Exhibit 10.1

 

LIQUIDMETAL TECHNOLOGIES, INC.

 

2015 Equity Incentive Plan

 

1.     Purpose. The purpose of the 2015 Equity Incentive Plan is to attract and
retain directors, officers, other employees and consultants of Liquidmetal
Technologies, Inc., a Delaware corporation, and its Subsidiaries and to provide
to such persons incentives and rewards for performance.

 

2.     Definitions. As used in this Plan,

 

(a)     “Appreciation Right” means a right granted pursuant to Section 5 or
Section 9 of this Plan, and will include both Tandem Appreciation Rights and
Free-Standing Appreciation Rights.

 

(b)     “Base Price” means the price to be used as the basis for determining the
Spread upon the exercise of a Free-Standing Appreciation Right and a Tandem
Appreciation Right.

 

(c)     “Board” means the Board of Directors of the Company and, to the extent
of any delegation by the Board to a committee (or subcommittee thereof) pursuant
to Section 13 of this Plan, such committee (or subcommittee).

 

(d)     “Change of Control” shall mean the occurrence of any of the following
events:

 

(i)     consummation of a consolidation or merger in which the Company is not
the surviving corporation, the sale of substantially all of the assets of the
Company, or the liquidation or dissolution of the Company;

 

(ii)     any person or other entity (other than the Company or a Subsidiary or
any Company employee benefit plan (including any trustee of any such plan acting
in its capacity as trustee)) purchases any Common Stock (or securities
convertible into Common Stock) pursuant to a tender or exchange offer without
the prior consent of the Board, or becomes the beneficial owner of securities of
the Company representing 50% or more of the voting power of the Company’s
outstanding securities without the prior consent of the Board; or

 

(iii)     during any two-year period, individuals who at the beginning of such
period constitute the entire Board cease to constitute a majority of the Board;
provided, that any person becoming a Director of the Company during such
two-year period whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least two-thirds of the Directors who
at the beginning of such period constituted the entire Board (either by a
specific vote or by approval of the Company’s proxy statement in which such
person is named as a nominee of the Company for director), but excluding for
this purpose any person whose initial assumption of office as a Director occurs
as a result of either an actual or threatened election contest with respect to
the election or removal of Directors or other actual or threatened solicitation
of proxies or consents by or on behalf of an individual, corporation,
partnership, group, associate or other entity or person other than the Board,
shall be, for purposes of this clause (iii), be considered as though such person
was a member of the Board at the beginning of such period.

  

 
 

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(e)     “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

 

(f)     “Common Stock” means the Common Stock, par value $0.001 per share, of
the Company or any security into which such Common Stock may be changed by
reason of any transaction or event of the type referred to in Section 12 of this
Plan.

 

(g)     “Company” means Liquidmetal Technologies, Inc., a Delaware corporation,
and its successors.

 

(h)     “Covered Employee” means a Participant who is, or is determined by the
Board to be likely to become, a “covered employee” within the meaning of Section
162(m) of the Code (or any successor provision).

 

(i)     “Date of Grant” means the date specified by the Board on which a grant
of Option Rights, Appreciation Rights, Performance Shares, Performance Units or
other awards contemplated by Section 10 of this Plan, or a grant or sale of
Restricted Stock, Restricted Stock Units, or other awards contemplated by
Section 10 of this Plan, will become effective (which date will not be earlier
than the date on which the Board takes action with respect thereto).

 

(j)     “Director” means a member of the Board or the board of directors of a
Subsidiary of the Company.

 

(k)     “Effective Date” means January 27, 2015.

 

(l)     “Evidence of Award” means an agreement, certificate, resolution or other
type or form of writing or other evidence approved by the Board that sets forth
the terms and conditions of the awards granted. An Evidence of Award may be in
an electronic medium, may be limited to notation on the books and records of the
Company and, unless otherwise determined by the Board, need not be signed by a
representative of the Company or a Participant.

 

(m)     “Exchange Act” means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder, as such law, rules and regulations may
be amended from time to time.

 

(n)     “Free-Standing Appreciation Right” means an Appreciation Right granted
pursuant to Section 5 or Section 9 of this Plan that is not granted in tandem
with an Option Right.

 

(o)     “Incentive Stock Options” means Option Rights that are intended to
qualify as “incentive stock options” under Section 422 of the Code or any
successor provision.

  

 
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(p)     “Management Objectives” means the measurable performance objective or
objectives established pursuant to this Plan for Participants who have received
grants of Performance Shares or Performance Units or, when so determined by the
Board, Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock
Units, dividend credits or other awards pursuant to this Plan. Management
Objectives may be described in terms of Company-wide objectives or objectives
that are related to the performance of the individual Participant or of the
Subsidiary, division, department, region or function within the Company or
Subsidiary in which the Participant is employed. The Management Objectives may
be made relative to the performance of one or more other companies or
subsidiaries, divisions, departments, regions or functions within such other
companies, and may be made relative to an index or one or more of the
performance objectives themselves. The Board may grant awards subject to
Management Objectives that are either Qualified Performance-Based Awards or are
not Qualified Performance-Based Awards. The Management Objectives applicable to
any Qualified Performance-Based Award to a Covered Employee will be based on
specified levels of or growth or improvement in one or more of the criteria
provided in Appendix A attached to this Plan.

 

If the Board determines that a change in the business, operations, corporate
structure or capital structure of the Company, or the manner in which it
conducts its business, or other events or circumstances render the Management
Objectives unsuitable, the Board may in its discretion modify such Management
Objectives or the related level or levels of achievement, in whole or in part,
as the Board deems appropriate and equitable, except in the case of a Qualified
Performance-Based Award (other than in connection with a Change of Control)
where such action would result in the loss of the otherwise available exemption
of the award under Section 162(m) of the Code. In such case, the Board will not
make any modification of the Management Objectives or level or levels of
achievement with respect to such Covered Employee.

 

(q)     “Market Value per Share” means, as of any given date, the value of a
share of Common Stock determined as follows:

 

(i)      if Common Stock is traded on any established stock exchange, the
closing price of a share of Common Stock as reported in The Wall Street Journal
(or such other source as the Company may deem reliable for such purposes) for
such date, or if no sale occurred on such date, the first trading date
immediately prior to such date during which a sale occurred;

 

(ii)      if Common Stock is not traded on an established stock exchange but is
quoted on a national market or other quotation system, the last sales price on
such date, or if no sales occurred on such date, then on the date immediately
prior to such date on which sales prices are reported; or

 

(iii)      if Common Stock is not traded on an established stock exchange or
quoted on a national market or other quotation system, the value established by
the Board acting in good faith.

  

 
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The Board is authorized to adopt another fair market value pricing method,
provided such method is stated in the Evidence of Award, and is in compliance
with the fair market value pricing rules set forth in Section 409A of the Code.

