case of
uncertificated shares) and prior to the expiration of the Restriction Period,
ownership of such shares, including the right to vote such shares and to receive
dividends or other distributions made or paid with respect to such shares,
provided that, such shares of Common Stock, and any new, additional or different
shares, or other securities or property, or other forms of consideration that
the Participant may be entitled to receive with respect to such shares as a
result of a stock split, stock dividend or any other change in the corporation
or capital structure of the Company, shall be subject to the restrictions set
forth in the Award and this Plan.

In the case of Restricted Stock Units, a Participant shall not have any
stockholder rights, including voting rights and actual dividend rights, with
respect to shares of Common Stock subject to the Award until such Participant
becomes a holder of such shares following their actual issuance under the terms
of the Restricted Stock Unit Award.

 

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8.5 Termination. The Committee shall determine in its discretion and specify in
each agreement evidencing an Award of Restricted Stock or Restricted Stock Units
the effect, if any, the termination of the Participant’s employment with, or
performance of services for, the Company during the Restriction Period shall
have on such Award.

8.6 Dividend Equivalents. The Committee may grant Dividend Equivalents to
Participants in connection with Awards of Restricted Stock Units. The Committee
may provide, at the date of grant or thereafter, that Dividend Equivalents shall
be paid or distributed when accrued or shall be deemed to have been reinvested
in additional shares of Common Stock, or other investment vehicles as the
Committee may specify; provided that, unless otherwise determined by the
Committee, Dividend Equivalents shall be subject to all conditions and
restrictions of the underlying Restricted Stock Units to which they relate.

8.7 Restrictions and Conditions. The Restricted Stock or Restricted Stock Units
awarded pursuant to the Plan shall be subject to the following restrictions and
conditions:

(a) Restriction Period. (i) The Participant shall not be permitted to Transfer
shares of Restricted Stock or Restricted Stock Units awarded under the Plan
during the Restriction Period and the Award Agreement shall set forth a vesting
schedule and any event that would accelerate vesting of the shares of Restricted
Stock or Restricted Stock Units. Within these limits, based on service,
attainment of Performance Goals and/or such other factors or criteria as the
Committee may determine in its sole discretion, the Committee may condition the
grant or provide for the lapse of such restrictions in installments in whole or
in part, or may accelerate the vesting of all or any part of any Restricted
Stock or Restricted Stock Unit Award and/or waive the deferral limitations for
all or any part of any Restricted Stock or Restricted Stock Unit Award.

(ii) If the grant of shares of Restricted Stock or Restricted Stock Units or the
lapse of restrictions is based on the attainment of Performance Goals, the
Committee shall establish the objective Performance Goals and the applicable
vesting percentage of the Restricted Stock or Restricted Stock Units applicable
to each Participant or class of Participants in writing prior to the beginning
of the applicable fiscal year or at such later date as otherwise determined by
the Committee and while the outcome of the Performance Goals are substantially
uncertain. Such Performance Goals may incorporate provisions for disregarding
(or adjusting for) changes in accounting methods, corporate transactions
(including, without limitation, dispositions and acquisitions) and other similar
type events or circumstances. With regard to a Restricted Stock or Restricted
Stock Unit Award that is intended to comply with Section 162(m) of the Code, to
the extent that any such provision would create impermissible discretion under
Section 162(m) of the Code or otherwise violate Section 162(m) of the Code, such
provision shall be of no force or effect.

ARTICLE IX

PERFORMANCE AWARDS

9.1 Performance Awards. The Committee may grant a Performance Award which shall
consist of a right that is (i) denominated and/or payable in cash, shares of
Common Stock or any other form of Award issuable under this Plan (or any
combination thereof) (other than Stock Options or Stock Appreciation Rights),
(ii) valued, as determined by the Committee, in accordance with the achievement
of such Performance Goals applicable to such Performance Periods as the
Committee shall establish and (iii) payable at such time and in such form as the
Committee shall determine. The Committee may award Performance Awards that are
intended to be performance-based compensation under Section 162(m) of the
Code. Unless otherwise determined by the Committee, any such Performance Award
shall be evidenced by an Award Agreement containing the terms of the Award,
including, but not limited to, the performance criteria and such terms and
conditions as may be determined, from time to time, by the Committee, in each
case, not inconsistent with this Plan. In relation to any Performance Award, the
Performance Period may consist of one or more calendar years or other fiscal
period of at least 12 months in length for which performance is being measured.

 

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Unless otherwise determined by the Committee at grant, each Performance Award
shall provide that in the event the Participant engages in Detrimental Activity
prior to, or during the one-year period after, any vesting of the Performance
Award, the Committee may direct (at any time within one year thereafter) that
all of the unvested portion of the Performance Award shall be immediately
forfeited to the Company and that the Participant shall pay over to the Company
an amount equal to any gain that the Participant realized from any Performance
Award that had vested in the period referred to above. The foregoing provision
shall cease to apply upon a Change in Control.

