ENUMERAL BIOMEDICAL HOLDINGS, INC.

2014 Equity Incentive Plan

July 30, 2014

 

 

 

 

TABLE OF CONTENTS

 

    Page       I. ESTABLISHMENT, OBJECTIVES AND DURATION 2       II. DEFINITIONS
2       III. ADMINISTRATION 7       IV. SHARES SUBJECT TO THE PLAN AND MAXIMUM
AWARDS 7       V. ELIGIBILITY AND PARTICIPATION 10       VI. STOCK OPTIONS 10  
    VII. STOCK APPRECIATION RIGHTS 12       VIII. RESTRICTED STOCK 13       IX.
RESTRICTED STOCK UNITS 17       X. PERFORMANCE UNITS AND PERFORMANCE SHARES 18  
    XI. PERFORMANCE MEASURES 19       XII. BENEFICIARY DESIGNATION 20      
XIII. DEFERRALS 20       XIV. RIGHTS OF PARTICIPANTS 20       XV. AMENDMENT,
MODIFICATION, TERMINATION AND ADJUSTMENTS 20       XVI. PAYMENT OF PLAN AWARDS
AND CONDITIONS THEREON 22       XVII. CHANGE IN CONTROL 22       XVIII. TAX
PROVISIONS 22       XIX. INDEMNIFICATION 23       XX. SUCCESSORS 24       XXI.
LEGAL CONSTRUCTION 24

 

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ENUMERAL BIOMEDICAL HOLDINGS, INC.
2014 Equity Incentive Plan
July 30, 2014

 

I.           ESTABLISHMENT, OBJECTIVES AND DURATION

 

A.           ESTABLISHMENT OF THE PLAN. Enumeral Biomedical Holdings, Inc., a
Delaware corporation (hereinafter referred to as the “Company”), hereby adopts
an incentive compensation plan known as the “Enumeral Biomedical Holdings, Inc.
2014 Equity Incentive Plan” (hereinafter referred to as the “Plan”), as set
forth in this document. The Plan permits the grant of Nonqualified Stock
Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units, Performance Shares and Performance Units.

 

Subject to approval by the Company’s stockholders, the Plan shall become
effective as of July 29, 2014 (the “Effective Date”). The Plan shall remain in
effect as provided in Section I.C hereof.

 

B.           OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize
the profitability and growth of the Company through incentives which are
consistent with the Company’s goals and which link the personal interests of
Participants to those of the Company’s stockholders; to provide Participants
with an incentive for excellence in individual performance; and to promote
teamwork among Participants.

 

It is also intended with respect to the Non-Employee Directors of the Company
that the Compensation Committee be able to choose from among Awards of
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock and
RSUs which will (a) permit Non-Employee Directors to increase their ownership
and proprietary interest in the Company and enhance their identification with
the interests of the Company’s stockholders, (b) provide a means of compensating
Non-Employee Directors that will help attract qualified candidates to serve as
Non-Employee Directors, and (c) induce incumbent Non-Employee Directors to
continue to serve if the Board desires that they remain on the Board.

 

C.           DURATION OF THE PLAN. The Plan shall commence on the Effective Date
and shall remain in effect, subject to the right of the Board of Directors to
amend or terminate the Plan at any time pursuant to Article XV hereof, until all
Shares subject to it shall have been purchased or acquired according to the
Plan’s provisions. However, in no event may an Award be granted under the Plan
on or after July 29, 2024.

 

II.          DEFINITIONS

 

Whenever used in the Plan, the following terms shall have the meanings set forth
below, and when the meaning is intended, the initial letter of the word shall be
capitalized:

 

A.           “AFFILIATE” shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations of the Exchange Act.

 

 

 

 

B.           “AWARD” means, individually or collectively, a grant under this
Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units, Performance Shares or
Performance Units.

 

C.           “AWARD AGREEMENT” means an agreement entered into by the Company
and each Participant setting forth the terms and provisions applicable to Awards
granted under this Plan.

 

D.           “BENEFICIAL OWNER” or “BENEFICIAL OWNERSHIP” shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.

 

E.           “BOARD” or “BOARD OF DIRECTORS” means the Board of Directors of the
Company.

 

F.           “CHANGE IN CONTROL” shall be deemed to have occurred as of the
first day that any one or more of the following conditions shall have been
satisfied:

 

1.           the “Beneficial Ownership” of securities as defined in Rule 13d-3
under the Exchange Act representing more than thirty-three percent (33%) of the
combined voting power of the Company is acquired by any “person” as defined in
Section 3(a)(9) of the Exchange Act (other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, or any corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of stock
of the Company); or

 

2.           the consummation of a definitive agreement to merge or consolidate
the Company with or into another corporation or to sell or otherwise dispose of
all or substantially all of its assets, or adopt a plan of liquidation; or

 

3.           during any period of three consecutive years, individuals who at
the beginning of such period were members of the Board cease for any reason to
constitute at least a majority thereof (unless the election, or the nomination
for election by the Company’s stockholders, of each new director was approved by
a vote of at least a majority of the directors then still in office who were
directors at the beginning of such period or whose election or nomination was
previously so approved).

 

Notwithstanding the foregoing, with respect to any Award subject to Code Section
409A, a “Change in Control” of the Company is deemed to have occurred as of the
first day that any one or more of the following conditions shall have been
satisfied:

 

4.           Change in Ownership: A change in ownership of the Company occurs on
the date that any one person, or more than one person acting as a group,
acquires ownership of stock of the Company that, together with stock held by
such person or group, constitutes more than fifty percent (50%) of the total
fair market value or total voting power of the stock of the Company, excluding
the acquisition of additional stock by a person or more than one person acting
as a group who is considered to own more than fifty percent (50%) of the total
fair market value or total voting power of the stock of the Company.

 

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5.           Change in Effective Control: A change in effective control of the
Company occurs only on either of the following dates:

 

a.           The date any one person, or more than one person acting as a group,
acquires (or has acquired during the twelve (12) month period ending in the date
of the most recent acquisition by such person or persons) ownership of stock of
the Company possessing 30% or more of the total voting power of the stock of the
Company; or

 

b.           The date a majority of the members of the Board is replaced during
any (12) month period by directors whose appointment or election is not endorsed
by a majority of the members of the board of directors before the date of the
appointment or election; provided that this paragraph (b) shall apply only to
the company for which no other corporation is a majority shareholder.

 

6.           Change in Ownership of Substantial Assets: A change in the
ownership of a substantial portion of the Company’s assets occurs on the date
that any one person, or more than one person acting as a group, acquires (or has
acquired during the twelve (12) month period ending on the date of the most
recent acquisition by such person or persons) assets from the Company that have
a total gross fair market value equal to or more than forty percent (40%) of the
total gross fair market value of the assets of the Company, or the value of the
assets being disposed of, determined without regard to any liabilities
associated with such assets.