 

(r)     “Non-Employee Director” means a person who is a “Non-Employee Director”
of the Company within the meaning of Rule 16b-3 of the Securities and Exchange
Commission promulgated under the Exchange Act and an “outside director” within
the meaning of Section 162(m) of the Code and the regulations promulgated
thereunder by the U.S. Department of the Treasury.

 

(s)     “Optionee” means the optionee named in an Evidence of Award evidencing
an outstanding Option Right.

 

(t)     “Option Price” means the purchase price payable on exercise of an Option
Right.

 

(u)     “Option Right” means the right to purchase Common Stock upon exercise of
an option granted pursuant to Section 4 or Section 9 of this Plan.

 

(v)     “Participant” means a person who is selected by the Board to receive
benefits under this Plan and who is at the time an officer, other employee or a
consultant of the Company or any one or more of its Subsidiaries, or who has
agreed to commence serving in any of such capacities within 90 days of the Date
of Grant, and will also include each Non-Employee Director who receives an award
under this Plan. The term “Participant” shall also include any person who
provides services to the Company or a Subsidiary that are substantially
equivalent to those typically provided by an employee.

 

(w)     “Performance Period” means, in respect of a Performance Share or
Performance Unit, a period of time established pursuant to Section 8 of this
Plan within which the Management Objectives relating to such Performance Share
or Performance Unit are to be achieved.

 

(x)     “Performance Share” means a bookkeeping entry that records the
equivalent of one share of Common Stock awarded pursuant to Section 8 of this
Plan.

 

(y)     “Performance Unit” means a bookkeeping entry awarded pursuant to Section
8 of this Plan that records a unit equivalent to $1.00 or such other value as is
determined by the Board.

 

(z)     “Plan” means this Liquidmetal Technologies, Inc. 2015 Equity Incentive
Plan, as may be amended from time to time.

 

(aa)     “Qualified Performance-Based Award” means any award of Performance
Shares, Performance Units, Restricted Stock, Restricted Stock Units or other
awards under Section 10 of this Plan, or portion of such award, to a Covered
Employee that is intended to satisfy the requirements for “qualified
performance-based compensation” under Section 162(m) of the Code.

  

 
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(bb)     “Restricted Stock” means Common Stock granted or sold pursuant to
Section 6 or Section 9 of this Plan as to which neither the substantial risk of
forfeiture nor the prohibition on transfers has expired.

 

(cc)     “Restriction Period” means the period of time during which Restricted
Stock Units are subject to restrictions, as provided in Section 7 or Section 9
of this Plan.

 

(dd)     “Restricted Stock Unit” means an award made pursuant to Section 7 or
Section 9 of this Plan of the right to receive Common Stock or cash at the end
of a specified period.

 

(ee)     “Spread” means the excess of the Market Value per Share on the date
when an Appreciation Right is exercised, or on the date when Option Rights are
surrendered in payment of the Option Price of other Option Rights, over the
Option Price or Base Price provided for in the related Option Right or
Free-Standing Appreciation Right, respectively.

 

(ff)     “Subsidiary” means a corporation, company or other entity (i) more than
50 percent of whose outstanding shares or securities (representing the right to
vote for the election of directors or other managing authority) are, or (ii)
which does not have outstanding shares or securities (as may be the case in a
partnership, limited liability company, joint venture or unincorporated
association), but more than 50 percent of whose ownership interest representing
the right generally to make decisions for such other entity is, now or
hereafter, owned or controlled, directly or indirectly, by the Company except
that for purposes of determining whether any person may be a Participant for
purposes of any grant of Incentive Stock Options, “Subsidiary” means any
corporation in which at the time the Company owns or controls, directly or
indirectly, more than 50 percent of the total combined voting power represented
by all classes of stock issued by such corporation.

 

(gg)     “Tandem Appreciation Right” means an Appreciation Right granted
pursuant to Section 5 or Section 9 of this Plan that is granted in tandem with
an Option Right.

 

3.     Shares Available Under the Plan.

 

(a)     Maximum Shares Available Under Plan.

 

(i)     Subject to adjustment as provided in Section 12 of this Plan, the number
of shares of Common Stock that may be issued or transferred (A) upon the
exercise of Option Rights or Appreciation Rights, (B) as Restricted Stock and
released from substantial risks of forfeiture thereof, (C) in payment of
Restricted Stock Units, (D) in payment of Performance Shares or Performance
Units that have been earned, (E) as awards to Non-Employee Directors, (F) as
awards contemplated by Section 10 of this Plan, or (G) in payment of dividend
equivalents paid with respect to awards made under the Plan, will not exceed in
the aggregate 40,000,000 shares of Common Stock. Such Common Stock may be shares
of original issuance or treasury shares or a combination of the foregoing.

  

 
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(ii)     Shares of Common Stock covered by an award granted under the Plan shall
not be counted as used unless and until they are actually issued and delivered
to a Participant and, therefore, the total number of shares of Common Stock
available under the Plan as of a given date shall not be reduced by any Common
Stock relating to prior awards that have expired or have been forfeited or
cancelled, and upon payment in cash of the benefit provided by any award granted
under the Plan, any shares of Common Stock that were covered by that award will
be available for issue or transfer hereunder. Notwithstanding anything to the
contrary contained herein: (A) if shares of Common Stock are tendered or
otherwise used in payment of the Option Price of an Option Right, the total
number of shares of Common Stock covered by the Option Right being exercised
shall count against the aggregate plan limit described above; (B) shares of
Common Stock withheld by the Company to satisfy the tax withholding obligation
shall count against the aggregate plan limit described above; and (C) the number
of shares of Common Stock covered by an Appreciation Right, to the extent that
it is exercised and settled in Common Stock, and whether or not the shares of
Common Stock are actually issued to the Participant upon exercise of the
Appreciation Right, shall be considered issued or transferred pursuant to the
Plan. In the event that the Company repurchases Common Stock with Option Right
proceeds, those shares of Common Stock will not be added to the aggregate plan
limit described above. If, under this Plan, a Participant has elected to give up
the right to receive compensation in exchange for Common Stock based on fair
market value, such shares of Common Stock will not count against the aggregate
plan limit described above.

 

(b)     Life of Plan Limits. Notwithstanding anything in this Section 3, or
elsewhere in this Plan, to the contrary, and subject to adjustment as provided
in Section 12 of this Plan:

 

(i)     The aggregate number of shares of Common Stock actually issued or
transferred by the Company upon the exercise of Incentive Stock Options will not
exceed 40,000,000 shares of Common Stock; and

 

(ii)     The number of shares of Common Stock issued as Restricted Stock,
Restricted Stock Units, Performance Shares and Performance Units and other
awards under Section 10 of this Plan (after taking into account any forfeitures
and cancellations) will not during the life of the Plan in the aggregate exceed
10,000,000 shares of Common Stock.

