Exhibit 10.1
METHODE ELECTRONICS, INC. 2007 STOCK PLAN
1. Preamble.
     Methode Electronics, Inc., a Delaware corporation (the “Company”), hereby
establishes the Methode Electronics, Inc. 2007 Stock Plan (the “Plan”) as a
means whereby the Company may, through awards of (i) incentive stock options
(“ISOs”) within the meaning of Section 422 of the Code, (ii) non-qualified stock
options (“NSOs”), (iii) stock appreciation rights (“SARs”), (iv) restricted
stock (“Restricted Stock”); (v) restricted stock units (“Restricted Stock
Units”) and (vi) performance share units (“Performance Share Units”):

  (a)   provide selected officers, directors and key employees with additional
incentive to promote the success of the Company’s business;     (b)   encourage
such persons to remain in the service of the Company; and     (c)   enable such
persons to acquire proprietary interests in the Company.

     The provisions of this Plan do not apply to or affect any option, stock
appreciation right, restricted stock, restricted stock unit or performance share
unit award hereafter granted under any other stock plan of the Company, and all
such option, stock appreciation right, restricted stock, restricted stock unit
or performance share unit awards shall be governed by and subject to the
applicable provisions of the plan under which they will be granted.
     2. Definitions and Rules of Construction.
          2.01 Definitions.
(a) “Affiliate” means any entity during any period that, in the opinion of the
Committee, the Company has a significant economic interest in the entity.
(b) “Award” means the grant of Options, SARs, Restricted Stock, Restricted Stock
Units, and/or Performance Share Units to a Participant.
(c) “Award Date” means the date upon which an Award is granted to a Participant
under the Plan.
(d) “Board” or “Board of Directors” means the board of directors of the Company.
(e) “Cause” shall mean:

  (i)   Participant’s conviction of a felony;     (ii)   Participant’s
commission of any act or acts of personal dishonesty intended to result in
substantial personal enrichment to Participant to the detriment of the Company;
    (iii)   repeated violations of Participant’s responsibilities which are
demonstrably willful and deliberate, provided that such violations have
continued more than ten days after the Board of Directors of the Company has
given written notice of such violations and of its intention to terminate
Participant’s employment because of such violations;     (iv)   any willful
misconduct by the Participant which affects the business reputation of the
Company;     (v)   breach by the Participant of any provision of any employment,
consulting, advisory, nondisclosure, non-competition or other similar agreement
between the Participant and the Company or any Affiliate or Subsidiary; or

 

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  (vi)   Participant’s violation of the Company’s code of conduct.

The Participant shall be considered to have been discharged for “Cause” if the
Company determines, within 30 days after the Participant’s resignation, that
discharge for Cause was warranted.
(f) “Change of Control” shall be deemed to have occurred on the first to occur
of any of the following as a result of one transaction or a series of
transactions:

  (i)   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 on the date
of the most recent acquisition by such person(s)) ownership of Common Stock
possessing thirty percent (30%) or more of the total voting power of the Common
Stock of the Company;     (ii)   the date a majority of the members of the
Company’s Board of Directors is replaced during any twelve (12) month period by
directors whose appointment or election is not endorsed by a majority of the
Company’s Board of Directors before the date of the appointment or election; or
    (iii)   the date 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%) percent of the
Fair Market Value or total voting power of the Common Stock of the Company.

(g) “Code” means the Internal Revenue Code of 1986, as amended from time to time
or any successor thereto.
(h) “Committee” means the Compensation Committee of the Board of Directors.
(i) “Common Stock” means common stock of the Company, par value $.50 per share.
(j) “Company” means Methode Electronics, Inc., a Delaware corporation, and any
successor thereto.
(k) “Exchange Act” shall mean the Securities Exchange Act of 1934, as it exists
now or from time to time may hereafter be amended.
(l) “Fair Market Value” means as of any date, the closing price for the Common
Stock on that date, or if no sales occurred on that date, the next trading day
on which actual sales occurred (as reported by the NASDAQ Stock Market System or
any securities exchange or automated quotation system of a registered securities
association on which the Common Stock is then traded or quoted).
(m) “Family Members” mean with respect to an individual, any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the individual’s household (other than a tenant or employee), a trust in
which these persons have more than 50% of the beneficial interest, a foundation
in which these persons (or the individual) control the management of assets, and
any other entity in which these persons (or the individual) own more than 50% of
the voting interests.
(n) “ISO” means an incentive stock option within the meaning of Section 422 of
the Code.
(o) “NSO” means a non-qualified stock option which is not intended to qualify as
an incentive stock option under Section 422 of the Code.