 

It is the intent that this definition be construed to satisfy the definition of
“Change of Control” as defined under Internal Revenue Code Section 409A and the
applicable Treasury Regulations, as amended from time to time.

 

G.          “CODE” means the Internal Revenue Code of 1986, as amended from time
to time.

 

H.          “COMMITTEE” means any committee appointed by the Board to administer
the Plan, as specified in Article III herein.

 

I.           “COMPANY” means Enumeral Biomedical Holdings, Inc., a Delaware
corporation, including any and all Subsidiaries, and any successor thereto as
provided in Article XX herein.

 

J.           “COVERED EMPLOYEE” means a Participant who, as of the date of
vesting and/or payout of an Award, as applicable, is one of the group of
“covered employees,” as defined in Code Section 162(m) and the regulations
promulgated under Code Section 162(m), or any successor statute.

 

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K.          “DIRECTOR” means any individual who is a member of the Board of
Directors of the Company or any Subsidiary; provided, however, that any Director
who is employed by the Company shall be considered an Employee under the Plan.

 

L.           “DISABILITY” with respect to any Award, a Participant shall be
considered Disabled if the Participant is considered “disabled” under the
Company’s long-term disability plan then in effect, or if none, then if the
Participant qualifies to receive disability payments under the federal Social
Security Act.

 

M.          “EFFECTIVE DATE” shall mean July 30, 2014.

 

N.           “EMPLOYEE” means any full-time, active employee of the Company or
its Subsidiaries. Directors who are not employed by the Company shall not be
considered Employees under this Plan.

 

O.           “EXCHANGE ACT” means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.

 

P.           “FAIR MARKET VALUE” shall be determined on the basis of the closing
sale price at which Shares have been sold on the principal securities exchange
on which the Shares are traded or, if there is no such sale on the relevant
date, then on the last previous day on which there was such a sale.

 

Q.           “FREESTANDING SAR” means an SAR that is granted independently of
any Options, as described in Article VII herein.

 

R.           “INCENTIVE STOCK OPTION” or “ISO” means an option to purchase
Shares granted under Article VI herein and which is designated as an Incentive
Stock Option and which is intended to meet the requirements of Code Section 422.

 

S.           “INSIDER” shall mean an individual who is, on the relevant date, an
officer, director or more than ten percent (10%) Beneficial Owner of any class
of the Company’s equity securities that is registered pursuant to Section 12 of
the Exchange Act, all as defined under Section 16 of the Exchange Act.

 

T.           “NON-EMPLOYEE DIRECTOR” shall mean a Director who is not also an
Employee.

 

U.           “NON-QUALIFIED STOCK OPTION” or “NQSO” means an option to purchase
Shares granted under Article VI herein and which is not intended to meet the
requirements of Code Section 422.

 

V.          “OPTION” means an Incentive Stock Option or a Nonqualified Stock
Option, as described in Article VI herein.

 

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W.         “OPTION PRICE” means the price at which a Share may be purchased by a
Participant pursuant to an Option.

 

X.           “PARTICIPANT” means: (1) an Employee or consultant who has been
selected to receive an Award or who has an outstanding Award granted under the
Plan; or (2) a Non-Employee Director who has been selected to receive an Award
other than an Incentive Stock Option, Performance Share or Performance Unit or
who has an outstanding Award other than an Incentive Stock Option, Performance
Share or Performance Unit granted under the Plan.

 

Y.           “PERFORMANCE-BASED EXCEPTION” means the performance-based exception
from the tax deductibility limitations of Code Section 162(m).

 

Z.           “PERFORMANCE SHARE” means an Award granted to a Participant (other
than a Non-Employee Director), as described in Article X herein, that shall have
an initial value equal to the Fair Market Value of a Share on the date of grant.

 

AA.       “PERFORMANCE UNIT” means an Award granted to a Participant (other than
a Non-Employee Director), as described in Article X herein, that shall have an
initial value that is established by the Committee on the date of grant.

 

BB.         “PERIOD OF RESTRICTION” means the period during which the transfer
of Shares of Restricted Stock or Restricted Stock Units is limited in some way
(based on the passage of time, the achievement of performance goals or upon the
occurrence of other events as determined by the Committee, at its discretion, as
specified in the Award Agreement), and the Shares are subject to a substantial
risk of forfeiture, as provided in Article VIII and Article IX herein.

 

CC.          “PERSON” shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a “group” as defined in Section 13(d) thereof.

 

DD.          “RESTRICTED STOCK” means an Award granted to a Participant pursuant
to Article VIII herein.

 

EE.          “RESTRICTED STOCK UNIT” or “RSU” means an award granted to a
Participant pursuant to Article IX herein.

 

FF.          “SEPARATION FROM SERVICE” means a termination of employment or
other separation from service as described in Code Section 409A and the
regulations thereunder.

 

GG.          “SHARES” means the shares of common stock of the Company.

 

HH.          “SPECIFIED EMPLOYEE” means, with respect to the Company or any of
its Subsidiaries, and determined as of the date of an individual’s separation
from service from the Company (1) any officer during the prior twelve (12) month
period with annual compensation in excess of $170,000 (as adjusted from time to
time under the Code), (2) a 5-percent owner of the Company’s outstanding equity
stock during the prior twelve (12) month period or (3) a 1-percent owner of the
Company’s outstanding equity stock during the prior (12) month period with
annual compensation in excess of $150,000 (as adjusted from time under Code),
provided that the Company or any of its Subsidiaries is publicly-traded within
the meaning of Code Section 409A on the date of determination.

 

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II.          “STOCK APPRECIATION RIGHT” or “SAR” means an Award, granted alone
or, in connection with a related Option, designated as an SAR, pursuant to the
terms of Article VII herein.

 

JJ.          “SUBSIDIARY” means any corporation, partnership, joint venture or
other entity in which the Company has a majority voting interest (including all
divisions, affiliates and related entities).

 

KK.          “TANDEM SAR” means an SAR that is granted in connection with a
related Option pursuant to Article VII herein, the exercise of which shall
require forfeiture of the right to purchase a Share under the related Option
(and when a Share is purchased under the Option, the Tandem SAR shall similarly
be canceled).

 

III.         ADMINISTRATION

 

A.          THE COMMITTEE. The Plan shall be administered by the Committee of
the Board consisting of not less than two Directors who meet the “Non-Employee
Director” requirements of Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Exchange Act, the “Independent Director” requirements of
NYSE MKT Rule 803(a), and the outside director requirements of Code Section
162(m), or by any other committee appointed by the Board, provided the members
of such committee meet such requirements.