 

(c)     Individual Participant Limits. Notwithstanding anything in this Section
3, or elsewhere in this Plan, to the contrary, and subject to adjustment as
provided in Section 12 of this Plan:

 

(i)     No Participant will be granted Option Rights or Appreciation Rights, in
the aggregate, for more than 10,000,000 shares of Common Stock during any
calendar year;

  

 
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(ii)     No Participant will be granted Qualified Performance Based Awards, in
the aggregate, for more than 10,000,000 shares of Common Stock during any
calendar year; and

 

(iii)     In no event will any Participant in any calendar year receive a
Qualified Performance-Based Award of Performance Units or other awards payable
in cash under Section 10 of this Plan having an aggregate maximum value as of
their respective Dates of Grant in excess of $2,000,000 dollars.

 

4.     Option Rights. The Board may, from time to time and upon such terms and
conditions as it may determine, authorize the grant to Participants of options
to purchase Common Stock. Each such grant may utilize any or all of the
authorizations, and will be subject to all of the requirements contained in the
following provisions:

 

(a)     Each grant will specify the number of shares of Common Stock to which it
pertains subject to the limitations set forth in Section 3 of this Plan.

 

(b)     Each grant will specify an Option Price per share, which may not be less
than the Market Value per Share on the Date of Grant.

 

(c)     Each grant will specify whether the Option Price will be payable (i) in
cash or by check acceptable to the Company or by wire transfer of immediately
available funds, (ii) by the actual or constructive transfer to the Company of
Common Stock owned by the Optionee (or other consideration authorized pursuant
to Section 4(d)) having a value at the time of exercise equal to the total
Option Price, (iii) by delivery (through a process approved by the Board) of an
irrevocable direction to a securities broker to sell Common Stock and to deliver
all or part of the sale proceeds to the Company in payment; (iv) by a
combination of such methods of payment, or (v) by such other methods as may be
approved by the Board.

 

(d)     To the extent permitted by law, any grant may provide for deferred
payment of the Option Price from the proceeds of sale through a bank or broker
on a date satisfactory to the Company of some or all of the shares to which such
exercise relates.

 

(e)     Successive grants may be made to the same Participant whether or not any
Option Rights previously granted to such Participant remain unexercised.

 

(f)     Each grant will specify the period or periods of continuous service by
the Optionee with the Company or any Subsidiary that is necessary before the
Option Rights or installments thereof will become exercisable. A grant of Option
Rights may provide for the earlier exercise of such Option Rights in the event
of the retirement, death or disability of a Participant or in the event of a
Change of Control.

  

 
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(g)     Any grant of Option Rights may specify Management Objectives that must
be achieved as a condition to the exercise of such rights.

 

(h)     Option Rights granted under this Plan may be (i) options, including,
without limitation, Incentive Stock Options, that are intended to qualify under
particular provisions of the Code, (ii) options that are not intended so to
qualify, or (iii) combinations of the foregoing. Incentive Stock Options may
only be granted to Participants who meet the definition of “employees” under
Section 3401(c) of the Code. An Incentive Stock Option may be granted to any
Participant who, at the Date of Grant, owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company or any “parent corporation” or “subsidiary corporation” thereof (within
the meaning of Sections 424(e) and 424(f) of the Code, respectively) only if
such Option Right is granted at an Option Price that is not less than 110% of
the Market Value per Share on the Date of Grant and the Option Right is
exercisable for no more than five years from the Date of Grant.

 

(i)     Option Rights granted under this Plan may be options intended to qualify
as performance-based compensation within the meaning of Section 162(m) of the
Code.

 

(j)     The exercise of an Option Right will result in the cancellation on a
share- for-share basis of any Tandem Appreciation Right authorized under Section
5 of this Plan.

 

(k)     No Option Right will be exercisable more than ten (10) years from the
Date of Grant.

 

(l)     The Board reserves the discretion at or after the Date of Grant to
provide for (i) the availability of a loan at exercise, subject to applicable
laws, and (ii) the right to tender in satisfaction of the Option Price
nonforfeitable, unrestricted shares of Common Stock, which are already owned by
the Optionee and have a value at the time of exercise that is equal to the
Option Price.

 

(m)     Each grant of Option Rights will be evidenced by an Evidence of Award.
Each Evidence of Award shall be subject to the Plan and shall contain such terms
and provisions, consistent with the terms of this Plan, as the Board may
approve.

 

5.     Appreciation Rights.

 

(a)     The Board may, from time to time and upon such terms and conditions as
it may determine, authorize the granting (i) to any Optionee, of Tandem
Appreciation Rights in respect of Option Rights granted hereunder, and (ii) to
any Participant, of Free-Standing Appreciation Rights. A Tandem Appreciation
Right will be a right of the Optionee, exercisable by surrender of the related
Option Right, to receive from the Company an amount determined by the Board,
which will be expressed as a percentage of the Spread (not exceeding 100
percent) at the time of exercise. Tandem Appreciation Rights may be granted at
any time prior to the exercise or termination of the related Option Rights;
provided, however, that a Tandem Appreciation Right awarded in relation to an
Incentive Stock Option must be granted concurrently with such Incentive Stock
Option. A Free-Standing Appreciation Right will be a right of the Participant to
receive from the Company an amount determined by the Board, which will be
expressed as a percentage of the Spread (not exceeding 100 percent) at the time
of exercise.

  

 
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(b)     Each grant of Appreciation Rights may utilize any or all of the
authorizations, and will be subject to all of the requirements, contained in the
following provisions:

 

(i)     Any grant may specify that the amount payable on exercise of an
Appreciation Right may be paid by the Company in cash, in Common Stock or in any
combination thereof and may either grant to the Participant or retain in the
Board the right to elect among those alternatives.

 

(ii)     Any grant may specify that the amount payable on exercise of an
Appreciation Right may not exceed a maximum specified by the Board at the Date
of Grant.

 

(iii)     Any grant may specify waiting periods before exercise and permissible
exercise dates or periods.

 

(iv)     Any grant may specify the period or periods of continuous service by
the Participant with the Company or any Subsidiary that is necessary before the
Appreciation Right or installments thereof will become exercisable. A grant may
provide for the earlier exercise of such Appreciation Right in the event of the
retirement, death or disability of a Participant, or in the event of a Change of
Control.

 

(v)     Any grant of Appreciation Rights may specify Management Objectives that
must be achieved as a condition of the exercise of such Appreciation Rights.

 

(vi)     Each grant of Appreciation Rights will be evidenced by an Evidence of
Award, which Evidence of Award will describe such Appreciation Rights, identify
the related Option Rights (if applicable), and contain such other terms and
provisions, consistent with this Plan, as the Board may approve.

 

(c)     Any grant of Tandem Appreciation Rights will provide that such Tandem
Appreciation Rights may be exercised only at a time when the related Option
Right is also exercisable and at a time when the Spread is positive, and by
surrender of the related Option Right for cancellation. Successive grants of
Tandem Appreciation Rights may be made to the same Participant regardless of
whether any Tandem Appreciation Rights previously granted to the Participant
remain unexercised.

