Exhibit 10.1

VERU INC.

2018 EQUITY INCENTIVE PLAN

(as amended and restated effective March 26, 2019)

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VERU INC.

2018 EQUITY INCENTIVE PLAN

 

1.  

Purpose

     1   2.  

Definitions

     1   3.  

Administration

     6   4.  

Shares Subject to Plan

     7   5.  

Eligibility; Per-Participant Limitations

     8   6.  

Specific Terms of Awards

     8   7.  

Certain Provisions Applicable to Awards

     14   8.  

Change of Control

     16   9.  

General Provisions

     19  

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VERU INC.

2018 EQUITY INCENTIVE PLAN

(as amended and restated effective March 26, 2019)

1.    Purpose. The purpose of this VERU INC. 2018 EQUITY INCENTIVE PLAN (the
“Plan”) is to assist Veru Inc. (the “Company”) and its Related Entities (as
hereinafter defined) in attracting, motivating, retaining and rewarding
high-quality executives and other employees, officers, directors, consultants
and other persons who provide services to the Company or its Related Entities by
enabling such persons to acquire or increase a proprietary interest in the
Company in order to strengthen the mutuality of interests between such persons
and the Company’s stockholders, and providing such persons with performance
incentives to expend their maximum efforts in the creation of stockholder value.

2.    Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof and elsewhere herein.

(a)    “Award” means any Option, Stock Appreciation Right, Restricted Stock
Award, Restricted Stock Unit Award, Share granted as a bonus or in lieu of
another Award, Dividend Equivalent, Other Stock-Based Award or Performance
Award, together with any other right or interest relating to Shares or other
property (including cash), granted to a Participant under the Plan.

(b)    “Award Agreement” means any written agreement, contract or other
instrument or document evidencing any Award granted by the Committee hereunder.

(c)    “Beneficiary” means the person, persons, trust or trusts that have been
designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under the
Plan upon such Participant’s death or to which Awards or other rights are
transferred if and to the extent permitted under Section 9(b) hereof. If, upon a
Participant’s death, there is no designated Beneficiary or surviving designated
Beneficiary, then the term Beneficiary means the person, persons, trust or
trusts entitled by will or the laws of descent and distribution to receive such
benefits.

(d)    “Beneficial Owner” and “Beneficial Ownership” shall have the meaning
ascribed to such term in Rule 13d-3 under the Exchange Act and any successor to
such Rule.

(e)    “Board” means the Company’s Board of Directors.

(f)    “Cause” shall, with respect to any Participant, have the meaning
specified in the Award Agreement. In the absence of any definition in the Award
Agreement, “Cause” shall have the equivalent meaning or the same meaning as
“cause” or “for cause” set forth in any employment, consulting, or other
agreement for the performance of services between the Participant and the
Company or a Related Entity or, in the absence of any such agreement or any such
definition in such agreement, such term shall mean (i) the failure by the
Participant to perform, in a reasonable manner, his or her duties as assigned by
the Company or a Related Entity, (ii) any violation or breach by the Participant
of his or her employment, consulting or other similar agreement with the Company
or a Related Entity, if any, (iii) any violation or breach by the Participant of
any non-competition, non-solicitation, non-disclosure and/or other

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similar agreement with the Company or a Related Entity, (iv) any act by the
Participant of dishonesty or bad faith with respect to the Company or a Related
Entity, (v) use of alcohol, drugs or other similar substances in a manner that
adversely affects the Participant’s work performance, or (vi) the commission by
the Participant of any act, misdemeanor or crime reflecting unfavorably upon the
Participant or the Company or any Related Entity. The good faith determination
by the Committee of whether the Participant’s Continuous Service was terminated
by the Company for “Cause” shall be final and binding for all purposes
hereunder.

(g)    “Change of Control” means a Change of Control as defined in Section 8(b)
of the Plan.

(h)    “Code” means the Internal Revenue Code of 1986, as amended from time to
time, including regulations thereunder and successor provisions and regulations
thereto.

(i)    “Committee” means a committee designated by the Board to administer the
Plan; provided, however, that if the Board fails to designate a committee or if
there are no longer any members on the committee so designated by the Board, or
for any other reason determined by the Board, then the Board shall serve as the
Committee. The Committee shall consist of at least two directors, each of whom
shall be (i) a “non-employee director” within the meaning of Rule 16b-3 (or any
successor rule) under the Exchange Act, unless administration of the Plan by
“non-employee directors” is not then required in order for exemptions under
Rule l6b-3 to apply to transactions under the Plan and (ii) “Independent.”

(j)    “Consultant” means any consultant or advisor who is a natural person and
who provides services to the Company or any Subsidiary, so long as such person
(i) renders bona fide services that are not in connection with the offer and
sale of the Company’s securities in a capital-raising transaction, (ii) does not
directly or indirectly promote or maintain a market for the Company’s securities
and (iii) otherwise qualifies as a de facto employee or consultant under the
applicable rules of the Securities and Exchange Commission for registration of
shares of stock on a Form S-8 registration statement.