 

B.           AUTHORITY OF THE COMMITTEE. Except as limited by law or by the
Articles of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select Employees and
Non-Employee Directors who shall participate in the Plan; determine the sizes
and types of Awards; determine the terms and conditions of Awards in a manner
consistent with the Plan; construe and interpret the Plan and any agreement or
instrument entered into under the Plan; establish or amend rules and regulations
for the Plan’s administration; and (subject to the provisions of Article XV
herein) amend the terms and conditions of any outstanding Award to the extent
such terms and conditions are within the discretion of the Committee as provided
in the Plan. Further, the Committee is empowered hereby to make all other
determinations which may be necessary or advisable for the administration of the
Plan. As permitted by law, the Committee may delegate its authority as
identified herein.

 

C.           DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, its stockholders, Directors, Employees, Participants and
their estates and beneficiaries.

 

IV.         SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS

 

A.           NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to Sections IV.B and
IV.C herein, the maximum number of Shares with respect to which Awards may be
granted to Participants under the Plan shall be Eight Million One-Hundred
Thousand (8,100,000). Shares issued under the Plan may be either authorized but
unissued Shares, treasury Shares or any combination thereof.

 

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Unless and until the Committee determines that an Award to a Covered Employee is
not designed to comply with the Performance-Based Exception, the following rules
shall apply to grants of Awards to Covered Employees under the Plan, subject to
Sections IV.B and IV.C.

 

1.           STOCK OPTIONS: The maximum aggregate number of Shares that may be
subject to Stock Options granted in any one fiscal year to any one Participant
shall be two hundred thousand (200,000).

 

2.           SARs: The maximum aggregate number of Shares that may be granted in
the form of SARs granted in any one fiscal year to any one Participant shall be
two hundred thousand (200,000).

 

3.           RESTRICTED STOCK: The maximum aggregate grant with respect to
Awards of Restricted Stock which are granted in any one fiscal year to any one
Participant shall be one hundred thousand (100,000) Shares.

 

4.           RESTRICTED STOCK UNITS: The maximum aggregate payment (determined
as of the date of grant) with respect to Awards of RSUs granted in any one
fiscal year to any one Participant shall be equal to the Fair Market Value of
one hundred thousand (100,000) Shares; provided, however, that the maximum
aggregate grant of Restricted Stock and RSUs for any one fiscal year shall be
coordinated so that in no event shall any one Participant be awarded more than
the Fair Market Value of one hundred thousand (100,000) Shares taking into
account all such grants.

 

5.           PERFORMANCE SHARES: The maximum aggregate payout (determined as of
the event of the applicable performance period) with respect to Awards of
Performance Shares which are granted in any one fiscal year to any one
Participant shall be equal to the Fair Market Value of one hundred fifty
thousand (150,000) Shares.

 

6.           PERFORMANCE UNITS: The maximum aggregate payout (determined as of
the end of the applicable performance period) with respect to Awards of
Performance Units which are granted in any one fiscal year to any one
Participant shall be equal to one million five hundred thousand dollars
($1,500,000).

 

B.           ADJUSTMENTS FOR AWARDS AND PAYOUTS. Unless determined otherwise by
the Committee, the following Awards and payouts will reduce, on a one-for-one
basis, the number of Shares available for issuance under the Plan:

 

1.          An Award of an Option;

 

2.          An Award of a SAR;

 

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3.          An Award of Restricted Stock;

 

4.          A payout of a Performance Share Award in Shares; and

 

5.          A payout of a Performance Units Award in Shares.

 

Unless determined otherwise by the Committee, unless a Participant has received
a benefit of ownership such as dividend or voting rights with respect to the
Award, the following transactions will restore, on a one-for-one basis, the
number of Shares available for issuance under the Plan:

 

1.           A payout of a SAR or a Tandem SAR in cash;

 

2.           A cancellation, termination, expiration, forfeiture or lapse for
any reason (with the exception of the termination of a Tandem SAR upon exercise
of the related Options, or the termination of a related Option upon exercise of
the corresponding Tandem SAR) of any Award payable in Shares;

 

3.           Shares tendered in payment of the exercise price of an Option;

 

4.           Shares withheld for payment of federal, state or local taxes;

 

5.           Shares repurchased by the Company with proceeds collected in
connection with the exercise of outstanding Options; and

 

6.           The net Shares issued in connection with the exercise of SARs (as
opposed to the full number of Shares underlying the exercised portion of the
SAR).

 

C.           ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in
corporate capitalization such as a stock split or stock dividend, or a corporate
transaction such as any merger, consolidation, separation, including a spin-off,
or other distribution of stock or property of the Company, any reorganization
(whether or not such reorganization comes within the definition of such term in
Code Section 368) or any partial or complete liquidation of the Company, such
adjustment shall be made in the number and class of Shares which are reserved
and may be delivered under Section IV.A, in the number and class of and/or price
of Shares subject to outstanding Awards granted under the Plan, and in the Award
limits set forth in subsections IV.A.1 through IV.A.6, inclusive as may be
determined to be appropriate and equitable by the Committee, in its sole
discretion, to prevent dilution or enlargement of rights; provided, however,
that the number of Shares subject to any Award shall always be a whole number.

 

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V.ELIGIBILITY AND PARTICIPATION

 

A.           ELIGIBILITY. Persons eligible to participate in this Plan include
officers and certain key salaried Employees of the Company with potential to
contribute to the success of the Company or its Subsidiaries, including
Employees who are members of the Board. Notwithstanding the foregoing,
Non-Employee Directors of the Company or consultants shall be eligible to
participate in the Plan with respect to Awards of Non-Qualified Stock Options,
Stock Appreciation Rights, Restricted Stock and RSUs, as specified in Article
VI, Article VII, Article VIII and Article IX. Except as otherwise specifically
provided in this Plan, the Committee shall determine the terms and conditions of
any such Awards to Non-Employee Directors, including the terms and conditions
which shall apply upon a termination of the Non-Employee Director’s service as a
member of the Board, and shall have full power and authority in its discretion
to administer such Awards, subject to the terms of the Plan and applicable law.

 

B.           ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select in its sole and broad discretion, upon
or without the recommendation of officers of the Company, from all eligible
Employees those to whom Awards shall be granted, and shall determine the nature
and amount of each Award.

 

VI.         STOCK OPTIONS

 

A.           GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Participants in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Committee. For
purposes of this Article VI, with respect to NQSOs only, the term “Participant”
shall include Non-Employee Directors and consultants of the Company.