 

(d)     Regarding Free-Standing Appreciation Rights only:

 

(i)     Each grant will specify in respect of each Free-Standing Appreciation
Right a Base Price, which will be equal to or greater than the Market Value per
Share on the Date of Grant;

  

 
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(ii)     Successive grants of Free-Standing Appreciation Rights may be made to
the same Participant regardless of whether any Free-Standing Appreciation Rights
previously granted to the Participant remain unexercised; and

 

(iii)     No Free-Standing Appreciation Right granted under this Plan may be
exercised more than 10 years from the Date of Grant.

 

6.     Restricted Stock. The Board may, from time to time and upon such terms
and conditions as it may determine, also authorize the grant or sale of
Restricted Stock to Participants. Each such grant or sale may utilize any or all
of the authorizations, and will be subject to all of the requirements, contained
in the following provisions:

 

(a)     Each such grant or sale will constitute an immediate transfer of the
ownership of Common Stock to the Participant in consideration of the performance
of services, entitling such Participant to voting, dividend and other ownership
rights, but subject to the substantial risk of forfeiture and restrictions on
transfer hereinafter referred to.

 

(b)     Each such grant or sale may be made without additional consideration or
in consideration of a payment by such Participant that is less than the Market
Value per Share at the Date of Grant.

 

(c)     Each such grant or sale will provide that the Restricted Stock covered
by such grant or sale that vests upon the passage of time will be subject to a
“substantial risk of forfeiture” within the meaning of Section 83 of the Code
for a period to be determined by the Board at the Date of Grant or upon
achievement of Management Objectives referred to in subparagraph (e) below.

 

(d)     Each such grant or sale will provide that during or after the period for
which such substantial risk of forfeiture is to continue, the transferability of
the Restricted Stock will be prohibited or restricted in the manner and to the
extent prescribed by the Board at the Date of Grant (which restrictions may
include, without limitation, rights of repurchase or first refusal in the
Company or provisions subjecting the Restricted Stock to a continuing
substantial risk of forfeiture in the hands of any transferee).

 

(e)     Any grant of Restricted Stock may specify Management Objectives that, if
achieved, will result in termination or early termination of the restrictions
applicable to such Restricted Stock. Each grant may specify in respect of such
Management Objectives a minimum acceptable level of achievement and may set
forth a formula for determining the number of shares of Restricted Stock on
which restrictions will terminate if performance is at or above the minimum or
threshold level or levels, or is at or above the target level or levels, but
falls short of maximum achievement of the specified Management Objectives.

 

(f)     Notwithstanding anything to the contrary contained in this Plan, any
grant or sale of Restricted Stock may provide for the earlier termination of
restrictions on such Restricted Stock in the event of the retirement, death or
disability of a Participant or in the event of a Change of Control.

  

 
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(g)     Any such grant or sale of Restricted Stock shall require that all
dividends or other distributions paid thereon during the period of such
restrictions be automatically deferred and reinvested in additional shares of
Restricted Stock, which shall be subject to the same restrictions and risk of
forfeiture as the underlying award.

 

(h)     Each grant or sale of Restricted Stock will be evidenced by an Evidence
of Award and will contain such terms and provisions, consistent with this Plan,
as the Board may approve. Unless otherwise directed by the Board, (i) all
certificates representing shares of Restricted Stock will be held in custody by
the Company until all restrictions thereon will have lapsed, together with a
stock power or powers executed by the Participant in whose name such
certificates are registered, endorsed in blank and covering such Shares, or (ii)
all shares of Restricted Stock will be held at the Company’s transfer agent in
book entry form with appropriate restrictions relating to the transfer of such
shares of Restricted Stock.

 

7.     Restricted Stock Units. The Board may, from time to time and upon such
terms and conditions as it may determine, also authorize the granting or sale of
Restricted Stock Units to Participants. Each such grant or sale may utilize any
or all of the authorizations, and will be subject to all of the requirements
contained in the following provisions:

 

(a)     Each such grant or sale will constitute the agreement by the Company to
deliver Common Stock or cash to the Participant in the future in consideration
of the performance of services, but subject to the fulfillment of such
conditions (which may include the achievement of Management Objectives) during
the Restriction Period as the Board may specify. Each grant may specify in
respect of such Management Objectives a minimum acceptable level of achievement
and may set forth a formula for determining the number of Restricted Stock Units
on which restrictions will terminate if performance is at or above the minimum
or threshold level or levels, or is at or above the target level or levels, but
falls short of maximum achievement of the specified Management Objectives.

 

(b)     Each such grant or sale may be made without additional consideration or
in consideration of a payment by such Participant that is less than the Market
Value per Share at the Date of Grant.

 

(c)     Notwithstanding anything to the contrary contained in this Plan, any
grant or sale of Restricted Stock Units may provide for the earlier lapse or
modification of the Restriction Period in the event of the retirement, death or
disability of a Participant or in the event of a Change of Control.

 

(d)     During the Restriction Period, the Participant will have no right to
transfer any rights under his or her award and will have no rights of ownership
in the Restricted Stock Units or the Common Stock covered by such Restricted
Stock Units and will have no right to vote the Common Stock covered by such
Restricted Stock Units, but the Board may at the Date of Grant authorize the
payment of dividend equivalents on a deferred basis, either in cash or in
additional shares of Common Stock; provided, however, that any such dividend
equivalents with respect to the number of shares of Common Stock covered by
Restricted Stock Units that are subject to Management Objectives shall be
subject to restrictions and risk of forfeiture to the same extent as the
Restricted Stock Units with respect to which such dividend equivalents have been
distributed.

  

 
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(e)     Each grant or sale of Restricted Stock Units will specify the time and
manner of payment of the Restricted Stock Units that have been earned. Each
grant or sale will specify the amount payable with respect thereto, which
payment may be made in cash, Common Stock or a combination thereof.

 

(f)     Each grant or sale of Restricted Stock Units will be evidenced by an
Evidence of Award and will contain such terms and provisions, consistent with
this Plan, as the Board may approve.

 

8.     Performance Shares and Performance Units. The Board may, from time to
time and upon such terms and conditions as it may determine, also authorize the
granting of Performance Shares and Performance Units that will become payable to
a Participant upon achievement of specified Management Objectives during the
Performance Period. Each such grant may utilize any or all of the
authorizations, and will be subject to all of the requirements, contained in the
following provisions:

 

(a)     Each grant will specify the number of Performance Shares or Performance
Units to which it pertains, which number may be subject to adjustment to reflect
changes in compensation or other factors; provided, however, that no such
adjustment will be made in the case of a Qualified Performance-Based Award where
such action would result in the loss of the otherwise available exemption of the
award under Section 162(m) of the Code.