(k)    “Continuous Service” means the uninterrupted provision of services to the
Company or any Related Entity in any capacity of Employee, Director, Consultant
or other service provider. Continuous Service shall not be considered to be
interrupted in the case of (i) any approved leave of absence, (ii) transfers
among the Company, any Related Entities or any successor entities, in any
capacity of Employee, Director, Consultant or other service provider, or
(iii) any change in status as long as the individual remains in the service of
the Company or a Related Entity in any capacity of Employee, Director,
Consultant or other service provider (except as otherwise provided in the Award
Agreement). An approved leave of absence shall include sick leave, military
leave or any other authorized personal leave.

(l)    “Director” means a member of the Board or the board of directors of any
Related Entity.

(m)    “Disability” means a permanent and total disability, (within the meaning
of Section 22(e) of the Code), as determined by a medical doctor satisfactory to
the Committee.

 

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(n)    “Dividend Equivalent” means a right, granted to a Participant under
Section 6(g) hereof, to receive cash, Shares, other Awards or other property
equal in value to dividends paid with respect to a specified number of Shares.

(o)    “Effective Date” means the effective date of the Plan, which shall be
March 20, 2018.

(p)    “Eligible Person” means each officer, Director, Employee, Consultant and
other person who provides services to the Company or any Related Entity. The
foregoing notwithstanding, only Employees of the Company, or any parent
corporation or subsidiary corporation of the Company (as those terms are defined
in Sections 424(e) and (f) of the Code, respectively), shall be Eligible Persons
for purposes of receiving any Incentive Stock Options. An Employee on leave of
absence may, in the discretion of the Committee, be considered as still in the
employ of the Company or a Related Entity for purposes of eligibility for
participation in the Plan.

(q)    “Employee” means any person, including an officer or Director, who is an
employee of the Company or any Subsidiary, or is a prospective employee of the
Company or any Subsidiary (conditioned upon, and effective not earlier than,
such person becoming an employee of the Company or any Subsidiary). The payment
of a director’s fee by the Company or a Subsidiary shall not be sufficient to
constitute “employment” by the Company.

(r)    “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, including rules thereunder and successor provisions and rules
thereto.

(s)    “Fair Market Value” means, as of any date, the value of a Share
determined as follows:

(i)    if a Share is listed on any national securities exchange, including,
without limitation, the NASDAQ Stock Market, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange for the day of determination, as reported
in The Wall Street Journal or such other source as the Committee deems reliable;

(ii)    if a Share is regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a Share shall be the
mean between the high bid and low asked prices for such Share for the day of
determination, as reported in The Wall Street Journal or such other source as
the Committee deems reliable; or

(iii)    in the absence of an established market for a Share, the Fair Market
Value shall be determined in good faith by the Committee.

(t)    “Incentive Stock Option” means any Option intended to be designated as an
incentive stock option within the meaning of Section 422 of the Code or any
successor provision thereto.

(u)    “Independent”, when referring to either the Board or members of the
Committee, shall have the same meaning as used in the rules of the Listing
Market.

 

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(v)    “Incumbent Board” means the Incumbent Board as defined in
Section 8(b)(ii) hereof.

(w)    “Listing Market” means the national securities exchange on which any
securities of the Company are listed for trading, and if not listed for trading,
by the rules of the Nasdaq Stock Market.

(x)    “Option” means a right granted to a Participant under Section 6(b)
hereof, to purchase Shares or other Awards at a specified price during specified
time periods.

(y)    “Optionee” means a person to whom an Option is granted under this Plan or
any person who succeeds to the rights of such person under this Plan.

(z)    “Other Stock-Based Awards” means Awards granted to a Participant under
Section 6(i) hereof.

(aa)    “Participant” means a person who has been granted an Award under the
Plan which remains outstanding, including a person who is no longer an Eligible
Person.

(bb)    “Performance Award” means any Award of Performance Shares or Performance
Units granted pursuant to Section 6(h) hereof.

(cc)    “Performance Period” means that period established by the Committee at
the time any Award is granted or at any time thereafter during which any
performance goals specified by the Committee with respect to such Award are to
be measured.

(dd)    “Performance Share” means any grant pursuant to Section 6(h) hereof of a
unit valued by reference to a designated number of Shares, which value may be
paid to the Participant by delivery of such property as the Committee shall
determine, including cash, Shares, other property or any combination thereof,
upon achievement of such performance goals during the Performance Period as the
Committee shall establish at the time of such grant or thereafter.

(ee)    “Performance Unit” means any grant pursuant to Section 6(h) hereof of a
unit valued by reference to a designated amount of property (including cash)
other than Shares, which value may be paid to the Participant by delivery of
such property as the Committee shall determine, including cash, Shares, other
property or any combination thereof, upon achievement of such performance goals
during the Performance Period as the Committee shall establish at the time of
such grant or thereafter.

(ff)    “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, and shall
include a “group” as defined in Section 13(d) thereof.

(gg)    “Related Entity” means any Subsidiary, and any business, corporation,
partnership, limited liability company or other entity designated by the Board,
in which the Company or a Subsidiary holds a substantial ownership interest,
directly or indirectly.