 

B.           AWARD AGREEMENT. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Award Agreement also shall specify whether the
Option is intended to be an ISO within the meaning of Code Section 422, or an
NQSO, whose grant is intended not to fall under the provisions of Code Section
422.

 

C.           OPTION PRICE. The Option Price for each grant of an Option under
this Plan shall be at least equal to one hundred percent (100%) of the Fair
Market Value of a Share on the date the Option is granted. Notwithstanding the
foregoing, no ISO shall be granted to any person who, immediately prior to the
grant, owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company, unless the Option Price is
at least one hundred ten percent (110%) of the Fair Market Value of a Share on
the date of grant of the Option.

 

D.           DURATION OF OPTIONS. Each Option granted to a Participant shall
expire at such time as the Committee shall determine at the time of grant;
provided, however, that no Option shall be exercisable later than the tenth
(10th) anniversary following the date of its grant and provided further that no
Option that is an ISO shall be exercisable later than the fifth (5th)
anniversary following the date of its grant to a Participant, who at the time of
such grant owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company.

 

E.           EXERCISE OF OPTIONS. Options granted under this Article VI shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant.

 

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F.           PAYMENT. Options granted under this Article VI shall be exercised
by the delivery of a written notice of exercise to the Company, setting forth
the number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.

 

The Option Price upon exercise of any Option shall be payable to the Company in
full either: (a) in cash or its equivalent; or (b) by tendering previously
acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the total Option Price (provided that the Shares which are tendered
must have been held by the Participant for at least six months prior to their
tender to satisfy the Option Price); or (c) by a combination of (a) and (b).

 

The Committee, in its discretion, may also (a) allow cashless exercise as
permitted under Federal Reserve Board’s Regulation T, subject to applicable
securities law restrictions, (b) cashless exercise by the Participant by the
Company’s withholding of Shares issuable upon exercise of an Option, or (c) by
any other means which the Committee determines to be consistent with the Plan’s
purpose and applicable law.

 

Subject to any governing rules or regulations, as soon as practicable after
receipt of a written notification of exercise and full payment, the Company
shall deliver to the Participant, in the Participant’s name, Share certificates
in an appropriate amount based upon the number of Shares purchased under the
Option(s).

 

G.           RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose
such restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article VI as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.

 

H.           TERMINATION OF EMPLOYMENT BY A PARTICIPANT WHO IS AN EMPLOYEE. With
respect to a Participant who is an Employee, each Option Award Agreement shall
set forth the extent to which the Participant shall have the right to exercise
the Option following termination of the Participant’s employment with the
Company, with the exception of a termination of employment after a Change in
Control, which is controlled by Article XVII. Such provisions shall be
determined in the sole discretion of the Committee but shall conform to the
limitations established in Section VI.D, shall be included in the Award
Agreement entered into with each Participant, need not be uniform among all
Options issued pursuant to this Article VI, and may reflect distinctions based
on the reasons for termination of employment.

 

I.           NONTRANSFERABILITY OF OPTIONS.

 

1.           INCENTIVE STOCK OPTIONS. No ISO granted under the Plan may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, all ISOs
granted to a Participant under the Plan shall be exercisable during his or her
lifetime only by such Participant or the Participant’s legal representative (to
the extent permitted under Code Section 422).

 

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2.           NONQUALIFIED STOCK OPTIONS. No NQSO granted under this Article VI
may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
Further, except as otherwise provided in a Participant’s Award Agreement, all
NQSOs granted to a Participant under this Article VI shall be exercisable during
his or her lifetime only by such Participant or the Participant’s legal
representative.

 

VII.        STOCK APPRECIATION RIGHTS

 

A.           GRANT OF SARS. Subject to the terms and conditions of the Plan,
SARs may be granted to Participants at any time and from time to time as shall
be determined by the Committee. The Committee may grant Freestanding SARs,
Tandem SARs or any combination of these forms of SAR. For purposes of this
Article VII, the term “Participant” shall include Non-Employee Directors of the
Company and consultants; provided, however, that a Tandem SAR may not be granted
to a Non-Employee Director or consultant unless the related Option is a NQSO.

 

The Committee shall have complete discretion in determining the number of SARs
granted to each Participant (subject to Article IV herein) and, consistent with
the provisions of the Plan, in determining the terms and conditions pertaining
to such SARs.

 

The grant price of a Freestanding SAR shall equal the Fair Market Value of a
Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option.

 

B.           EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or
part of the Shares subject to the related Option upon the surrender of the right
to exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.

 

Notwithstanding any other provision of this Plan to the contrary, with respect
to a Tandem SAR granted to an Employee in connection with an ISO: (i) the Tandem
SAR will expire no later than the expiration of the underlying ISO; (ii) the
value of the payout with respect to the Tandem SAR may be for no more than one
hundred percent (100%) of the difference between the Option Price of the
underlying ISO and the Fair Market Value of the Shares subject to the underlying
ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be
exercised only when the Fair Market Value of the Shares subject to the ISO
exceeds the Option Price of the ISO.

 

C.           EXERCISE OF FREESTANDING SARS. Freestanding SARs may be exercised
upon whatever terms and conditions the Committee, in its sole discretion,
imposes upon them.

 

D.           SAR AGREEMENT. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the grant price, the term of the SAR, and such
other provisions as the Committee may determine.

 

12

 

 

E.           TERM OF SARS. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
such term shall not exceed ten (10) years.

 

F.           PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying:

 

1.           the difference between the Fair Market Value of a Share on the date
of exercise over the grant price; by

 

2.           the number of Shares with respect to which the SAR is exercised.

 

At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof. The
Committee’s determination regarding the form of SAR payout shall be set forth in
the Award Agreement pertaining to the grant of the SAR.

 

G.           TERMINATION OF EMPLOYMENT BY A PARTICIPANT WHO IS AN EMPLOYEE. With
respect to a Participant who is an Employee, each SAR Award Agreement shall set
forth the extent to which the Participant shall have the right to exercise the
SAR following termination of the Participant’s employment with the Company
and/or its Subsidiaries, with the exception of a termination of employment that
occurs after a Change in Control, which is controlled by Article XVII. Such
provisions shall be determined in the sole discretion of the Committee, shall be
included in the Award Agreement entered into with Participants, need not be
uniform among all SARs issued pursuant to the Plan and may reflect distinctions
based on the reasons for termination of employment.

 

H.           NONTRANSFERABILITY OF SARS. No SAR granted under the Plan may be
sold, transferred, pledged, assigned or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, except
as otherwise provided in a Participant’s Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant or the Participant’s legal representative.