With respect to Performance Awards that are intended to qualify as
“performance-based compensation” under Section 162(m) of the Code, the Committee
shall condition the right to payment of any Performance Award upon the
attainment of objective Performance Goals established pursuant to
Section 9.2(c).

9.2 Terms and Conditions. Performance Awards awarded pursuant to this Article IX
shall be subject to the following terms and conditions:

(a) Earning of Performance Award. At the expiration of the applicable
Performance Period, the Committee shall determine the extent to which the
Performance Goals established pursuant to Section 9.2(c) are achieved and the
percentage of each Performance Award that has been earned.

(b) Non-Transferability. Subject to the applicable provisions of the Award
Agreement and the Plan, Performance Awards may not be Transferred during the
Performance Period.

(c) Objective Performance Goals, Formulas or Standards. With respect to
Performance Awards that are intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, the Committee shall establish
the objective Performance Goals for the earning of Performance Awards based on a
Performance Period applicable to each Participant or class of Participants in
writing prior to the beginning of the applicable Performance Period or at such
later date as permitted under Section 162(m) of the Code and while the outcome
of the Performance Goals are substantially uncertain. Such Performance Goals may
incorporate, if and only to the extent permitted under Section 162(m) of the
Code, provisions for disregarding (or adjusting for) changes in accounting
methods, corporate transactions (including, without limitation, dispositions and
acquisitions) and other similar type events or circumstances. To the extent that
any such provision would create impermissible discretion under Section 162(m) of
the Code or otherwise violate Section 162(m) of the Code, such provision shall
be of no force or effect, with respect to Performance Awards that are intended
to qualify as “performance-based compensation” under Section 162(m) of the Code.

(d) Dividends. Unless otherwise determined by the Committee at the time of
grant, amounts equal to dividends declared during the Performance Period with
respect to the number of shares of Common Stock covered by a Performance Award
will not be paid to the Participant.

(e) Payment. Following the Committee’s determination in accordance with
Section 9.2(a), the Company shall settle Performance Awards, in such form
(including, without limitation, in shares of Common Stock or in cash) as
determined by the Committee, in an amount equal to such Participant’s earned
Performance Awards. Notwithstanding the foregoing, the Committee may, in its
sole discretion, award an amount less than the earned Performance Awards and/or
subject the payment of all or part of any Performance Award to additional
vesting, forfeiture and deferral conditions as it deems appropriate.

(f) Termination. Subject to the applicable provisions of the Award Agreement and
the Plan, upon a Participant’s Termination for any reason during the Performance
Period for a given Performance Award, the Performance Award in question will
vest or be forfeited in accordance with the terms and conditions established by
the Committee at grant.

 

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(g) Accelerated Vesting. Subject to any applicable limitations for
performance-based compensation under Section 162(m) of the Code, the Committee
may, at or after grant, accelerate the vesting of all or any part of any
Performance Award based on service, performance and/or such other factors or
criteria, if any, as the Committee may determine.

ARTICLE X

OTHER STOCK-BASED AND CASH-BASED AWARDS

10.1 Other Stock-Based Awards. The Committee is authorized to grant to Eligible
Individuals Other Stock-Based Awards that are payable in, valued in whole or in
part by reference to, or otherwise based on or related to shares of Common
Stock, including but not limited to, shares of Common Stock awarded purely as a
bonus and not subject to restrictions or conditions, shares of Common Stock in
payment of the amounts due under an incentive or performance plan sponsored or
maintained by the Company or an Affiliate, Dividend Equivalents, other stock
equivalent units, and Awards valued by reference to book value of shares of
Common Stock. Other Stock-Based Awards may be granted either alone or in
addition to or in tandem with other Awards granted under the Plan.

Subject to the provisions of the Plan, the Committee shall have authority to
determine the Eligible Individuals, to whom, and the time or times at which,
such Awards shall be made, the number of shares of Common Stock to be awarded
pursuant to such Awards, and all other conditions of the Awards. The Committee
may also provide for the grant of Common Stock under such Awards upon the
completion of a specified Performance Period.