 

(b)     The Performance Period with respect to each Performance Share or
Performance Unit will be such period of time (not less than one year),
commencing on the Date of Grant, as will be determined by the Board at the time
of grant, which may be subject to earlier lapse or other modification in the
event of the retirement, death or disability of a Participant or in the event of
a Change of Control.

 

(c)     Any grant of Performance Shares or Performance Units will specify
Management Objectives which, if achieved, will result in payment or early
payment of the award, and each grant may specify in respect of such Management
Objectives a minimum acceptable level of achievement and may set forth a formula
for determining the number of Performance Shares or Performance Units that will
be earned if performance is at or above the minimum or threshold level or
levels, or is at or above the target level or levels, but falls short of maximum
achievement of the specified Management Objectives. The grant of Performance
Shares or Performance Units will specify that, before the Performance Shares or
Performance Units will be earned and paid, the Board must certify that the
Management Objectives have been satisfied.

 

(d)     Each grant will specify the time and manner of payment of Performance
Shares or Performance Units that have been earned. Any grant may specify that
the amount payable with respect thereto may be paid by the Company in cash, in
Common Stock or in any combination thereof and may either grant to the
Participant or retain in the Board the right to elect among those alternatives.

  

 
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(e)     Any grant of Performance Shares or Performance Units may specify that
the amount payable or the number of shares of Common Stock issued with respect
thereto may not exceed maximums specified by the Board at the Date of Grant.

 

(f)     The Board may at the Date of Grant of Performance Shares provide for the
payment of dividend equivalents to the holder thereof either in cash or in
additional shares of Common Stock subject in all cases to payment on a
contingent basis based on the Participant’s earning of the Performance Shares
with respect to which such dividend equivalents are paid.

 

(g)     Each grant of Performance Shares or Performance Units will be evidenced
by an Evidence of Award and will contain such other terms and provisions,
consistent with this Plan, as the Board may approve.     

 

9.     Awards to Non-Employee Directors. The Board may, from time to time and
upon such terms and conditions as it may determine, authorize the granting to
Non-Employee Directors of Option Rights, Appreciation Rights or other awards
contemplated by Section 10 of this Plan and may also authorize the grant or sale
of Common Stock, Restricted Stock or Restricted Stock Units to Non-Employee
Directors. Each grant of an award to a non-employee Director will be upon such
terms and conditions as approved by the Board, will not be required to be
subject to any minimum vesting period, and will be evidenced by an Evidence of
Award in such form as will be approved by the Board. Each grant will specify in
the case of an Option Right, an Option Price per share, and in the case of a
Free-Standing Appreciation Right, a Base Price per share, which will not be less
than the Market Value per Share on the Date of Grant. Each Option Right and
Free-Standing Appreciation Right granted under the Plan to a Non-Employee
Director will expire not more than 10 years from the Date of Grant. Non-employee
Directors, pursuant to this Section 9, may be awarded, or may be permitted to
elect to receive at the discretion of the Board, pursuant to procedures
established by the Board, all or any portion of their annual retainer, meeting
fees or other fees in Common Stock, Restricted Stock, Restricted Stock Units or
other awards under the Plan in lieu of cash.

  

 
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10.    Other Awards.

 

(a)     The Board may, subject to limitations under applicable law, grant to any
Participant such other awards that may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, shares
of Common Stock or factors that may influence the value of such shares,
including, without limitation, convertible or exchangeable debt securities,
other rights convertible or exchangeable into Common Stock, purchase rights for
Common Stock, awards with value and payment contingent upon performance of the
Company or specified Subsidiaries, affiliates or other business units thereof or
any other factors designated by the Board, and awards valued by reference to the
book value of shares of Common Stock or the value of securities of, or the
performance of specified Subsidiaries or affiliates or other business units of
the Company. The Board shall determine the terms and conditions of such awards.
Shares of Common Stock delivered pursuant to an award in the nature of a
purchase right granted under this Section 10 shall be purchased for such
consideration, paid for at such time, by such methods, and in such forms,
including, without limitation, cash, shares of Common Stock, other awards, notes
or other property, as the Board shall determine.

 

(b)     Cash awards, as an element of or supplement to any other award granted
under this Plan, may also be granted pursuant to this Section 10 of this Plan.

 

(c)     The Board may grant Common Stock as a bonus, or may grant other awards
in lieu of obligations of the Company or a Subsidiary to pay cash or deliver
other property under this Plan or under other plans or compensatory
arrangements, subject to such terms as shall be determined by the Board in a
manner that complies with Section 409A of the Code.

 

(d)     Share-based awards pursuant to this Section 10 are not required to be
subject to any minimum vesting period.

 

11.    Transferability.

 

(a)     Except as otherwise determined by the Board, no Option Right,
Appreciation Right or other derivative security granted under the Plan shall be
transferable by the Participant except by will or the laws of descent and
distribution, and in no event shall any such award granted under this Plan be
transferred for value. Except as otherwise determined by the Board, Option
Rights and Appreciation Rights will be exercisable during the Participant’s
lifetime only by him or her or, in the event of the Participant’s legal
incapacity to do so, by his or her guardian or legal representative acting on
behalf of the Participant in a fiduciary capacity under state law and/or court
supervision.

 

(b)     The Board may specify at the Date of Grant that part or all of the
shares of Common Stock that are (i) to be issued or transferred by the Company
upon the exercise of Option Rights or Appreciation Rights, upon the termination
of the Restriction Period applicable to Restricted Stock Units or upon payment
under any grant of Performance Shares or Performance Units or (ii) no longer
subject to the substantial risk of forfeiture and restrictions on transfer
referred to in Section 6 of this Plan, will in each case be subject to further
restrictions on transfer.

  

 
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12.    Adjustments. The Board shall make or provide for such adjustments
(including acceleration) in the numbers of shares of Common Stock covered by
outstanding Option Rights, Appreciation Rights, Restricted Stock Units,
Performance Shares and Performance Units granted hereunder and, if applicable,
in the number of shares of Common Stock covered by other awards granted pursuant
to Section 10 hereof, in the Option Price and Base Price provided in outstanding
Appreciation Rights, and in the kind of shares covered thereby, as the Board, in
its sole discretion, exercised in good faith, may determine is equitably
required to prevent dilution or enlargement of the rights of Participants or
Optionees that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) any merger, consolidation, spin-off, split- off, spin-out,
split-up, reorganization, partial or complete liquidation or other distribution
of assets, issuance of rights or warrants to purchase securities, or (c) any
other corporate transaction or event having an effect similar to any of the
foregoing. Moreover, in the event of any such transaction or event or in the
event of a Change of Control, the Board, in its discretion, may provide in
substitution for any or all outstanding awards under this Plan such alternative
consideration (including cash), if any, as it, in good faith, may determine to
be equitable in the circumstances and may require in connection therewith the
surrender of all awards so replaced in a manner that complies with Section 409A
of the Code. In addition, for each Option Right or Appreciation Right with an
Option Price or Base Price greater than the consideration offered in connection
with any such transaction or event or Change of Control, the Board may in its
sole discretion elect to cancel such Option Right or Appreciation Right without
any payment to the person holding such Option Right or Appreciation Right. The
Board shall also make or provide for such adjustments in the numbers of shares
of Common Stock specified in Section 3 of this Plan as the Board in its sole
discretion, exercised in good faith, may determine is appropriate to reflect any
transaction or event described in this Section 12; provided, however, that any
adjustment or acceleration to an Option Right intended to qualify as an
Incentive Stock Option, which will fail to so qualify as such after the
adjustment or acceleration, will be a non-qualified Option Right.