 

VIII.       RESTRICTED STOCK

 

A.           GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of
the Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Committee shall
determine. For purposes of this Article VIII, the term “Participant” shall
include Non-Employee Directors of the Company and consultants.

 

B.           RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Award Agreement that shall specify the Period(s)
of Restriction, the number of Shares of Restricted Stock granted and such other
provisions as the Committee shall determine.

 

13

 

 

C.           NONTRANSFERABILITY. Except as provided in this Article VIII and
subject to federal securities laws, the Shares of Restricted Stock granted under
the Plan may not be sold, transferred, pledged, assigned or otherwise alienated
or hypothecated until the end of the applicable Period of Restriction
established by the Committee and specified in the Restricted Stock Award
Agreement, or upon earlier satisfaction of any other conditions, as specified by
the Committee in its sole discretion and as set forth in the Restricted Stock
Award Agreement. All rights with respect to the Restricted Stock granted to a
Participant under the Plan shall be available during his or her lifetime only to
such Participant or the Participant’s legal representative for the Period of
Restriction.

 

D.           OTHER RESTRICTIONS. Subject to Article XI herein, the Committee may
impose such other conditions and/or restrictions on any Shares of Restricted
Stock granted pursuant to the Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase price for
each Share of Restricted Stock, restrictions based upon the achievement of
specific performance goals (Company-wide, divisional and/or individual),
time-based restrictions on vesting following the attainment of the performance
goals and/or restrictions under applicable federal or state securities laws.

 

The Company may retain the certificates representing Shares of Restricted Stock
in the Company’s possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied.

 

Except as otherwise provided in this Article VIII and subject to Federal
securities laws, Shares of Restricted Stock covered by each Restricted Stock
grant made under the Plan shall become freely transferable by the Participant
after the last day of the applicable Period of Restriction.

 

E.           VOTING RIGHTS. Participants holding Shares of Restricted Stock
granted hereunder may be granted the right to exercise full voting rights with
respect to those Shares during the Period of Restriction.

 

F.           DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of
Restriction, Participants holding Shares of Restricted Stock granted hereunder
shall be credited with regular cash dividends paid with respect to the
underlying Shares while they are so held. The Committee may apply any
restrictions to the dividends that the Committee deems appropriate. Without
limiting the generality of the preceding sentence, if the grant or vesting of
Restricted Stock granted to a Covered Employee is designed to comply with the
requirements of the Performance-Based Exception, the Committee may apply any
restrictions it deems appropriate to the payment of dividends declared with
respect to such Restricted Stock, such that the dividends and/or the Restricted
Stock maintain eligibility for the Performance-Based Exception. Notwithstanding
anything to the contrary herein, (i) dividends accrued on Restricted Stock will
only be paid if the Restricted Stock vests; and (ii) for any Award that is
governed by Code Section 409A regarding non-qualified deferred compensation, the
Committee shall establish the schedule of any payments of dividends in
accordance with the requirements of Code Section 409A or any guidance
promulgated thereunder.

 

14

 

 

G.           TERMINATION OF EMPLOYMENT BY A PARTICIPANT WHO IS AN EMPLOYEE. With
respect to a Participant who is an Employee, each Restricted Stock Award
Agreement shall set forth the extent to which the Participant shall have the
right to receive nonvested Restricted Shares following termination of the
Participant’s employment with the Company. Such provisions shall be determined
in the sole discretion of the Committee, shall be included in the Award
Agreement entered into with each Participant, need not be uniform among all
Shares of Restricted Stock issued pursuant to the Plan and may reflect
distinctions based on the reasons for termination of employment.

 

H.           VESTING OF RESTRICTED STOCK AWARDS. Unless otherwise provided in
the Plan or under an Award Agreement: (1) all Awards of Restricted Stock that
vest based on the passage of time which are granted to a Participant shall vest
no more rapidly than pro-rata over a three (3) year period from the date of
grant (the “Time-Based Restricted Stock”); and (2) all Awards of Restricted
Stock that vest based on the achievement of specific measures designed to
satisfy the Performance-Based Exception or other performance measures which are
granted to a Participant shall vest no more rapidly than one (1) year from the
date of grant (the “Performance-Based Restricted Stock”); provided, however: (1)
up to ten percent (10%) of the Time-Based Restricted Stock Awards,
Performance-Based Restricted Stock Awards, or both, may by designation of the
Committee (as reflected in the Restricted Stock Award Agreement), be subject to
a more accelerated time-based vesting schedule or performance-based vesting
schedule, as the case may be; and (2) Restricted Stock Awards which fully vest
upon certain termination events as determined by the Committee and specified in
the Employee’s Restricted Stock Award Agreement (or as a result of termination
from the Board as a Non-Employee Director pursuant to Section VIII.I.3.f.) or a
Change in Control shall not count as part of this ten percent (10%) pool.

 

I.            ADDITIONAL PROVISIONS RELATED TO RESTRICTED STOCK AWARDS TO
NON-EMPLOYEE DIRECTORS.

 

1.           AWARD DATES. Effective as of the date specified by the Committee in
its sole discretion, each Non-Employee Director will be awarded such number of
Shares of Restricted Stock as determined by the Board, after consideration of
the recommendation of the Committee. Non-Employee Directors may, but need not,
be awarded the same number of Shares of Restricted Stock. A Non-Employee
Director who is first elected to the Board on a date subsequent to the date
specified by the Committee in its sole discretion will be awarded such number of
Shares of Restricted Stock as of such date of election as determined by the
Board, after consideration of the recommendation of the Committee.

 

2.           DIVIDEND RIGHTS OF HOLDERS OF RESTRICTED STOCK. Notwithstanding
Section VIII.F., upon issuance of a Restricted Stock Agreement, the Non-Employee
Director in whose name the Restricted Stock Agreement is registered will,
subject to the provisions of the Plan have the right to receive cash dividends
and other cash distributions thereon.

 

3.           PERIOD OF RESTRICTION. Restricted Stock will be subject to the
restrictions set forth in Section VIII.I.4. and the other provisions of the Plan
during the Period of Restriction commencing on the date as of which the
Restricted Stock is awarded (the “Award Date”) and ending on the earliest of the
first to occur of the following:

 

15

 

 

a.            the retirement of the Non-Employee Director from the Board in
compliance with the Board’s retirement policy as then in effect;

 

b.            the termination of the Non-Employee Director’s service on the
Board as a result of the Non-Employee Director’s not being nominated for
reelection by the Board;

 

c.            the termination of the Non-Employee Director’s service on the
Board because of the Non-Employee Director’s resignation or failure to stand for
reelection with the consent of the Company’s Board (which means approval by at
least 80% of the Directors voting, with the affected Non-Employee Director
abstaining);

 

d.            the termination of the Non-Employee Director’s service on the
Board because the Non-Employee Director, although nominated for reelection by
the Board, is not reelected by the stockholders;

 

e.            the termination of the Non-Employee Director’s service on the
Board because of (i) the Non-Employee’s Director’s resignation at the request of
the Nominating and Governance Committee of the Board (or successor committee),
(ii) the Non-Employee Director’s removal by action of the stockholders or by the
Board, or (iii) a Change in Control of the Company;

 

f.            the termination of the Non-Employee Director’s service on the
Board because of Disability or death; or

 

g.           the vesting of the Restricted Stock.