The Committee may condition the grant or vesting of Other Stock-Based Awards
upon the attainment of specified Performance Goals as the Committee may
determine, in its sole discretion; provided that to the extent that such Other
Stock-Based Awards are intended to comply with Section 162(m) of the Code, the
Committee shall establish the objective Performance Goals for the grant or
vesting of such Other Stock-Based Awards based on a Performance Period
applicable to each Participant or class of Participants in writing prior to the
beginning of the applicable Performance Period or at such later date as
permitted under Section 162(m) of the Code and while the outcome of the
Performance Goals are substantially uncertain. Such Performance Goals may
incorporate, if and only to the extent permitted under Section 162(m) of the
Code, provisions for disregarding (or adjusting for) changes in accounting
methods, corporate transactions (including, without limitation, dispositions and
acquisitions) and other similar type events or circumstances. To the extent that
any such provision would create impermissible discretion under Section 162(m) of
the Code or otherwise violate Section 162(m) of the Code, such provision shall
be of no force or effect, with respect to Performance Awards that are intended
to qualify as “performance-based compensation” under Section 162(m) of the Code.

10.2 Terms and Conditions. Other Stock-Based Awards made pursuant to this
Article X shall be subject to the following terms and conditions:

(a) Non-Transferability. Subject to the applicable provisions of the Award
Agreement and the Plan, shares of Common Stock subject to Awards made under this
Article X may not be Transferred prior to the date on which the shares are
issued, or, if later, the date on which any applicable restriction, performance
or deferral period lapses.

(b) Dividends. Unless otherwise determined by the Committee at the time of
Award, subject to the provisions of the Award Agreement and the Plan, the
recipient of an Award under this Article X shall not be entitled to receive,
currently or on a deferred basis, dividends or Dividend Equivalents with respect
to the number of shares of Common Stock covered by the Award.

(c) Vesting. Any Award under this Article X and any Common Stock covered by any
such Award shall vest or be forfeited to the extent so provided in the Award
Agreement, as determined by the Committee, in its sole discretion.

 

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(d) Price. Common Stock issued on a bonus basis under this Article X may be
issued for no cash consideration. Common Stock purchased pursuant to a purchase
right awarded under this Article X shall be priced, as determined by the
Committee in its sole discretion.

10.3 Other Cash-Based Awards. The Committee may from time to time grant Other
Cash-Based Awards to Eligible Individuals in such amounts, on such terms and
conditions, and for such consideration, including no consideration or such
minimum consideration as may be required by applicable law, as it shall
determine in its sole discretion. Other Cash-Based Awards may be granted subject
to the satisfaction of vesting conditions or may be awarded purely as a bonus
and not subject to restrictions or conditions, and if subject to vesting
conditions, the Committee may accelerate the vesting of such Awards at any time
in its sole discretion. The grant of an Other Cash-Based Award shall not require
a segregation of any of the Company’s assets for satisfaction of the Company’s
payment obligation thereunder.

The Committee may condition the grant or vesting of Other Cash-Based Awards upon
the attainment of specified Performance Goals as the Committee may determine, in
its sole discretion; provided that to the extent that such Other Cash-Based
Awards are intended to comply with Section 162(m) of the Code, the Committee
shall establish the objective Performance Goals for the grant or vesting of such
Other Cash-Based Awards based on a Performance Period applicable to each
Participant or class of Participants in writing prior to the beginning of the
applicable Performance Period or at such later date as permitted under
Section 162(m) of the Code and while the outcome of the Performance Goals are
substantially uncertain. Such Performance Goals may incorporate, if and only to
the extent permitted under Section 162(m) of the Code, provisions for
disregarding (or adjusting for) changes in accounting methods, corporate
transactions (including, without limitation, dispositions and acquisitions) and
other similar type events or circumstances. To the extent that any such
provision would create impermissible discretion under Section 162(m) of the Code
or otherwise violate Section 162(m) of the Code, such provision shall be of no
force or effect, with respect to Performance Awards that are intended to qualify
as “performance-based compensation” under Section 162(m) of the Code.

10.4 Detrimental Activity. Unless otherwise determined by the Committee at
grant, the Award Agreement shall provide that (i) in the event that the
Participant engages in Detrimental Activity prior to any exercise, distribution
or settlement of any Other Stock-Based Award and/or Other Cash-Based Award, such
Other Stock-Based Awards and/or Other Cash-Based Awards held by the Participant
shall thereupon terminate and expire, (ii) as a condition of the exercise,
distribution or settlement of an Other Stock-Based Award and/or Other Cash-Based
Award, the Participant shall be required to certify (or shall be deemed to have
certified) at the time of such exercise, distribution or settlement in a manner
acceptable to the Company that the Participant is in compliance with the terms
and conditions of the Plan and that the Participant has not engaged in, and does
not intend to engage in, any Detrimental Activity, and (iii) in the event that
the Participant engages in Detrimental Activity during the one-year period
commencing on the date of exercise, distribution, or settlement of an Other
Stock-Based Award and/or Other Cash-Based Award, the Company shall be entitled
to recover from the Participant at any time within one year after such exercise,
settlement, or distribution, and the Participant shall pay over to the Company,
an amount equal to any gain realized as a result of the exercise, distribution
or settlement (whether at the time of exercise, distribution or settlement or
thereafter). The foregoing provisions described in subsections (i), (ii) and
(iii) shall cease to apply upon a Change in Control.