 

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(p) “Option” means the right of a Participant, whether granted as an ISO or an
NSO, to purchase a specified number of shares of Common Stock, subject to the
terms and conditions of the Plan.
(q) “Option Price” means the price per share of Common Stock at which an Option
may be exercised.
(r) “Participant” means an individual to whom an Award has been granted under
the Plan.
(s) “Performance Share Unit” means a unit awarded to a Participant pursuant to
Section 11 of this Plan.
(t) “Plan” means the Methode Electronics, Inc. 2007 Stock Plan, as set forth
herein and from time to time amended.
(u) “Restricted Stock” means the Common Stock awarded to a Participant pursuant
to Section 9 of this Plan.
(v) “Restricted Stock Unit” means a unit awarded to a Participant pursuant to
Section 9 of this Plan evidencing the right of a Participant to receive a fixed
number of shares of Common Stock at some future date.
(w) “SAR” means a stock appreciation right issued to a Participant pursuant to
Section 10 of this Plan.
(x) “SEC” means the Securities and Exchange Commission.
(y) “Subsidiary” means any entity during any period of which the Company owns or
controls more than 50% of:

  (i)   the outstanding capital stock, or     (ii)   the combined voting power
of all classes of stock.

     2.02 Rules of Construction.
(a) Governing Law and Venue. The construction and operation of this Plan are
governed by the laws of the State of Illinois without regard to any conflicts or
choice of law rules or principles that might otherwise refer construction or
interpretation of this Plan to the substantive law of another jurisdiction, and
any litigation arising out of this Plan shall be brought in the Circuit Court of
the State of Illinois or the United States District Court for the Eastern
Division of the Northern District of Illinois.
(b) Undefined Terms. Unless the context requires another meaning, any term not
specifically defined in this Plan is used in the sense given to it by the Code.
(c) Headings. All headings in this Plan are for reference only and are not to be
utilized in construing the Plan.
(d) Conformity with Section 422. Any ISOs issued under this Plan are intended to
qualify as incentive stock options described in Section 422 of the Code, and all
provisions of the Plan relating to ISOs shall be construed in conformity with
this intention. Any NSOs issued under this Plan are not intended to qualify as
incentive stock options described in Section 422 of the Code, and all provisions
of the Plan relating to NSOs shall be construed in conformity with this
intention.
(e) Conformity with Section 162(m). Any awards issued to specified employees (as
defined in Section 162(m) of the Code) with any of the performance criteria
listed in Section 6 are intended to

 

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qualify as performance-based compensation under Section 162(m) of the Code to
which the applicable remuneration limits of Section 162(m)(1) do not apply.
(f) Gender. Unless clearly inappropriate, all nouns of whatever gender refer
indifferently to persons of any gender.
(g) Singular and Plural. Unless clearly inappropriate, singular terms refer also
to the plural and vice versa.
(h) Severability. If any provision of this Plan is determined to be illegal or
invalid for any reason, the remaining provisions are to continue in full force
and effect and to be construed and enforced as if the illegal or invalid
provision did not exist, unless the continuance of the Plan in such
circumstances is not consistent with its purposes.
     3. Stock Subject to the Plan.
     Subject to adjustment as provided in Section 15 hereof, the aggregate
number of shares of Common Stock for which Awards may be issued under this Plan
may not exceed 1,250,000 shares. Reserved shares may be either authorized but
unissued shares or treasury shares, in the Board’s discretion. If any Award
shall terminate, expire, be cancelled or forfeited as to any number of shares of
Common Stock, new Awards may thereafter be awarded with respect to such shares.
Notwithstanding the foregoing, the total number of shares of Common Stock with
respect to which Awards may be granted to any Participant in any calendar year
shall not exceed 200,000 shares (subject to adjustment as provided in Section 15
hereof).
     4. Administration.
     The Committee shall administer the Plan. All determinations of the
Committee are made by a majority vote of its members. The Committee’s
determinations are final and binding on all Participants. In addition to any
other powers set forth in this Plan, the Committee has the following powers:

  (a)   to construe and interpret the Plan;     (b)   to establish, amend and
rescind appropriate rules and regulations relating to the Plan;     (c)  
subject to the terms of the Plan, to select the individuals who will receive
Awards, the times when they will receive them, the form of agreements which
evidence such Awards, the number of Options, Restricted Stock, Restricted Stock
Units, Performance Share Units and/or SARs to be subject to each Award, the
Option Price, the vesting schedule (including any performance targets to be
achieved in connection with the vesting of any Award), the expiration date
applicable to each Award and other terms, provisions and restrictions of the
Awards (which need not be identical) and subject to Section 20 hereof, to amend
or modify any of the terms of outstanding Awards provided, however, that except
as permitted by Section 15.01, no outstanding Award may be repriced, whether
through cancellation of the Award and the grant of a new Award, or the amendment
of the Award, without the approval of the stockholders of the Company;     (d)  
to contest on behalf of the Company or Participants, at the expense of the
Company, any ruling or decision on any matter relating to the Plan or to any
Awards;     (e)   generally, to administer the Plan, and to take all such steps
and make all such determinations in connection with the Plan and the Awards
granted thereunder as it may deem necessary or advisable; and     (f)   to
determine the form in which tax withholding under Section 18 of this Plan will
be made (i.e., cash, Common Stock or a combination thereof).