 

13.    Administration of the Plan.

 

(a)     To the extent permitted by applicable law, or the rules of any
securities exchange or automated quotation system on which the Company’s
securities are listed, quoted or traded, this Plan will be administered by the
Board, which may from time to time delegate all or any part of its authority
under this Plan to the Compensation Committee of the Board (or a subcommittee
thereof), as constituted from time to time. To the extent of any such
delegation, references in this Plan to the Board will be deemed to be references
to such committee or subcommittee. A majority of the committee (or subcommittee)
will constitute a quorum, and the action of the members of the committee (or
subcommittee) present at any meeting at which a quorum is present, or acts
unanimously approved in writing, will be the acts of the committee (or
subcommittee).

 

(b)     The terms and conditions of each award granted hereunder shall be
determined by the Board in its sole discretion and the Board shall have complete
flexibility to provide for varied terms and conditions as between any awards,
whether of the same or different award type and/or whether granted to the same
or different Participants (in all cases, subject to the terms and conditions of
the Plan). The interpretation and construction by the Board of any provision of
this Plan or of any agreement, notification or document evidencing the grant of
Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Shares, Performance Units or other awards pursuant to Section 10 of
this Plan (including, but not limited to, any Evidence of Award) and any
determination by the Board pursuant to any provision of this Plan or of any such
agreement, notification or document will be final and conclusive. No member of
the Board will be liable for any such action or determination made in good
faith.

  

 
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(c)     The Board or, to the extent of any delegation as provided in Section
13(a), the committee, may delegate to one or more of its members or to one or
more officers of the Company, or to one or more agents or advisors, such
administrative duties or powers as it may deem advisable, and the Board, the
committee, or any person to whom duties or powers have been delegated as
aforesaid, may employ one or more persons to render advice with respect to any
responsibility the Board, the committee or such person may have under the Plan.
The Board or the committee may, by resolution, authorize one or more officers of
the Company to do one or both of the following on the same basis as the Board or
the committee: (i) designate employees to be recipients of awards under this
Plan; (ii) determine the size of any such awards; provided, however, that (A)
the Board or the committee shall not delegate such responsibilities to any such
officer for awards granted to an employee who is an officer, Director, or more
than 10% beneficial owner of any class of the Company’s equity securities that
is registered pursuant to Section 12 of the Exchange Act, as determined by the
Board in accordance with Section 16 of the Exchange Act; (B) the resolution
providing for such authorization sets forth the total number of shares of Common
Stock such officer(s) may grant; and (iii) the officer(s) shall report
periodically to the Board or the committee, as the case may be, regarding the
nature and scope of the awards granted pursuant to the authority delegated.

 

(d)     Any delegation of the Board’s authority that is made pursuant to this
Section 13 shall be subject to the restrictions and limits that the Board
specifies at the time of such delegation, and the Board may at any time rescind
the authority so delegated or appoint a new delegatee. At all times, the
delegatee appointed under this Section 13 shall serve in such capacity at the
pleasure of the Board.

 

14.    Cancellation Provisions. Any Evidence of Award may provide for the
cancellation, modification or termination of an award upon such terms and
conditions as may be determined from time to time by the Board.

 

15.    Forfeiture and Claw-Back Provisions. Pursuant to its general authority to
determine the terms and conditions applicable to awards granted under the Plan,
the Board shall have the right to provide, in an Evidence of Award or otherwise,
or to require a Participant to agree by separate written or electronic
instrument, that:

 

(a)     (i) Any proceeds, gains or other economic benefit actually or
constructively received by the Participant upon any receipt or exercise of an
award, or upon the receipt or resale of any Common Stock underlying an award,
must be paid to the Company, and (ii) an award shall terminate and any
unexercised portion of the award (whether or not vested) shall be forfeited, in
each case if (x) a termination of service occurs prior to a specified date, or
within a specified time period following receipt or exercise of the award, (y)
the Participant at any time, or during a specified time period, engages in any
activity in competition with the Company, or which is inimical, contrary or
harmful to the interests of the Company, as further defined by the Board or (z)
the Participant incurs a termination of service for “cause” (as such term is
defined in the sole discretion of the Board, or as set forth in a written
agreement relating to such award between the Company and the Participant); and

  

 
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(b)     All awards (including any proceeds, gains or other economic benefit
actually or constructively received by the Participant upon any receipt or
exercise of any award or upon the receipt or resale of any Common Stock
underlying the award) shall be subject to the provisions of any claw-back policy
as may be implemented and/or maintained by the Company from time-to-time,
including, without limitation, any claw-back policy adopted to comply with the
requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act
and any rules or regulations promulgated thereunder and any applicable rules or
regulations promulgated by the SEC or any national securities exchange or
national securities association on which the Company’s Common Stock may be
traded or listed, to the extent set forth in such claw-back policy and/or in the
applicable Evidence of Award.

 

16.    Non U.S. Participants. In order to facilitate the making of any grant or
combination of grants under this Plan, the Board may provide for such special
terms for awards to Participants who are foreign nationals or who are employed
by the Company or any Subsidiary outside of the United States of America or who
provide services to the Company under an agreement with a foreign nation or
agency, as the Board may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. Moreover, the Board may approve
such supplements to or amendments, restatements or alternative versions of this
Plan (including without limitation, sub-plans) as it may consider necessary or
appropriate for such purposes, without thereby affecting the terms of this Plan
as in effect for any other purpose, and the Secretary or other appropriate
officer of the Company may certify any such document as having been approved and
adopted in the same manner as this Plan. No such special terms, supplements,
amendments or restatements, however, will include any provisions that are
inconsistent with the terms of this Plan as then in effect unless this Plan
could have been amended to eliminate such inconsistency without further approval
by the stockholders of the Company.