ARTICLE XI

CHANGE IN CONTROL PROVISIONS

11.1 Benefits. In the event of a Change in Control of the Company (as defined
below), and except as otherwise provided by the Committee in an Award Agreement,
a Participant’s unvested Award shall not vest and a Participant’s Award shall be
treated in accordance with one of the following methods as determined by the
Committee:

(a) Awards, whether or not then vested, shall be continued, assumed, have new
rights substituted therefore or be treated in accordance with Section 4.2(d)
hereof, as determined by the Committee, and

 

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restrictions to which shares of Restricted Stock or any other Award granted
prior to the Change in Control are subject shall not lapse upon a Change in
Control and the Restricted Stock or other Award shall, where appropriate in the
sole discretion of the Committee, receive the same distribution as other Common
Stock on such terms as determined by the Committee; provided that the Committee
may decide to award additional Restricted Stock or other Awards in lieu of any
cash distribution. Notwithstanding anything to the contrary herein, for purposes
of Incentive Stock Options, any assumed or substituted Stock Option shall comply
with the requirements of Treasury Regulation Section 1.424-1 (and any amendment
thereto).

(b) The Committee, in its sole discretion, may provide for the purchase of any
Awards by the Company or an Affiliate for an amount of cash equal to the excess
of the Change in Control Price (as defined below) of the shares of Common Stock
covered by such Awards, over the aggregate exercise price of such Awards. For
purposes of this Section 11.1, “Change in Control Price” shall mean the highest
price per share of Common Stock paid in any transaction related to a Change in
Control of the Company.

(c) Notwithstanding any other provision herein to the contrary, the Committee
may, in its sole discretion, provide for accelerated vesting or lapse of
restrictions, of an Award at any time.

11.2 Change in Control. Unless otherwise determined by the Committee in the
applicable Award Agreement or other written agreement approved by the Committee,
a “Change in Control” shall be deemed to occur if:

(a) any “person,” as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than the Company, any trustee or other fiduciary holding
securities under any employee benefit plan of the Company, or any company owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of Common Stock of the Company), becoming
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company’s then outstanding securities;

(b) during any period of two consecutive years, individuals who at the beginning
of such period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in paragraph (a), (c), or (d) of this
Section 11.2 or a director whose initial assumption of office occurs as a result
of either an actual or threatened election contest or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than the
Board) whose election by the Board or nomination for election by the Company’s
stockholders was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the two-year
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority of the Board;

(c) a merger or consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; provided, however, that a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no person (other than those covered by the exceptions in
Section 11.2(a)) acquires more than 50% of the combined voting power of the
Company’s then outstanding securities shall not constitute a Change in Control
of the Company; or

(d) a complete liquidation or dissolution of the Company or the consummation of
a sale or disposition by the Company of all or substantially all of the
Company’s assets other than the sale or disposition of all or substantially all
of the assets of the Company to a person or persons who beneficially own,
directly or indirectly, 50% or more of the combined voting power of the
outstanding voting securities of the Company at the time of the sale.

 

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(e) Notwithstanding the foregoing, with respect to any Award that is
characterized as “non-qualified deferred compensation” within the meaning of
Section 409A of the Code, an event shall not be considered to be a Change in
Control under the Plan unless such event is also a “change in ownership,” a
“change in effective control” or a “change in the ownership of a substantial
portion of the assets” of the Company within the meaning of Section 409A of the
Code.