Except to the extent prohibited by applicable law or the applicable rules of a
stock exchange, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all

 

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or any part of its responsibilities and powers to any person or persons selected
by it. Any such allocation or delegation may be revoked by the Committee at any
time.
     5. Eligible Participants.
     Present and future directors, officers and key employees of the Company or
any Subsidiary shall be eligible to participate in the Plan. The Committee from
time to time shall select those officers, directors and key employees of the
Company and any Subsidiary of the Company who shall be designated as
Participants and shall designate in accordance with the terms of the Plan the
number, if any, of ISOs, NSOs, SARs, Restricted Stock Units, Performance Share
Units and shares of Restricted Stock or any combination thereof, to be awarded
to each Participant.
     6. Performance Criteria (162(m) Awards).
     Subject to the terms of the Plan, the Committee, in its discretion, may
make the grant or vesting of an Award to a “specified employee” (as defined in
Section 162(m) of the Code and the regulations thereunder) subject to
performance criteria (a “162(m) Award”). All 162(m) Awards shall be granted by
the Committee when composed of two or more outside directors, as prescribed by
Section 162(m) of the Code and the regulations thereunder. The Committee shall
certify that the performance goals and other material terms have been satisfied
before payment of a 162(m) Award is made. All 162(m) Awards shall be paid solely
on account of the attainment of one or more pre-established, objective
performance goals, which goals shall be established on a timely basis, in
conformity with the timing requirements of Section 162(m) of the Code.
Notwithstanding any provision of the Plan to the contrary, the Committee shall
not have discretion to waive or amend such performance goals or to increase the
amount payable pursuant to a 162(m) Award after the performance goals have been
established; provided, however, the Committee may, in its sole discretion,
reduce the amount that would otherwise be payable with respect to any 162(m)
Award. Permissible performance goals include any one of the following or
combination thereof which may be applicable on a Company-wide basis and/or with
respect to operating units, divisions, subsidiaries, acquired businesses,
minority investments, partnerships or joint ventures:

  (a)   meeting specific targets for or growth in:

  (1)   stock price,     (2)   net sales (dollars or volume),     (3)   cash
flow,     (4)   operating income,     (5)   net income,     (6)   earnings per
share,     (7)   earnings before taxes,     (8)   earnings before interest and
taxes, or     (9)   earnings before interest, taxes, depreciation and
amortization (EBITDA);

  (b)   return on:

  (1)   net sales,     (2)   assets or net assets, or     (3)   invested
capital;

  (c)   management of:

  (1)   working capital,     (2)   expenses, or     (3)   cash flow;

  (d)   meeting specific targets for or growth in:

  (1)   productivity,     (2)   specified product lines,     (3)   market share,
    (4)   product development,     (5)   customer service or satisfaction,    
(6)   employee satisfaction,     (7)   strategic innovation, or

 

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  (8)   acquisitions;

  (e)   specific personal performance improvement objectives relative to:

  (1)   formal education,     (2)   executive training,     (3)   leadership
training, or     (4)   succession planning.

(f)     any other criteria established by the Committee (but only if such other
criteria are approved by the stockholders).
     The material terms of the 162(m) Award shall be disclosed and approved by
stockholders prior to payment, in conformity with the requirements under Section
162(m) of the Code. Notwithstanding anything to the contrary contained herein,
no Participant may be granted more than 200,000 shares (subject to adjustment as
provided in Section 15 hereof) in any calendar year pursuant to a 162(m) Award
made under the Plan. Any 162(m) Award that fails to meet the requirements under
this Section 6 or the requirements under Section 162(m) and its regulations
shall not be nullified or voided. Instead, payment of such a 162(m) Award shall
be delayed until the applicable remuneration is deductible or upon the specified
employee’s termination of employment, whichever occurs first.
     7. Terms and Conditions of Non-Qualified Stock Option Awards.
     Subject to the terms of the Plan, the Committee, in its discretion, may
award an NSO to any Participant. Each NSO shall be evidenced by an agreement, in
such form as is approved by the Committee, and except as otherwise provided by
the Committee in such agreement, each NSO shall be subject to the following
express terms and conditions, and to such other terms and conditions, not
inconsistent with the Plan, as the Committee may deem appropriate:
          7.01 Option Period. Each NSO will expire as of the earliest of:

  (a)   the date on which it is forfeited under the provisions of Sections 13.01
and 13.03;     (b)   10 years from the Award Date;     (c)   in the case of a
Participant who is an employee of the Company or a Subsidiary, three months
after the Participant’s termination of employment with the Company and its
Subsidiaries and Affiliates for any reason other than for Cause or death or
total and permanent disability;     (d)   in the case of a Participant who is a
member of the board of directors of the Company or a Subsidiary or Affiliate,
but not an employee of the Company, a Subsidiary or an Affiliate, three months
after the Participant’s termination as a member of the board for any reason
other than for Cause or death or total and permanent disability;     (e)  
immediately upon the Participant’s termination of employment with the Company
and its Subsidiaries and Affiliates or service on a board of directors of the
Company or a Subsidiary or Affiliate for Cause;     (f)   12 months after the
Participant’s death or total and permanent disability; or     (g)   any other
date specified by the Committee when the NSO is granted.