 

17.    Withholding Taxes. To the extent that the Company is required to withhold
federal, state, local or foreign taxes in connection with any payment made or
benefit realized by a Participant or other person under this Plan, and the
amounts available to the Company for such withholding are insufficient, it will
be a condition to the receipt of such payment or the realization of such benefit
that the Participant or such other person make arrangements satisfactory to the
Company for payment of the balance of such taxes required to be withheld, which
arrangements (in the discretion of the Board) may include relinquishment of a
portion of such benefit. If a Participant’s benefit is to be received in the
form of Common Stock, and such Participant fails to make arrangements for the
payment of tax, the Company shall withhold such shares of Common Stock having a
value equal to the amount required to be withheld. Notwithstanding the
foregoing, when a Participant is required to pay the Company an amount required
to be withheld under applicable income and employment tax laws, the Participant
may elect to satisfy the obligation, in whole or in part, by electing to have
withheld, from the shares required to be delivered to the Participant, shares of
Common Stock having a value equal to the amount required to be withheld (except
in the case of Restricted Stock where an election under Section 83(b) of the
Code has been made), or by delivering to the Company other shares of Common
Stock held by such Participant. The shares used for tax withholding will be
valued at an amount equal to the Market Value per Share of such Common Stock on
the date the benefit is to be included in Participant’s income. In no event
shall the Market Value per Share of the Common Stock to be withheld and
delivered pursuant to this Section 17 to satisfy applicable withholding taxes in
connection with the benefit exceed the minimum amount of taxes required to be
withheld. Participants shall also make such arrangements as the Company may
require for the payment of any withholding tax obligation that may arise in
connection with the disposition of shares of Common Stock acquired upon the
exercise of Option Rights.

  

 
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18.    Determination of Continuous Service.

 

(a)     For purposes of this Plan and any award granted hereunder, except as
provided otherwise in an Evidence of Award and subject to Section 20, a
Participant shall be deemed to remain in the continuous service of the Company
or any Subsidiary as follows:

 

(i)     As to a consultant, during the uninterrupted period of such
Participant’s engagement as a consultant to the Company or any Subsidiary,
provided that if the Participant simultaneously commences or remains in
employment and/or service as a director at the end of such uninterrupted period
due to a cessation of services as a consultant, such continued service shall
qualify as continuous service to the Company or Subsidiary, as applicable.

 

(ii)     As to a Non-Employee Director who serves on the Board and/or on the
board of directors of one or more Subsidiaries, during the uninterrupted period
during which such Participant continues to serve as a Non-Employee Director,
provided that if the Participant simultaneously commences or remains in
employment or service as a consultant at the end of such uninterrupted period
due to a cessation of services as a Non-Employee Director, such continued
service shall qualify as continuous service to the Company or Subsidiary, as
applicable.

 

(iii)     As to an employee, during the uninterrupted period during which such
Participant continues to serve as an employee, provided that if the Participant
simultaneously commences or remains in service as a consultant and/or
Non-Employee Director at the end of such uninterrupted period due to a cessation
of services as an employee, such continued service shall qualify as continuous
service to the Company or Subsidiary, as applicable.

 

(b)     For purposes of subsection (a), a Participant’s continuous service shall
not be considered interrupted in the case of any approved leave of absence or
any transfer among the Company, any Subsidiary or any successor to any such
entity so as long as the individual remains in the service of the Company or a
Subsidiary in any capacity of employee, Director or Consultant (except as
otherwise provided in an Evidence of Award). For purposes of the foregoing, an
approved leave of absence shall include sick leave, military leave, or any other
authorized personal leave. For purposes of each Incentive Stock Option granted
under the Plan, if such leave exceeds three (3) months, and reemployment upon
expiration of such leave is not guaranteed by statute or contract, then the
Incentive Stock Option shall be treated as a non-qualified stock option on the
day three (3) months and one (1) day following the expiration of such three (3)
month period.

  

 
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19.    Amendments, Etc.

 

(a)     The Board may at any time and from time to time amend the Plan in whole
or in part; provided, however, that if an amendment to the Plan (i) would
materially increase the benefits accruing to participants under the Plan, (ii)
would materially increase the number of securities which may be issued under the
Plan, (iii) would materially modify the requirements for participation in the
Plan or (iv) must otherwise be approved by the stockholders of the Company in
order to comply with applicable law or the rules of the principal securities
exchange upon which the Common Stock is traded or quoted, if any, then, such
amendment will be subject to stockholder approval and will not be effective
unless and until such approval has been obtained. The limitations set forth in
clauses (i), (ii), and (iii) of this paragraph shall not apply, however, if the
Company’s stockholders do not approve this Plan within twelve (12) months after
the date this Plan is adopted by the Board.

 

(b)     Except in connection with a corporate transaction or event described in
Section 12 of this Plan, the terms of outstanding awards may not be amended to
reduce the Option Price of outstanding Option Rights or the Base Price of
outstanding Appreciation Rights, or cancel outstanding Option Rights or
Appreciation Rights in exchange for cash, other awards or Option Rights or
Appreciation Rights with an Option Price or Base Price, as applicable, that is
less than the Option Price of the original Option Rights or Base Price of the
original Appreciation Rights, as applicable, without stockholder approval.

 

(c)     If permitted by Section 409A of the Code and Section 162(m) of the Code,
but subject to the paragraph that follows, in case of termination of employment
by reason of death, disability or normal or early retirement, or in the case of
unforeseeable emergency or other special circumstances, of a Participant who
holds an Option Right or Appreciation Right not immediately exercisable in full,
or any shares of Restricted Stock as to which the substantial risk of forfeiture
or the prohibition or restriction on transfer has not lapsed, or any Restricted
Stock Units as to which the Restriction Period has not been completed, or any
Performance Shares or Performance Units which have not been fully earned, or any
other awards made pursuant to Section 10 subject to any vesting schedule or
transfer restriction, or who holds Common Stock subject to any transfer
restriction imposed pursuant to Section 11(b) of this Plan, or in the case of a
Change of Control, the Board may, in its sole discretion, accelerate the time at
which such Option Right, Appreciation Right or other award may be exercised or
the time at which such substantial risk of forfeiture or prohibition or
restriction on transfer will lapse or the time when such Restriction Period will
end or the time at which such Performance Shares or Performance Units will be
deemed to have been fully earned or the time when such transfer restriction will
terminate or may waive any other limitation or requirement under any such award.

 

(d)     Subject to Section 19(b) hereof, the Board may amend the terms of any
award theretofore granted under this Plan prospectively or retroactively, except
in the case of a Qualified Performance-Based Award (other than in connection
with the Participant’s death or disability, or a Change of Control) where such
action would result in the loss of the otherwise available exemption of the
award under Section 162(m) of the Code. In such case, the Board will not make
any modification of the Management Objectives or the level or levels of
achievement with respect to such Qualified Performance-Based Award. Subject to
Section 12 above, no such amendment shall impair the rights of any Participant
without his or her consent. The Board may, in its discretion, terminate this
Plan at any time. Termination of this Plan will not affect the rights of
Participants or their successors under any awards outstanding hereunder and not
exercised in full on the date of termination.

  

 
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20.    Compliance with Section 409A of the Code.

 

(a)     To the extent applicable, it is intended that this Plan and any grants
made hereunder comply with the provisions of Section 409A of the Code, so that
the income inclusion provisions of Section 409A(a)(1) of the Code do not apply
to the Participants. This Plan and any grants made hereunder shall be
administered in a manner consistent with this intent. Any reference in this Plan
to Section 409A of the Code will also include any regulations or any other
formal guidance promulgated with respect to such Section by the U.S. Department
of the Treasury or the Internal Revenue Service.