ARTICLE XII

TERMINATION OR AMENDMENT OF PLAN

12.1 Termination or Amendment. Notwithstanding any other provision of the Plan,
the Board may at any time, and from time to time, amend, in whole or in part,
any or all of the provisions of the Plan (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement
referred to in Article XIV or Section 409A of the Code), or suspend or terminate
it entirely, retroactively or otherwise; provided, however, that, unless
otherwise required by law or specifically provided herein, the rights of a
Participant with respect to Awards granted prior to such amendment, suspension
or termination, may not be materially impaired without the consent of such
Participant and, provided further, that without the approval of the holders of
the Company’s Common Stock entitled to vote in accordance with applicable law,
no amendment may be made that would (i) increase the aggregate number of shares
of Common Stock that may be issued under the Plan (except by operation of
Section 4.2); (ii) increase the maximum individual Participant limitations for a
fiscal year under Section 4.1(b) and (c) (except by operation of Section 4.2);
(iii) change the classification of individuals eligible to receive Awards under
the Plan; (iv) extend the maximum option period under Section 6.4; (v) alter the
Performance Goals for Restricted Stock, Restricted Stock Units, Performance
Awards or Other Stock-Based Awards as set forth in Exhibit A hereto; or
(vi) require stockholder approval in order for the Plan to continue to comply
with the applicable provisions of Section 162(m) of the Code or, to the extent
applicable to Incentive Stock Options, Section 422 of the Code. In no event may
the Plan be amended without the approval of the stockholders of the Company in
accordance with the applicable laws of the State of Delaware to increase the
aggregate number of shares of Common Stock that may be issued under the Plan,
decrease the minimum exercise price of any Award, or to make any other amendment
that would require stockholder approval under Financial Industry Regulatory
Authority (FINRA) rules and regulations or the rules of any exchange or system
on which the Company’s securities are listed or traded at the request of the
Company. Notwithstanding anything herein to the contrary, the Board may amend
the Plan or any Award Agreement at any time without a Participant’s consent to
comply with applicable law including Section 409A of the Code. Except in
connection with a corporate transaction involving the Company (including,
without limitation, any stock dividend, distribution (whether in the form of
cash, Common Stock or other property), stock split, extraordinary cash dividend,
recapitalization, Change in Control, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase or exchange of Common Stock, or
similar transaction(s)), the terms of outstanding Stock Options or Stock
Appreciation Rights may not be amended to reduce the exercise price of such
outstanding Stock Options or Stock Appreciation Rights or cancel outstanding
Stock Options or Stock Appreciation Rights in exchange for cash, other Awards or
Stock Options or Stock Appreciation Rights with an exercise price that is less
than the exercise price of the original Stock Options or Stock Appreciation
Rights without obtaining stockholder approval.

The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but, subject to Article IV or as otherwise
specifically provided herein, no such amendment or other action by the Committee
shall materially impair the rights of any holder without the holder’s consent.

ARTICLE XIII

UNFUNDED STATUS OF PLAN

The Plan is intended to constitute an “unfunded” plan for incentive and deferred
compensation. With respect to any payment as to which a Participant has a fixed
and vested interest but which are not yet made to a Participant by the Company,
nothing contained herein shall give any such Participant any right that is
greater than those of a general unsecured creditor of the Company.

 

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ARTICLE XIV

GENERAL PROVISIONS

14.1 Legend. The Committee may require each person receiving shares of Common
Stock pursuant to a Stock Option or other Award under the Plan to represent to
and agree with the Company in writing that the Participant is acquiring the
shares without a view to distribution thereof. In addition to any legend
required by the Plan, the certificates (or other evidence of ownership) for such
shares may include any legend that the Committee deems appropriate to reflect
any restrictions on Transfer. All certificates (or other evidence of ownership)
for shares of Common Stock delivered under the Plan shall be subject to such
stop transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Common Stock is then
listed or any national securities exchange system upon whose system the Common
Stock is then quoted, any applicable federal or state securities law, and any
applicable corporate law, and the Committee may cause a legend or legends to be
put on any such certificates (or other evidence of ownership) to make
appropriate reference to such restrictions.

14.2 Other Plans. Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required, and such arrangements may be either
generally applicable or applicable only in specific cases.

14.3 No Right to Employment/Directorship/Consultancy. Neither the Plan nor the
grant of any Option or other Award hereunder shall give any Participant or other
employee, Consultant or Non-Employee Director any right with respect to
continuance of employment, consultancy or directorship by the Company or any
Affiliate, nor shall there be a limitation in any way on the right of the
Company or any Affiliate by which an employee is employed or a Consultant or
Non-Employee Director is retained to terminate his or her employment,
consultancy or directorship at any time.

14.4 Withholding of Taxes. The Company shall have the right to deduct from any
payment to be made pursuant to the Plan, or to otherwise require, prior to the
issuance or delivery of shares of Common Stock or the payment of any cash
hereunder, payment by the Participant of, any federal, state or local taxes
required by law to be withheld. Upon the vesting of Restricted Stock (or other
Award that is taxable upon vesting), or upon making an election under
Section 83(b) of the Code, a Participant shall pay all required withholding to
the Company. Any statutorily required withholding obligation with regard to any
Participant may be satisfied, subject to the consent of the Committee, by
reducing the number of shares of Common Stock otherwise deliverable or by
delivering shares of Common Stock already owned. Any fraction of a share of
Common Stock required to satisfy such tax obligations shall be disregarded and
the amount due shall be paid instead in cash by the Participant.

14.5 No Assignment of Benefits. No Award or other benefit payable under the Plan
shall, except as otherwise specifically provided by law or permitted by the
Committee, be Transferable in any manner, and any attempt to Transfer any such
benefit shall be void, and any such benefit shall not in any manner be liable
for or subject to the debts, contracts, liabilities, engagements or torts of any
person who shall be entitled to such benefit, nor shall it be subject to
attachment or legal process for or against such person.