The periods set forth above shall be tolled during any period for which
employees of the Company are prohibited by the Company from engaging in
transactions in the Company’s securities.
          7.02 Option Price. At the time granted, the Committee shall determine
the Option Price of any NSO, and in the absence of such determination, the
Option Price shall be 100% of the Fair Market Value of the Common Stock subject
to the NSO on the Award Date.

 

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          7.03 Vesting. Unless otherwise determined by the Committee and set
forth in the agreement evidencing an Award, NSO Awards shall vest in accordance
with Sections 13.01 and 13.03.
          7.04 Other Option Provisions. The form of NSO authorized by the Plan
may contain such other provisions as the Committee may from time to time
determine.
     8. Terms and Conditions of Incentive Stock Option Awards.
     Subject to the terms of the Plan, the Committee, in its discretion, may
award an ISO to any employee of the Company or a Subsidiary. Each ISO shall be
evidenced by an agreement, in such form as is approved by the Committee, and
except as otherwise provided by the Committee, each ISO shall be subject to the
following express terms and conditions and to such other terms and conditions,
not inconsistent with the Plan, as the Committee may deem appropriate:
          8.01 Option Period. Each ISO will expire as of the earliest of:

  (a)   the date on which it is forfeited under the provisions of Section 13.01
and 13.03;     (b)   10 years from the Award Date, except as set forth in
Section 8.02 below;     (c)   immediately upon the Participant’s termination of
employment with the Company and its Subsidiaries for Cause;     (d)   three
months after the Participant’s termination of employment with the Company and
its Subsidiaries for any reason other than for Cause or death or total and
permanent disability;     (e)   12 months after the Participant’s death or total
and permanent disability; or     (f)   any other date (within the limits of the
Code) specified by the Committee when the ISO is granted.

The periods set forth above shall be tolled during any period for which
employees of the Company are prohibited by the Company from engaging in
transactions in the Company’s securities. Notwithstanding the foregoing
provisions granting discretion to the Committee to determine the terms and
conditions of ISOs, such terms and conditions shall meet the requirements set
forth in Section 422 of the Code or any successor thereto.
     8.02 Option Price and Expiration. The Option Price of any ISO shall be
determined by the Committee at the time an ISO is granted, and shall be no less
than 100% of the Fair Market Value of the Common Stock subject to the ISO on the
Award Date; provided, however, that if an ISO is granted to a Participant who,
immediately before the grant of the ISO, beneficially owns stock representing
more than 10% of the total combined voting power of all classes of stock of the
Company or its parent or subsidiary corporations, the Option Price shall be at
least 110% of the Fair Market Value of the Common Stock subject to the ISO on
the Award Date and in such cases, the exercise period specified in the Option
agreement shall not exceed five years from the Award Date.
     8.03 Vesting. Unless otherwise determined by the Committee and set forth in
the agreement evidencing an Award, ISO Awards shall vest in accordance with
Sections 13.01 and 13.03.
     8.04 Other Option Provisions. The form of ISO authorized by the Plan may
contain such other provisions as the Committee may, from time to time,
determine; provided, however, that such other provisions may not be inconsistent
with any requirements imposed on incentive stock options under Code Section 422
and the regulations thereunder.
     8.05 $100,000 Limitation. To the extent required by Code Section 422, if
the aggregate Fair Market Value (determined as of the time of grant) of Common
Stock with respect to which ISOs are exercisable for the first time by a
Participant during any calendar year (under this Plan and all other plans of the
Company and its Subsidiaries) exceeds $100,000, the Options or portions thereof
which exceed such limit (according to the order in which they were granted)
shall be treated as NSOs.
     9. Terms and Conditions of Restricted Stock or Restricted Stock Unit
Awards.