 

Section VIII.I.3.a. through g. above are subject to the further restrictions
that a removal or resignation for “Cause” will be deemed to not constitute
completion of the Period of Restriction and will result in a forfeiture of
Restricted Stock not previously vested under Section VIII.I.4. For purposes of
this Plan, “Cause” will be a good faith determination by the Board that the
Non-Employee Director (i) failed to substantially perform his or her duties
(other than a failure resulting from his or her incapacity due to physical or
mental illness) after a written demand for substantial performance has been
delivered to him or her by the Board, which demand specifically identifies the
manner in which the Board believes such Non-Employee Director has not
substantially performed his or her duties; (ii) has engaged in conduct the
consequences of which are materially adverse to the Company, monetarily or
otherwise; or (iii) has pleaded guilty or nolo contendere to or been convicted
of a felony. The Non-Employee Director will not be deemed to have been
terminated for Cause unless there will have been delivered to the Non-Employee
Director a letter from the Board setting forth the reasons for the Company’s
termination of the Non-Employee Director for Cause and, with respect to (i) or
(ii), stating that the Non-Employee Director has failed to cure such reason for
termination within thirty (30) days after the Non-Employee Director’s receipt of
such notice.

 

16

 

 

4.           FORFEITURE OF RESTRICTED STOCK. As of the date (“Termination Date”)
a Non-Employee Director ceases to be a member of the Board for any reason,
including but not limited to removal or resignation for Cause, the Non-Employee
Director shall forfeit to the Company all Restricted Stock awarded to the
Non-Employee Director for which the Period of Restriction has not ended pursuant
to Section VIII.I.3. as of or prior to the Termination Date.

 

IX.         RESTRICTED STOCK UNITS

 

A.          GRANT OF RESTRICTED STOCK UNITS. Subject to the terms of the Plan,
RSUs may be granted to Participants in such amounts and upon such terms, and at
any time and from time to time, as shall be determined by the Committee. For
purposes of this Article IX, the term “Participant” shall include Non-Employee
Directors of the Company and consultants.

 

B.           RESTRICTED STOCK UNIT AGREEMENT. Each RSU grant shall be evidenced
by a Restricted Stock Unit Award Agreement that shall specify the Period(s) of
Restriction, the number of RSUs granted, and such other provisions as the
Committee may determine.

 

C.           VALUE OF RESTRICTED STOCK UNIT. Each RSU shall have a value that is
equal to the Fair Market Value of a Share on the date of grant.

 

D.           FORM AND TIMING OF PAYMENT OF RESTRICTED STOCK UNITS. Settlement of
vested RSUs may be made in the form of (i) cash, (ii) Shares or (iii) any
combination of both, as determined by the Committee at the time of the grant of
the RSUs, in its sole discretion. Vested RSUs shall be settled in a lump sum as
soon as administratively practicable after the vesting date, but in no event
later than two and one-half (2 ½) months following the vesting date. The amount
of such settlement shall be equal to the Fair Market Value of the RSUs on the
vesting date.

 

E.           DIVIDEND EQUIVALENTS. Each RSU shall be credited with an amount
equal to the dividends paid on a Share between the date of grant and the date
such RSU is paid to the Participant (if at all). Dividend equivalents shall
vest, if at all, upon the same terms and conditions governing the vesting of
RSUs under the Plan. Payment of the dividend equivalent shall be made at the
same time as payment of the RSU and shall be made without interest or other
adjustment. If the RSU is forfeited, the Participant shall have no right to
dividend equivalents.

 

F.           VOTING RIGHTS. The holders of RSUs shall have no voting rights.

 

17

 

 

G.           NONTRANSFERABILITY. RSUs may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by laws
of descent and distribution.

 

X.          PERFORMANCE UNITS AND PERFORMANCE SHARES

 

A.           GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms of the
Plan, Performance Units and/or Performance Shares may be granted to Participants
in such amounts and upon such terms, and at any time and from time to time, as
shall be determined by the Committee.

 

B.           PERFORMANCE UNIT/SHARE AGREEMENT. Each Performance Unit or
Performance Share grant shall be evidenced by a Performance Unit or Performance
Share Award Agreement, as the case may be, that shall specify the number of
Performance Units or Performance Shares granted and such other provisions as the
Committee may determine.

 

C.           VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall have
an initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Committee shall set performance goals in its
discretion which, depending on the extent to which they are met, will determine
the number and/or value of Performance Units/Shares that will be paid out to the
Participant. For purposes of this Article X, the time period during which the
performance goals must be met shall be called a “Performance Period.”

 

D.           EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of this
Plan, after the applicable Performance Period has ended, the holder of
Performance Units/Shares shall be entitled to receive payout on the number and
value of Performance Units/Shares earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the corresponding
performance goals have been achieved.

 

E.           FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. Payment of
earned Performance Units/Shares shall be made in a single lump sum following the
close of the applicable Performance Period. Subject to the terms of this Plan,
the Committee, in its sole discretion, may pay earned Performance Units/Shares
in the form of cash or in Shares (or in a combination thereof) which have an
aggregate Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period. Such Shares may
be granted subject to any restrictions deemed appropriate by the Committee. The
determination of the Committee with respect to the form of payout of such Awards
shall be set forth in the Award Agreement pertaining to the grant of the Award.
Payment shall be made no later than two and one-half (2 ½) months following the
close of the Performance Period.

 

F.           SEPARATION FROM SERVICE DUE TO DEATH OR DISABILITY. In the event
the Participant incurs a Separation From Service by reason of death or
Disability during a Performance Period, the Participant shall not receive a
payout of the Performance Units/Shares, unless determined otherwise by the
Committee or set forth in the Participant’s Award Agreement.

 

18

 

 

Payment of earned Performance Units/Shares shall be made at a time specified by
the Committee in its sole discretion and set forth in the Participant’s Award
Agreement.

 

G.           TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that a
Participant’s employment terminates for any reason other than those reasons set
forth in Section X.F. herein, all Performance Units/Shares intended to qualify
for the Performance-Based Exception shall be forfeited by the Participant to the
Company.