 

(b)     Neither a Participant nor any of a Participant’s creditors or
beneficiaries shall have the right to subject any deferred compensation (within
the meaning of Section 409A of the Code) payable under this Plan and grants
hereunder to any anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment or garnishment. Except as permitted under Section 409A
of the Code, any deferred compensation (within the meaning of Section 409A of
the Code) payable to a Participant or for a Participant’s benefit under this
Plan and grants hereunder may not be reduced by, or offset against, any amount
owing by a Participant to the Company or any of its affiliates.

 

(c)     If, at the time of a Participant’s separation from service (within the
meaning of Section 409A of the Code), (i) the Participant shall be a specified
employee (within the meaning of Section 409A of the Code and using the
identification methodology selected by the Company from time to time) and (ii)
the Company shall make a good faith determination that an amount payable
hereunder constitutes deferred compensation (within the meaning of Section 409A
of the Code) the payment of which is required to be delayed pursuant to the
six-month delay rule set forth in Section 409A of the Code in order to avoid
taxes or penalties under Section 409A of the Code, then the Company shall not
pay such amount on the otherwise scheduled payment date but shall instead pay
it, without interest, on the tenth business day of the seventh month after such
separation of service (or upon the Participant’s death, if earlier).

 

(d)     Notwithstanding any provision of this Plan and grants hereunder to the
contrary, in light of the uncertainty with respect to the proper application of
Section 409A of the Code, the Company reserves the right to make amendments to
this Plan and grants hereunder as the Company deems necessary or desirable to
avoid the imposition of taxes or penalties under Section 409A of the Code. In
any case, a Participant shall be solely responsible and liable for the
satisfaction of all taxes and penalties that may be imposed on a Participant or
for a Participant’s account in connection with this Plan and grants hereunder
(including any taxes and penalties under Section 409A of the Code), and neither
the Company nor any of its affiliates shall have any obligation to indemnify or
otherwise hold a Participant harmless from any or all of such taxes or
penalties.

 

 
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 21.    Governing Law. The Plan and all grants and awards and actions taken
thereunder shall be governed by and construed in accordance with the internal
substantive laws of the State of Delaware, without regard to the conflicts of
law principles thereof. 

 

22.    Effective Date/Termination. This Plan will be effective as of the
Effective Date. No grant will be made under this Plan after the tenth
anniversary of the Effective Date, but all grants made on or prior to such date
will continue in effect thereafter subject to the terms thereof and of this
Plan.

 

23.    Stockholder Approval. This Plan shall be submitted for the approval of
the Company’s stockholders, consistent with applicable laws, so that such
approval (if obtained) would occur within twelve (12) months after the date this
Plan is adopted by the Board.

 

24.    Miscellaneous.

 

(a)     The Company will not be required to issue any fractional shares of
Common Stock pursuant to this Plan. The Board may provide for the elimination of
fractions or for the settlement of fractions in cash.

 

(b)     This Plan will not confer upon any Participant any right with respect to
continuance of employment or other service with the Company or any Subsidiary,
nor will it interfere in any way with any right the Company or any Subsidiary
would otherwise have to terminate such Participant’s employment or other service
at any time.

 

(c)     To the extent that any provision of this Plan would prevent any Option
Right that was intended to qualify as an Incentive Stock Option from qualifying
as such, that provision will be null and void with respect to such Option Right.
Such provision, however, will remain in effect for other Option Rights and there
will be no further effect on any provision of this Plan.

 

(d)     No award under this Plan may be exercised by the holder thereof if such
exercise, and the receipt of cash or stock thereunder, would be, in the opinion
of counsel selected by the Board, contrary to law or the regulations of any duly
constituted authority having jurisdiction over this Plan.

 

(e)     Absence or leave approved by a duly constituted officer of the Company
or any of its Subsidiaries shall not be considered interruption or termination
of service of any employee for any purposes of this Plan or awards granted
hereunder, except that no awards may be granted to an employee while he or she
is absent on leave.

 

(f)     No Participant shall have any rights as a stockholder with respect to
any shares subject to awards granted to him or her under this Plan prior to the
date as of which he or she is actually recorded as the holder of such shares
upon the stock records of the Company.

  

 
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(g)     The Board may condition the grant of any award or combination of awards
authorized under this Plan on the surrender or deferral by the Participant of
his or her right to receive a cash bonus or other compensation otherwise payable
by the Company or a Subsidiary to the Participant.

 

(h)     If any provision of the Plan is or becomes invalid, illegal or
unenforceable in any jurisdiction, or would disqualify the Plan or any award
under any law deemed applicable by the Board, such provision shall be construed
or deemed amended or limited in scope to conform to applicable laws or, in the
discretion of the Board, it shall be stricken and the remainder of the Plan
shall remain in full force and effect. 

 

 
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APPENDIX A

 

MANAGEMENT OBJECTIVES FOR

QUALIFIED PERFORMANCE-BASED AWARDS

 

 

 

(1)

Profits (e.g., operating income, EBIT, EBT, net income, earnings per share,
residual or economic earnings, economic profit -- these profitability metrics
could be measured before special items and/or subject to GAAP definition);

 

 

(2)

Cash Flow (e.g., EBITDA, free cash flow, free cash flow with or without specific
capital expenditure target or range, including or excluding divestments and/or
acquisitions, total cash flow, cash flow in excess of cost of capital or
residual cash flow or cash flow return on investment);

 

 

(3)

Returns (e.g., Profits or Cash Flow returns on: assets, invested capital, net
capital employed, and equity);

 

 

(4)

Working Capital (e.g., working capital divided by sales, days’ sales
outstanding, days’ sales inventory, and days’ sales in payables);

 

 

(5)

Profit Margins (e.g., Profits divided by revenues, gross margins and material
margins divided by revenues, and material margin divided by sales pounds);

 

 

(6)

Liquidity Measures (e.g., debt-to-capital, debt-to-EBITDA, total debt ratio);

 

 

(7)

Sales Growth, Gross Margin Growth, Cost Initiative and Stock Price Metrics
(e.g., revenues, revenue growth, revenue growth outside the United States, gross
margin and gross margin growth, material margin and material margin growth,
stock price appreciation, total return to stockholders, sales and administrative
costs divided by sales, and sales and administrative costs divided by profits);
and

 

 

(8)

Strategic Initiative Key Deliverable Metrics consisting of one or more of the
following: product development, strategic partnering, research and development,
vitality index, market penetration, geographic business expansion goals, cost
targets, customer satisfaction, employee satisfaction, management of employment
practices and employee benefits, supervision of litigation and information
technology, and goals relating to acquisitions or divestitures of subsidiaries,
affiliates and joint ventures.

 

 

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