 

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     Subject to the terms of the Plan, the Committee, in its discretion, may
award Restricted Stock or Restricted Stock Units to any Participant. Each Award
of Restricted Stock or Restricted Stock Units shall be evidenced by an
agreement, in such form as is approved by the Committee, and all shares of
Common Stock awarded to Participants under the Plan as Restricted Stock and all
Restricted Stock Units shall be subject to the following express terms and
conditions and to such other terms and conditions, not inconsistent with the
Plan, as the Committee shall deem appropriate:

  (a)   Restricted Period. Except as permitted by Section 16 hereof, shares of
Restricted Stock awarded under this Section 9 may not be sold, assigned,
transferred, pledged or otherwise encumbered before they vest, and Restricted
Stock Units may not be sold, assigned, transferred, pledged, or otherwise
encumbered at any time.     (b)   Vesting. Unless otherwise determined by the
Committee and set forth in the agreement evidencing an Award, Awards of
Restricted Stock and Restricted Stock Units under this Section 9 shall vest in
accordance with Sections 13.02 and 13.03.     (c)   Certificate Legend for
Restricted Stock Awards. Each certificate issued in respect of shares of
Restricted Stock awarded under this Section 9 shall be registered in the name of
the Participant and shall bear the following (or a similar) legend until such
shares have vested:

“The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture) relating
to Restricted Stock contained in Section 9 of the Methode Electronics, Inc. 2007
Stock Plan and an Agreement entered into between the registered owner and
Methode Electronics, Inc. Copies of such Plan and Agreement are on file at the
principal office of Methode Electronics, Inc.”

  (d)   Restricted Stock Units. In the case of an Award of Restricted Stock
Units, no shares of Common Stock or other property shall be issued at the time
such Award is granted. Upon the lapse or waiver of restrictions and the
restricted period relating to Restricted Stock Units (or at such other later
time as may be determined by the Committee), shares of Common Stock shall be
issued to the holder of the Restricted Stock Units and evidenced in such manner
as the Committee may deem appropriate.

     10. Terms and Conditions of Stock Appreciation Right Awards.
     The Committee may, in its discretion, grant an SAR to any Participant under
the Plan. Each SAR shall be evidenced by an agreement between the Company and
the Participant, and may relate to and be associated with all or any part of a
specific ISO or NSO. An SAR shall entitle the Participant to whom it is granted
the right, so long as such SAR is exercisable and subject to such limitations as
the Committee shall have imposed, to surrender any then exercisable portion of
his SAR and, if applicable, the related ISO or NSO, in whole or in part, and
receive from the Company in exchange, without any payment of cash (except for
applicable employee withholding taxes), that number of shares of Common Stock
having an aggregate Fair Market Value on the date of surrender equal to the
product of (i) the excess of the Fair Market Value of a share of Common Stock on
the date of surrender over the Fair Market Value of the Common Stock on the date
the SARs were issued, or, if the SARs are related to an ISO or an NSO, the per
share Option Price under such ISO or NSO on the Award Date, and (ii) the number
of shares of Common Stock subject to such SAR, and, if applicable, the related
ISO or NSO or portion thereof which is surrendered.
     Except as otherwise determined by the Committee and set forth in the
Agreement, an SAR granted in conjunction with an ISO or NSO shall terminate on
the same date as the related ISO or NSO and shall be exercisable only if the
Fair Market Value of a share of Common Stock exceeds the Option Price for the
related ISO or NSO, and then shall be exercisable to the extent, and only to the
extent, that the related ISO or NSO is exercisable. The Committee may at the
time of granting any SAR add such additional conditions and limitations to the
SAR as it shall deem advisable, including, but not limited to, limitations on
the period or periods within which the SAR shall be exercisable and the maximum
amount of appreciation to be recognized with regard to such SAR. Any ISO or NSO
or portion thereof which is surrendered with an SAR shall no longer be
exercisable. An SAR that is not granted in conjunction with an ISO or NSO shall
terminate on such date as is specified by the Committee in the SAR

 

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agreement and shall vest in accordance with Section 13.02 and 13.03. The
Committee, in its sole discretion, may allow the Company to settle all or part
of the Company’s obligation arising out of the exercise of an SAR by the payment
of cash equal to the aggregate Fair Market Value of the shares of Common Stock
which the Company would otherwise be obligated to deliver, less the withholding
required under Section 18 hereof.
     11. Terms and Conditions of Performance Share Unit Awards.
     Subject to the terms of the Plan, the Committee, in its discretion, may
award Performance Share Units to any Participant. Each Award of Performance
Share Units shall be evidenced by an agreement, in such form as is approved by
the Committee, and all shares of Common Stock awarded to Participants under the
Plan as Performance Share Units shall be subject to the following express terms
and conditions and to such other terms and conditions, not inconsistent with the
Plan, as the Committee shall deem appropriate:

  (a)   In the case of an Award of Performance Share Units, no shares of Common
Stock or other property shall be issued at the time such Award is granted. Upon
the achievement of specified performance goals, which goals may include (but are
not required to include) the criteria outlined in Section 6 above, shares of
Common Stock shall be issued to the holder of the Performance Share Units and
evidenced in such manner as the Committee may deem appropriate.     (b)   The
Committee may elect in its sole discretion, without further approval of the
stockholders, to pay to the grantee of any Performance Share Unit Award, in lieu
of delivering all or any part of the Common Stock that would be otherwise
delivered to the Participant, a cash amount equal to the aggregate Fair Market
Value of such Common Stock that would otherwise be delivered, less all amounts
as may be required by law to be withheld in the manner contemplated by
Section 18 hereof.