 

H.           NONTRANSFERABILITY. Except as otherwise provided in a Participant’s
Award Agreement, Performance Units/Shares may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, except as otherwise provided in a
Participant’s Award Agreement, a Participant’s rights under the Plan shall be
exercisable during the Participant’s lifetime only by the Participant or the
Participant’s legal representative.

 

I.           NO DIVIDEND AND VOTING RIGHTS. Participants will not be entitled to
receive any dividends declared with respect to Shares which have been earned in
connection with grants of Performance Units and/or Performance Shares, but not
yet distributed to Participants nor shall Participants have voting rights with
respect to such Shares.

 

XI.         PERFORMANCE MEASURES

 

Unless and until the Committee proposes for stockholder vote and the Company’s
stockholders approve a change in the general performance measures set forth in
this Article XI, the attainment of which may determine the degree of payout
and/or vesting with respect to Awards to Covered Employees which measures are
designed to qualify for the Performance-Based Exception, the performance
measure(s) to be used for purposes of such grants may be measured at the Company
level, at a Subsidiary or Affiliate level, or at an operating unit level and
shall be chosen from among the following: net income either before or after
taxes (including adjusted net income), share price, earnings per share (basic or
diluted), total stockholder return, return on assets, return on equity,
operating income, return on capital or investment, cash flow or adjusted cash
flow from operations, economic value added or adjusted cash flow per Share (net
income plus or minus change in operating assets and liabilities), debt level,
cost reduction targets, and equity ratios.

 

The Committee shall have the discretion to adjust the determinations of the
degree of attainment of the preestablished performance goals; provided, however,
that Awards which are designed to qualify for the Performance-Based Exception,
and which are held by Covered Employees, may not be adjusted upward (the
Committee shall retain the discretion to adjust such Awards downward).

 

In the event that applicable tax and/or securities laws or exchange listing
standards change to permit Committee discretion to alter the governing
performance measures without obtaining stockholder approval of such changes, the
Committee shall have sole discretion to make such changes without obtaining
stockholder approval. In addition, in the event that the Committee determines
that it is advisable to grant Awards which shall not qualify for the
Performance-Based Exception, the Committee may make such grants without
satisfying the requirements of Code Section 162(m).

 

19

 

 

In the case of any Award which is granted subject to the condition that a
specified performance measure be achieved, no payment under such Award shall be
made prior to the time that the Committee certifies in writing that the
performance measure has been satisfied, in accordance with Internal Revenue
Service requirements. No such certification is required, however, in the case of
an Award that is based solely on an increase in the value of a Share from the
date such Award was made.

 

XII.        BENEFICIARY DESIGNATION

 

Each Participant under the Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Company, and will be effective only when filed by the Participant in writing
with the Company during the Participant’s lifetime. In the absence of any such
designated beneficiary, benefits remaining unpaid at the Participant’s death
shall be paid to the Participant’s estate.

 

XIII.       DEFERRALS

 

The Committee may permit or require a Participant to defer such Participant’s
receipt of the payment of cash or the delivery of Shares that would otherwise be
due to such Participant by virtue of the exercise of an Option or SAR, the lapse
or waiver of restrictions with respect to Restricted Stock or Restricted Stock
Units, or the satisfaction of any requirements or goals with respect to
Performance Units/Shares. If any such deferral election is required or
permitted, the Committee shall, in its sole discretion, establish rules and
procedures for such payment deferrals, provided, however, all deferrals shall be
made in accordance with all applicable requirements of Code Section 409A or any
guidance promulgated thereunder.

 

XIV.       RIGHTS OF EMPLOYEES

 

A.           EMPLOYMENT. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant’s employment at
any time, nor confer upon any Participant any right to continue in the employ of
the Company.

 

B.           PARTICIPATION. No Employee shall have the right to be selected to
receive an Award under this Plan or, having been so selected, to be selected to
receive a future Award.

 

XV.        AMENDMENT, MODIFICATION, TERMINATION AND ADJUSTMENTS

 

A.           AMENDMENT, MODIFICATION, AND TERMINATION. Subject to the terms of
the Plan, the Board, upon recommendation of the Committee, may at any time and
from time to time, alter, amend, suspend or terminate the Plan in whole or in
part for any purpose which the Committee deems appropriate and that is otherwise
consistent with Code Section 409A; provided, however, no amendment shall,
without shareholder approval, (i) materially increase the benefits accruing to
Participants under the Plan; (ii) materially increase the number of securities
which may be issued under the Plan; or (iii) materially modify the requirements
for participation in the Plan.

 

20

 

 

Except in connection with a corporate transaction involving the Company
(including, without limitation, any stock dividend, stock split, extraordinary
cash dividend, recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination, or exchange of shares), the terms of
outstanding Awards may not be amended to reduce the exercise price of
outstanding Options or SARs or cancel outstanding Options or SARs in exchange
for cash, other awards or Options or SARs with an exercise price that is less
than the exercise price of the original Options or SARs without shareholder
approval.

 

B.           ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. The Committee may make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section IV.C. hereof) affecting the Company or the financial statements of the
Company or of changes in applicable laws, regulations or accounting principles,
whenever the Committee determines that such adjustments are appropriate in order
to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan; provided that unless the Committee
determines otherwise, no such adjustment shall be authorized to the extent that
such authority would be inconsistent with the Plan or Awards meeting the
requirements of Code Sections 162(m) and 409A, as from time to time amended.

 

C.           AWARDS PREVIOUSLY GRANTED. Notwithstanding any other provision of
the Plan to the contrary (but subject to Section XV.B. hereof), no termination,
amendment or modification of the Plan shall adversely affect in any material way
any Award previously granted under the Plan without the written consent of the
Participant holding such Award.

 

D.           COMPLIANCE WITH CODE SECTION 162(m). At all times when Code Section
162(m) is applicable, all Awards granted under this Plan shall comply with the
requirements of Code Section 162(m); provided, however, that in the event the
Committee determines that such compliance is not desired with respect to any
Award or Awards available for grant under the Plan, then compliance with Code
Section 162(m) will not be required. In addition, in the event that changes are
made to Code Section 162(m) to permit greater flexibility with respect to any
Award or Awards available under the Plan, the Committee may, subject to this
Article XV, make any adjustments it deems appropriate consistent with the
changes made to Code Section 162(m).