14.6 Listing and Other Conditions.

(a) Unless otherwise determined by the Committee, as long as the Common Stock is
listed on a national securities exchange or system sponsored by a national
securities association, the issuance of shares of Common Stock pursuant to an
Award shall be conditioned upon such shares being listed on such exchange or
system. The Company shall have no obligation to issue such shares unless and
until such shares are so listed, and the right to exercise any Option or other
Award with respect to such shares shall be suspended until such listing has been
effected.

 

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(b) If at any time counsel to the Company shall be of the opinion that any sale
or delivery of shares of Common Stock pursuant to an Option or other Award is or
may in the circumstances be unlawful or result in the imposition of excise taxes
on the Company under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act or otherwise, with
respect to shares of Common Stock or Awards, and the right to exercise any
Option or other Award shall be suspended until, in the opinion of said counsel,
such sale or delivery shall be lawful or will not result in the imposition of
excise taxes on the Company.

(c) Upon termination of any period of suspension under this Section 14.6, any
Award affected by such suspension which shall not then have expired or
terminated shall be reinstated as to all shares available before such suspension
and as to shares which would otherwise have become available during the period
of such suspension, but no such suspension shall extend the term of any Award.

(d) A Participant shall be required to supply the Company with certificates,
representations and information that the Company requests and otherwise
cooperate with the Company in obtaining any listing, registration,
qualification, exemption, consent or approval the Company deems necessary or
appropriate.

14.7 Governing Law. The Plan and actions taken in connection herewith shall be
governed and construed in accordance with the laws of the State of Delaware
(regardless of the law that might otherwise govern under applicable Delaware
principles of conflict of laws).

14.8 Jurisdiction; Waiver of Jury Trial. Any suit, action or proceeding with
respect to the Plan or any Award Agreement, or any judgment entered by any court
of competent jurisdiction in respect of any thereof, shall be resolved only in
the courts of the State of Delaware or the United States District Court for the
District of Delaware and the appellate courts having jurisdiction of appeals in
such courts. In that context, and without limiting the generality of the
foregoing, the Company and each Participant shall irrevocably and
unconditionally (a) submit in any proceeding relating to the Plan or any Award
Agreement, or for the recognition and enforcement of any judgment in respect
thereof (a “Proceeding”), to the exclusive jurisdiction of the courts of the
State of Delaware, the court of the United States of America for the District of
Delaware, and appellate courts having jurisdiction of appeals from any of the
foregoing, and agree that all claims in respect of any such Proceeding shall be
heard and determined in such Delaware State court or, to the extent permitted by
law, in such federal court, (b) consent that any such Proceeding may and shall
be brought in such courts and waives any objection that the Company and each
Participant may now or thereafter have to the venue or jurisdiction of any such
Proceeding in any such court or that such Proceeding was brought in an
inconvenient court and agree not to plead or claim the same, (c) waive all right
to trial by jury in any Proceeding (whether based on contract, tort or
otherwise) arising out of or relating to the Plan or any Award Agreement,
(d) agree that service of process in any such Proceeding may be effected by
mailing a copy of such process by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such party, in the case
of a Participant, at the Participant’s address shown in the books and records of
the Company or, in the case of the Company, at the Company’s principal offices,
attention General Counsel, and (e) agree that nothing in the Plan shall affect
the right to effect service of process in any other manner permitted by the laws
of the State of Delaware.

14.9 Construction. Wherever any words are used in the Plan in the masculine
gender they shall be construed as though they were also used in the feminine
gender in all cases where they would so apply, and wherever words are used
herein in the singular form they shall be construed as though they were also
used in the plural form in all cases where they would so apply.

14.10 Other Benefits. No Award granted or paid out under the Plan shall be
deemed compensation for purposes of computing benefits under any retirement plan
of the Company or its Affiliates nor affect any benefit under any other benefit
plan now or subsequently in effect under which the availability or amount of
benefits is related to the level of compensation.

 

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14.11 Costs. The Company shall bear all expenses associated with administering
this Plan, including expenses of issuing Common Stock pursuant to Awards
hereunder.

14.12 No Right to Same Benefits. The provisions of Awards need not be the same
with respect to each Participant, and such Awards to individual Participants
need not be the same in subsequent years.

14.13 Death/Disability. The Committee may in its discretion require the
transferee of a Participant to supply it with written notice of the
Participant’s death or Disability and to supply it with a copy of the will (in
the case of the Participant’s death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Award. The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of the Plan.