     12. Manner of Exercise of Options.
     To exercise an Option in whole or in part, a Participant (or, after his
death, his executor or administrator) must give written notice to the Committee
on a form acceptable to the Committee, stating the number of shares with respect
to which he intends to exercise the Option. The Company will issue the shares
with respect to which the Option is exercised upon payment in full of the Option
Price. The Committee may permit the Option Price to be paid in cash or shares of
Common Stock held by the Participant having an aggregate Fair Market Value, as
determined on the date of delivery, equal to the Option Price. The Committee may
also permit the Option Price to be paid by any other method permitted by law,
including by delivery to the Committee from the Participant of an election
directing the Company to withhold the number of shares of Common Stock from the
Common Stock otherwise due upon exercise of the Option having an aggregate Fair
Market Value on that date equal to the Option Price. If a Participant pays the
Option Price with shares of Common Stock which were received by the Participant
upon exercise of an ISO, and such Common Stock has not been held by the
Participant for at least the greater of:

  (a)   two years from the date the ISO was granted; or     (b)   one year after
the transfer of the shares of Common Stock to the Participant;

the use of the shares shall constitute a disqualifying disposition and the ISO
underlying the shares used to pay the Option Price shall no longer satisfy all
of the requirements of Code Section 422.

 

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13. Vesting.
     13.01 Options. A Participant may not exercise an Option until it has become
vested. The portion of an Award of Options that is vested depends upon the
period that has elapsed since the Award Date.
The following schedule applies to any Award of Options under this Plan unless
the Committee establishes a different vesting schedule on the Award Date as set
forth in the Agreement evidencing the Award:

          Number of Months   Vested Since Award Date   Percentage
fewer than 12 months
    0 %
at least 12 months, but less than 24 months
    331/3 %
at least 24 months, but less than 36 months
    662/3 %
36 months or more
    100 %

     Notwithstanding the above schedule, except as provided below and unless
otherwise determined by the Committee and set forth in the agreement evidencing
an Award, a Participant’s Awards shall become fully vested if a Participant’s
employment with the Company and its Subsidiaries and Affiliates is terminated
due to: (i) retirement on or after his sixty-fifth birthday; (ii) retirement on
or after his fifty-fifth birthday with consent of the Company; (iii) retirement
at any age on account of total and permanent disability as determined by the
Company; or (iv) death. Notwithstanding the foregoing, an Award to a member of
the Board of Directors who is not an employee of the Company or its Subsidiaries
shall become fully vested if the Participant ceases to be a member of the Board
for any reason, other than removal from office by shareholders of the Company
for Cause at a special meeting of the shareholders called for that purpose.
Vesting of an Award subject to performance criteria shall be made on a pro rata
basis, based on performance to date and on the total number of days during the
performance period before the termination in relation to the entire performance
period. Unless the Committee otherwise provides in the applicable agreement
evidencing an Award or the preceding sentence of this Section or Section 13.03
applies, if a Participant’s employment with or service to the Company, a
Subsidiary or an Affiliate terminates for any other reason, any Awards that are
not yet vested are immediately and automatically forfeited; provided, however,
in such special circumstances as the Committee deems appropriate, the Committee
may take such action as it deems equitable in the circumstances or in the best
interests of the Company, including, without limitation, fully vesting an Award
or waiving or modifying any other limitation or requirement under the Award.
     A Participant’s employment shall not be considered to be terminated
hereunder by reason of a transfer of his employment from the Company to a
Subsidiary or Affiliate, or vice versa, or a leave of absence approved by the
Participant’s employer. A Participant’s employment shall be considered to be
terminated hereunder if, as a result of a sale or other transaction, the
Participant’s employer ceases to be a Subsidiary or Affiliate (and the
Participant’s employer is or becomes an entity that is separate from the Company
and its Subsidiaries and Affiliates).
     13.02 Restricted Stock, Restricted Stock Units and SARs. The Committee
shall establish the vesting schedule to apply to any Award of Restricted Stock,
Restricted Stock Units or SARs that is not associated with an ISO or NSO granted
under the Plan to a Participant, and in the absence of such a vesting schedule
set forth in the Agreement evidencing the Award, such Award shall vest in
accordance with Section 13.01.
     13.03 Effect of “Change of Control”. Notwithstanding Sections 13.01 and
13.02 above, except as provided below and unless otherwise determined by the
Committee and set forth in the agreement evidencing an Award, immediately
following a Change of Control, any Award issued to the Participant shall be
fully vested and payment of all Awards shall be accelerated. Payment of an Award
subject to performance criteria shall be made on a pro rata basis, based on
performance to date and on the total number of days during the performance
period before the Change of Control in relation to the entire performance
period.
     14. Deferrals.
     A Participant may elect to defer receipt of all or a portion of a
Restricted Stock Unit, Stock Appreciation Right, or Performance Share Unit
Award, subject to the rules listed below:

 

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  (a)   a deferral may be made for any amount of time, if the election is
received by the Committee no later than the calendar year prior to the date of
the grant of the applicable Award;     (b)   a deferral may be made no later
than twelve months before the portion of the Award vests, but payment must be
deferred for at least five years from the original payment date;     (c)   a
Participant who first becomes eligible to participate in the Plan (or any other
plan subject to the aggregation rules under Section 409A of the Code) may make a
deferral for any amount of time, but such deferral must be made within the first
30 days in which the Participant becomes eligible to participate and the
deferral may only apply to compensation earned after the election is made;    
(d)   a deferral may be made for any amount of time, but

  (1)   such election must be made within 30 days of the grant;     (2)   such
election may only apply with respect to the portion of the Award whose vesting
is contingent on the Participant performing services for at least an additional
twelve months from the date of election; and     (3)   such election may not be
not effective until 12 months from the date it is made; or

  (e)   a deferral may be made for any amount of time up until six months before
the Award vests if the Award is for performance-based compensation (as
determined under Section 409A of the Code) measured over a period of at least
twelve (12) months and either

  (1)   the amount of the compensation cannot be reasonably ascertained at the
time of the election, or     (2)   the performance requirement is still not
substantially certain to be met at the time of the election.

Notwithstanding any other provision of this Plan, a deferred Award shall be
accelerated and paid out upon a Participant’s separation from service or death,
except that a Participant who is a “specified employee” under Section 409A of
the Code shall have the payment of his deferred Award delayed for an additional
six months after his separation from service to the extent required to comply
with Section 409A of the Code.
     15. Adjustments to Reflect Changes in Capital Structure.
     15.01 Adjustments. If there is any change in the corporate structure or
shares of the Company, the Committee will make any appropriate adjustments,
including, but not limited to, such adjustments deemed necessary to prevent
accretion, or to protect against dilution, in the number and kind of shares of
Common Stock with respect to which Awards may be granted under this Plan
(including the maximum number of shares of Common Stock with respect to which
Awards may be granted under this Plan in the aggregate and individually to any
Participant during any calendar year as specified in Section 3) and, with
respect to outstanding Awards, in the number and kind of shares covered thereby
and in the applicable Option Price. For the purposes of this Section 15, a
change in the corporate structure or shares of the Company includes, without
limitation, any change resulting from a recapitalization, stock split, stock
dividend, consolidation, rights offering, separation, reorganization, or
liquidation (including a partial liquidation) and any transaction in which
shares of Common Stock are changed into or exchanged for a different number or
kind of shares of stock or other securities of the Company or another
corporation.
     15.02 Cashouts. In the event of an extraordinary dividend or other
distribution, merger, reorganization, consolidation, combination, sale of
assets, split up, exchange, or spin off, or other extraordinary corporate
transaction, the Committee may, in such manner and to such extent (if any) as it
deems appropriate and equitable, make provision for a cash payment or for the
substitution or exchange of any or all outstanding Awards for the cash,
securities or property deliverable to the holder of any or all outstanding
Awards based upon the distribution or consideration payable to holders of Common
Stock upon or in respect of such event; provided,

 

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however, in each case, that with respect to any ISO no such adjustment may be
made that would cause the Plan to violate Section 422 of the Code (or any
successor provision).
     16. Nontransferability of Awards.
     16.01 ISOs. ISOs are not transferable, voluntarily or involuntarily, other
than by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code. During a
Participant’s lifetime, his ISOs may be exercised only by him.
     16.02 Awards Other Than ISOs. All Awards granted pursuant to this Plan
other than ISOs are transferable by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code, or in the Committee’s discretion after vesting. With the approval of
the Committee, a Participant may transfer an Award (other than an ISO) for no
consideration to or for the benefit of one or more Family Members of the
Participant subject to such limits as the Committee may establish, and the
transferee shall remain subject to all the terms and conditions applicable to
the Award prior to such transfer. The transfer of an Award pursuant to this
Section 16 shall include a transfer of the right set forth in Section 20 hereof
to consent to an amendment or revision of the Plan and, in the discretion of the
Committee, shall also include transfer of ancillary rights associated with the
Award. The provisions of this Section 16 shall not apply to any Common Stock
issued pursuant to an Award for which all restrictions have lapsed and is fully
vested.
     17. Rights as Stockholder.
     No Common Stock may be delivered upon the exercise of any Option until full
payment has been made. A Participant has no rights whatsoever as a stockholder
with respect to any shares covered by an Award until the date of the issuance of
a stock certificate for the shares except as otherwise determined by the
Committee and set forth in the Agreement.
     18. Withholding Taxes.
     The Committee may, in its discretion and subject to such rules as it may
adopt, permit or require a Participant to pay all or a portion of the federal,
state and local taxes, including FICA and Medicare withholding tax, arising in
connection with any Awards by (i) having the Company withhold shares of Common
Stock at the minimum rate legally required, (ii) tendering back shares of Common
Stock received in connection with such Award or (iii) delivering other
previously acquired shares of Common Stock having a Fair Market Value
approximately equal to the amount to be withheld.
     19. No Right to Employment.
     Participation in the Plan will not give any Participant a right to be
retained as an employee or director of the Company, its Subsidiaries, or an
Affiliate, or any right or claim to any benefit under the Plan, unless the right
or claim has specifically accrued under the Plan.
     20. Amendment of the Plan.
     The Board of Directors may from time to time amend or revise the terms of
this Plan in whole or in part, subject to the following limitations:

  (a)   No amendment may, in the absence of written consent to the change by the
affected Participant (or, if the Participant is not then living, the affected
beneficiary), adversely affect the rights of any Participant or beneficiary
under any Award granted under the Plan prior to the date such amendment is
adopted by the Board; provided, however, no such consent shall be required if
the Committee determines in its sole and absolute discretion that the amendment
or revision (i) is required or advisable in order for the Company, the Plan or
the Award to satisfy applicable law, to meet the requirements of any accounting
standard or to avoid any adverse accounting treatment, or (ii) in connection
with any transaction or event described in Section 15, is in the best interests
of the Company or its stockholders. The Committee may, but need not, take the
tax consequences to affected Participants into consideration in acting under the
preceding sentence.

 

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  (b)   no amendment may increase the limitations on the number of shares set
forth in Section 3, unless any such amendment is approved by the Company’s
stockholders; and     (c)   no amendment may be made to the provisions of
Section 4(c) relating to repricing unless such amendment is approved by the
Company’s stockholders;

provided; however, that adjustments pursuant to Section 15.01 shall not be
subject to the foregoing limitations of this Section 20.
     21. Conditions Upon Issuance of Shares.
     An Option shall not be exercisable and a share of Common Stock shall not be
issued pursuant to the exercise of an Option, and Restricted Stock, Restricted
Stock Units, and Performance Share Units shall not be awarded until and unless
the Award of Restricted Stock, Restricted Stock Units or Performance Share
Units, exercise of such Option and the issuance and delivery of such share
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations promulgated thereunder, and the requirements of any
stock exchange or national securities association upon which the shares of
Common Stock may then be listed or quoted, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
     22. Dividends.
     Unless otherwise specified in the agreement evidencing an Award, all
Restricted Stock and Restricted Stock Unit Awards shall be entitled to
dividends, even if not vested or the restrictions applicable thereto have not
yet lapsed. For all other Awards (except if specified otherwise in the agreement
evidencing the Award), no dividends shall be paid unless and until Common Stock
is issued under the Award, the Award is fully vested, and all restrictions upon
the Award have lapsed or been waived. If this Section 22 or the agreement
evidencing an Award allows for the payment of dividends, all noncash dividends
and distributions shall be subject to the same vesting and other restrictions
applicable to the underlying Award.
     23. Substitution or Assumption of Awards by the Company.
     The Company, from time to time, also may substitute or assume outstanding
awards granted by another company, whether in connection with an acquisition of
such other company or otherwise, by either (a) granting an Award under the Plan
in substitution of such other company’s award, or (b) assuming such award as if
it had been granted under the Plan if the terms of such assumed award could be
applied to an Award granted under the Plan. Such substitution or assumption
shall be permissible if the holder of the substituted or assumed award would
have been eligible to be granted an Award under the Plan if the other company
had applied the rules of the Plan to such grant. In the event the Company
assumes an award granted by another company, the terms and conditions of such
award shall remain unchanged (except that the exercise price and the number and
nature of shares issuable upon exercise of any such option will be adjusted
appropriately pursuant to Section 424(a) of the Code). In the event the Company
elects to grant a new Award rather than assuming an existing option, such new
Award may be granted with a similarly adjusted exercise price.
     24. Effective Date and Termination of Plan.
          24.01 Effective Date. This Plan is effective as of the date of its
approval by the stockholders of the Company. Awards may be made under this Plan
prior to stockholder approval, but such Awards shall be conditioned on the
approval of this Plan by stockholders of the Company.
          24.02 Termination of the Plan. The Plan will terminate 10 years after
the date it is approved by the Board of Directors; provided, however, that the
Board of Directors may terminate the Plan at any time prior thereto with respect
to any shares that are not then subject to Awards. Termination of the Plan will
not affect the rights and obligations of any Participant with respect to Awards
granted before termination.