 

21

 

 

XVI.       PAYMENT OF PLAN AWARDS AND CONDITIONS THEREON

 

A.           EFFECT OF COMPETITIVE ACTIVITY. Anything contained in the Plan to
the contrary notwithstanding, unless otherwise covered in an employment
agreement by and between the Company and the Participant, with respect to any
Participant who is an Employee, if the employment of any Participant shall
terminate, for any reason other than death, while any Award to such Participant
is outstanding hereunder, and such Participant has not yet received the Shares
covered by such Award or otherwise received the full benefit of such Award, such
Participant, if otherwise entitled thereto, shall receive such Shares or benefit
only if, during the entire period from the date of such Participant’s
termination to the date of such receipt, such Participant shall have earned such
Award by making himself or herself available, upon request, at reasonable times
and upon a reasonable basis, to consult with, supply information to, and
otherwise cooperate with the Company or any Subsidiary or Affiliate thereof with
respect to any matter that shall have been handled by him or her or under his or
her supervision while he or she was in the employ of the Company or of any
Subsidiary or Affiliate thereof.

 

B.           NONFULFILLMENT OF COMPETITIVE ACTIVITY CONDITIONS; WAIVERS UNDER
THE PLAN. In the event of a Participant’s nonfulfillment of any condition set
forth in Section XVI.A. hereof, such Participant’s rights under any Award shall
be forfeited and canceled forthwith; provided, however, that the nonfulfillment
of such condition may at any time (whether before, at the time of, or subsequent
to termination of employment) be waived by the Committee upon its determination
that in its sole judgment there shall not have been and will not be any
substantial adverse effect upon the Company or any Subsidiary or Affiliate
thereof by reason of the nonfulfillment of such condition.

 

XVII.     CHANGE IN CONTROL

 

A.           TREATMENT OF OUTSTANDING AWARDS. Notwithstanding any provisions in
the Participant’s Employment Agreement to the contrary, but subject to Section
XVII.B. herein or the Plan governing the particular Award, upon the occurrence
of a Change in Control:

 

1.           any and all Options and SARs granted hereunder shall become
fully-vested and immediately exercisable;

 

2.           any Periods of Restriction and restrictions imposed on Restricted
Stock or RSUs which are not intended to qualify for the Performance-Based
Exception shall lapse; and

 

3.           any Award intended to qualify for the Performance-Based Exception
shall be earned in accordance with the applicable Award Agreement.

 

B.           TERMINATION, AMENDMENT AND MODIFICATIONS OF CHANGE-IN-CONTROL
PROVISIONS. Notwithstanding any other provision of the Plan or any Award
Agreement provision, the provisions of this Article XVII may not be terminated,
amended or modified on or after the date of an event, commencing upon material
discussions by the Board respecting a possible transaction that would result in
a Change in Control, which is likely to give rise to a Change in Control to
affect adversely any Award theretofore granted under the Plan without the prior
written consent of the Participant with respect to said Participant’s
outstanding Awards.

 

XVIII.    TAX PROVISIONS

 

A.           TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant who is an Employee to remit to the
Company, an amount sufficient to satisfy federal, state and local taxes,
domestic or foreign, required by law or regulation to be withheld with respect
to any taxable event arising as a result of this Plan.

 

22

 

 

B.           SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock
or Restricted RSUs, upon achievement of the performance goals on Performance
Shares or Performance Units or upon any other taxable event arising as a result
of Awards granted hereunder, Participants who are Employees may elect, subject
to the approval of the Committee, to satisfy the withholding requirement, in
whole or in part, by having the Company withhold Shares having a Fair Market
Value on the date the tax is to be determined at least equal to the minimum, but
not more than the maximum, statutory tax which could be imposed on the
transaction. All such elections shall be irrevocable, made in writing, and
signed by the Participant, and shall be subject to any restrictions or
limitations that the Committee, in its sole discretion, deems appropriate.

 

C.           REQUIREMENT OF NOTIFICATION OF CODE SECTION 83(b) ELECTION. If any
Participants shall make an election under Code Section 83(b) (to include in
gross income in the year of transfer the amounts specified in Code Section
83(b)) or under a similar provisions of the laws of a jurisdiction outside the
United States, such Participant shall notify the Company of such election within
ten (10) days after filing notice of the election with the Internal Revenue
Service or other government authority, in addition to any filing and
notification required pursuant to regulations issued under Code Section 83(b) or
other applicable provision.

 

D.           REQUIREMENT OF NOTIFICATION UPON DISQUALIFYING DISPOSITION UNDER
CODE SECTION 421(b). If any Participant shall make any disposition of shares of
stock delivered pursuant to the exercise of an Incentive Stock Option under the
circumstances described in Code Section 421(b) (relating to certain
disqualifying dispositions), such Participant shall notify the Company of such
disposition within ten (10) days thereof.

 

XIX.      INDEMNIFICATION

 

Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company’s approval, or paid by him or her in satisfaction of any
judgment in any such action, suit or proceeding against him or her, provided he
or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such persons may be entitled under
the Company’s Articles of Incorporation or Bylaws, as a matter of law or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

 

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XX.        SUCCESSORS

 

All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
or assets of the Company.

 

XXI.       LEGAL CONSTRUCTION

 

A.           GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.

 

B.           SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

 

C.           REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

 

D.           SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent any provision of
the Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.

 

E.           CODE SECTION 409A COMPLIANCE. Notwithstanding any other provision
of this Plan to the contrary, all Awards under this Plan that are subject to
Code Section 409A shall be designed and administered in a manner that does not
result in the imposition of tax or penalties under Code Section 409A.
Accordingly, Awards under this Plan that are subject to Code Section 409A shall
comply with the following requirements, as applicable.

 

1.           Distribution to Specified Employees Upon Separation from Service.
To the extent that payment under an Award which is subject to Code Section 409A
is due to a Specified Employee on account of the Specified Employee’s Separation
from Service from the Company or its Affiliate or Subsidiary, such payment shall
be delayed until the first day of the seventh (7th) month following such
Separation from Service (or as soon as practicable thereafter). The Committee,
in its discretion, may provide in the Award document for the payment of interest
at a rate set by the Committee for such six-month period. In the event that a
payment under an Award is exempt from Code Section 409A, payment shall be made
to a Specified Employee without any such six-month delay.

 

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2.           No Acceleration of Payment. To the extent that an Award is subject
to Code Section 409A, payment under such Award shall not be accelerated from the
date(s) specified in the Award documents as of the date of grant.

 

3.           Subsequent Delay in Payment. To the extent that an Award is subject
to Code Section 409A, payment under such Award shall not be deferred beyond the
dates specified in the Award document as of the date of grant, unless the
Committee or Participant, as the case may be, makes the decision to delay
payment at least one year prior to the scheduled payment date, and payment is
delayed at least five (5) years.

 

F.           GOVERNING LAW. To the extent not preempted by federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware.

 

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