14.14 Section 16(b) of the Exchange Act. All elections and transactions under
the Plan by persons subject to Section 16 of the Exchange Act involving shares
of Common Stock are intended to comply with any applicable exemptive condition
under Rule 16b-3. The Committee may establish and adopt written administrative
guidelines, designed to facilitate compliance with Section 16(b) of the Exchange
Act, as it may deem necessary or proper for the administration and operation of
the Plan and the transaction of business thereunder.

14.15 Section 409A of the Code. The Plan is intended to comply with the
applicable requirements of Section 409A of the Code and shall be limited,
construed and interpreted in accordance with such intent. To the extent that any
Award is subject to Section 409A of the Code, it shall be paid in a manner that
will comply with Section 409A of the Code, including proposed, temporary or
final regulations or any other guidance issued by the Secretary of the Treasury
and the Internal Revenue Service with respect thereto. Notwithstanding anything
herein to the contrary, any provision in the Plan that is inconsistent with
Section 409A of the Code shall be deemed to be amended to comply with
Section 409A of the Code and to the extent such provision cannot be amended to
comply therewith, such provision shall be null and void. The Company shall have
no liability to a Participant, or any other party, if an Award that is intended
to be exempt from, or compliant with, Section 409A of the Code is not so exempt
or compliant or for any action taken by the Committee or the Company and, in the
event that any amount or benefit under the Plan becomes subject to penalties
under Section 409A of the Code, responsibility for payment of such penalties
shall rest solely with the affected Participants and not with the Company.
Notwithstanding any contrary provision in the Plan or Award Agreement, any
payment(s) of “nonqualified deferred compensation” (within the meaning of
Section 409A of the Code) that are otherwise required to be made under the Plan
to a “specified employee” (as defined under Section 409A of the Code) as a
result of his or her separation from service (other than a payment that is not
subject to Section 409A of the Code) shall be delayed for the first six
(6) months following such separation from service (or, if earlier, the date of
death of the specified employee) and shall instead be paid (in a manner set
forth in the Award Agreement) on the payment date that immediately follows the
end of such six month period or as soon as administratively practicable
thereafter.

14.16 Successor and Assigns. The Plan shall be binding on all successors and
permitted assigns of a Participant, including, without limitation, the estate of
such Participant and the executor, administrator or trustee of such estate.

14.17 Severability of Provisions. If any provision of the Plan shall be held
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provisions hereof, and the Plan shall be construed and enforced as if
such provisions had not been included.

14.18 Payments to Minors, Etc. Any benefit payable to or for the benefit of a
minor, an incompetent person or other person incapable of receipt thereof shall
be deemed paid when paid to such person’s guardian or to the party providing or
reasonably appearing to provide for the care of such person, and such payment
shall fully discharge the Committee, the Board, the Company, its Affiliates and
their employees, agents and representatives with respect thereto.

 

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14.19 Agreement. As a condition to the grant of an Award, if requested by the
Company and the lead underwriter of any public offering of the Common Stock (the
“Lead Underwriter”), a Participant shall irrevocably agree not to sell, contract
to sell, grant any option to purchase, transfer the economic risk of ownership
in, make any short sale of, pledge or otherwise transfer or dispose of, any
interest in any Common Stock or any securities convertible into, derivative of,
or exchangeable or exercisable for, or any other rights to purchase or acquire
Common Stock (except Common Stock included in such public offering or acquired
on the public market after such offering) during such period of time following
the effective date of a registration statement of the Company filed under the
Securities Act that the Lead Underwriter shall specify (the “Lock-Up Period”).
The Participant shall further agree to sign such documents as may be requested
by the Lead Underwriter to effect the foregoing and agree that the Company may
impose stop-transfer instructions with respect to Common Stock acquired pursuant
to an Award until the end of such Lock-Up Period.

14.20 Headings and Captions. The headings and captions herein are provided for
reference and convenience only, shall not be considered part of the Plan, and
shall not be employed in the construction of the Plan.

14.21 Clawback. Notwithstanding any other provisions of this Plan, any Award
granted hereunder which is or becomes subject to recovery under any Company
policy adopted hereafter and required by law, regulation or stock exchange
listing requirement, shall be subject to such deductions, recoupment, and
clawback as may be required to be made pursuant to such Company policy.

ARTICLE XV

EFFECTIVE DATE OF PLAN

The Plan originally became effective on November 13, 2009. The Plan, as amended
and restated, shall become effective subject to approval and adoption of the
Plan, as amended and restated, by the Company’s stockholders at the Company’s
annual meeting of stockholders to be held on June 7, 2013. If this amendment and
restatement of the Plan is not so approved at such meeting, then the Plan as in
effect immediately prior to June 7, 2013 shall remain in effect.

ARTICLE XVI

TERM OF PLAN

No Award shall be granted pursuant to the Plan on or after the tenth anniversary
of the date that the Plan is approved by the Company’s stockholders, but Awards
granted prior to such tenth anniversary may extend beyond that date.

ARTICLE XVII

NAME OF PLAN

This Plan shall be known as the “rue21, inc. Amended and Restated 2009 Omnibus
Incentive Plan.”

 

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EXHIBIT A

PERFORMANCE GOALS

To the extent permitted under Section 162(m) of the Code, performance goals
established for purposes of Awards intended to be “performance-based
compensation” under Section 162(m) of the Code, shall be conditioned upon the
achievement of objective, pre-established goals relating to one or more of the
following performance measures, as determined in writing by the Committee and
subject to such modifications as specified by the Committee:

 

  •  

earnings per share, diluted or basic;

 

  •  

operating income;

 

  •  

gross income;

 

  •  

net income (before or after taxes);

 

  •  

same store sales;

 

  •  

cash flow;

 

  •  

gross profit;

 

  •  

gross profit return on investment;

 

  •  

gross margin return on investment;

 

  •  

gross margin;

 

  •  

operating margin;

 

  •  

working capital;

 

  •  

capital expenditures;

 

  •  

earnings before interest and taxes;

 

  •  

earnings before interest, taxes, depreciation and amortization;

 

  •  

return on equity;

 

  •  

return on assets;

 

  •  

return on capital;

 

  •  

return on invested capital;

 

  •  

net revenues;

 

  •  

gross revenues;

 

  •  

revenue growth;

 

  •  

annual recurring revenues;

 

  •  

recurring revenues;

 

  •  

license revenues;

 

  •  

sales or market share;

 

  •  

total stockholder return;

 

  •  

stock price;

 

  •  

economic value added;

 

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  •  

specified objectives with regard to limiting the level of increase in all or a
portion of the Company’s bank debt or other long-term or short-term public or
private debt or other similar financial obligations of the Company, which may be
calculated net of cash balances and/or other offsets and adjustments as may be
established by the Committee in its sole discretion;

 

  •  

the growth in the value of an investment in the Common Stock assuming the
reinvestment of dividends;

 

  •  

reduction in operating expenses and/or shrink costs;

 

  •  

growth in assets;

 

  •  

geographic expansion goals;

 

  •  

expense reduction levels and/or cost targets;

 

  •  

debt rating;

 

  •  

work force satisfaction and/or diversity goals;

 

  •  

employee retention;

 

  •  

customer satisfaction;

 

  •  

implementation or completion of projects or processes;

 

  •  

strategic plan development and implementation;

 

  •  

business expansion (including acquisitions);

 

  •  

internal rate of return or net present value;

 

  •  

productivity measures;

 

  •  

comparable store sales;

 

  •  

merchandise margin;

 

  •  

inventory turns;

 

  •  

individual performance goals;

 

  •  

brand recognition; or

 

  •  

operating efficiency.

With respect to Awards that are intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, to the extent permitted under
Section 162(m) of the Code, the Committee may, in its sole discretion, also
include or exclude, or adjust to reflect, the impact of an event or occurrence
that the Committee determines should be appropriately included, excluded or
adjusted, including the following:

(a) restructurings, discontinued operations, extraordinary items or events, and
other unusual or non-recurring charges as described in Accounting Principles
Board Opinion No. 30 and/or management’s discussion and analysis of financial
condition and results of operations or the financial statements and/or notes
thereto appearing or incorporated by reference in the Company’s Form 10-K for
the applicable year;

(b) an event either not directly related to the operations of the Company or not
within the reasonable control of the Company’s management;

(c) a change in tax law or accounting standards required by generally accepted
accounting principles;

(d) impairment of tangible or intangible assets;

(e) asset write-downs;

 

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(f) litigation or claim judgments or settlements;

(g) acquisitions or divestitures;

(h) gains or losses on the sale of assets;

(i) foreign exchange gains and/or losses;

(j) changes in tax laws, accounting standards required by generally accepted
accounting principles or other such laws or provisions affecting reported
results;

(k) business combinations, discontinued operations, reorganizations and/or
restructuring programs, including but not limited to, reductions in force and
early retirement incentives; and

(l) currency fluctuations.

In addition, such performance goals may be based upon the attainment of
specified levels of Company (or Subsidiary, division, other operational unit,
administrative department, or product category of the Company) performance under
one or more of the measures described above or relative to the performance of
other corporations. With respect to Awards that are intended to qualify as
“performance-based compensation” under Section 162(m) of the Code, to the extent
permitted under Section 162(m) of the Code, but only to the extent permitted
under Section 162(m) of the Code (including, without limitation, compliance with
any requirements for stockholder approval), the Committee may also:

(a) designate additional business criteria on which the performance goals may be
based; or

(b) adjust, modify or amend the aforementioned business criteria.

 

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