 

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(hh)    “Restricted Stock” means any Share issued with such risks of forfeiture
and other restrictions as the Committee, in its sole discretion, may impose
(including any restriction on the right to vote such Share and the right to
receive any dividends), which restrictions may lapse separately or in
combination at such time or times, in installments or otherwise, as the
Committee may deem appropriate.

(ii)    “Restricted Stock Award” means an Award granted to a Participant under
Section 6(d) hereof.

(jj)    “Restricted Stock Unit” means a right to receive Shares, including
Restricted Stock, cash measured based upon the value of Shares or a combination
thereof, at the end of a specified deferral period.

(kk)    “Restricted Stock Unit Award” means an Award of Restricted Stock Unit
granted to a Participant under Section 6(e) hereof.

(ll)    “Restriction Period” means the period of time specified by the Committee
that Restricted Stock Awards shall be subject to such restrictions on
transferability, risk of forfeiture and other restrictions, if any, as the
Committee may impose.

(mm)    “Rule 16b-3” means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.

(nn)    “Shares” means the shares of common stock of the Company and such other
securities as may be substituted (or resubstituted) for Shares pursuant to
Section 9(c) hereof.

(oo)    “Stock Appreciation Right” means a right granted to a Participant under
Section 6(c) hereof.

(pp)    “Subsidiary” means any corporation or other entity in which the Company
has a direct or indirect ownership interest of 50% or more of the total combined
voting power of the then outstanding securities or interests of such corporation
or other entity entitled to vote generally in the election of directors or in
which the company has the right to receive 50% or more of the distribution of
profits or 50% or more of the assets, as that term is defined in Rule 405 of
under the Securities Act of 1933, controlled by the Company directly, or
indirectly, through one or more intermediaries.

(qq)    “Substitute Awards” means Awards granted or Shares issued by the Company
in assumption of, or in substitution or exchange for, Awards previously granted,
or the right or obligation to make future Awards, by a company (i) acquired by
the Company or any Related Entity; (ii) which becomes a Related Entity after the
date hereof or (iii) with which the Company or any Related Entity combines.

 

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3.    Administration.

(a)    Authority of the Committee. The Plan shall be administered by the
Committee; provided, however, that except as otherwise expressly provided in
this Plan, the Board may exercise any power or authority granted to the
Committee under this Plan and, in that case, references herein shall be deemed
to include references to the Board. The Committee shall have full and final
authority, subject to and consistent with the provisions of the Plan, to select
Eligible Persons to become Participants; grant Awards; determine the type,
number and other terms and conditions of, and all other matters relating to,
Awards; prescribe Award Agreements (which need not be identical for each
Participant) and rules and regulations for the administration of the Plan;
construe and interpret the Plan and Award Agreements and correct defects, supply
omissions or reconcile inconsistencies therein; and to make all other decisions
and determinations as the Committee may deem necessary or advisable for the
administration of the Plan. In exercising any discretion granted to the
Committee under the Plan or pursuant to any Award, the Committee shall not be
required to follow past practices, act in a manner consistent with past
practices, or treat any Eligible Person or Participant in a manner consistent
with the treatment of any other Eligible Persons or Participants. Decisions of
the Committee shall be final, conclusive and binding on all persons or entities,
including the Company, any Subsidiary or any Participant or Beneficiary, or any
transferee under Section 9(b) hereof or any other person or entity claiming
rights from or through any of the foregoing persons or entities.

(b)    Manner of Exercise of Committee Authority.

(i)    The Committee, and not the Board, shall exercise sole and exclusive
discretion on any matter relating to a Participant then subject to Section 16 of
the Exchange Act with respect to the Company to the extent necessary in order
that transactions by such Participant shall be exempt under Rule 16b-3 under the
Exchange Act.

(ii)    Any action of the Committee shall be final, conclusive and binding on
all Persons, including the Company, its Related Entities, Eligible Persons,
Participants, Beneficiaries, transferees under Section 9(b) hereof or other
persons claiming rights from or through a Participant, and stockholders. The
express grant of any specific power to the Committee, and the taking of any
action by the Committee, shall not be construed as limiting any power or
authority of the Committee. The Committee may delegate to members of the Board,
or officers or managers of the Company or any Related Entity, or committee
thereof, the authority subject to such terms and conditions as the Committee
shall determine, to perform such functions, including administrative functions,
as the Committee may determine to the extent that such delegation will not
result in the loss of an exemption under Rule 16b-3(d)(1) of the Exchange Act
for Awards granted to Participants subject to Section 16 of the Exchange Act in
respect of the Company. The Committee may appoint agents to assist it in
administering the Plan.

(c)    Limitation of Liability. The Committee and the Board and each member
thereof shall be entitled to, in good faith, rely or act upon any report or
other information furnished to him or her by any officer or Employee, the
Company’s independent auditors, Consultants or any other agents assisting in the
administration of the Plan. Members of the Committee and the Board, and any
officer or Employee acting at the direction or on behalf of the

 

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Committee or the Board, shall not be personally liable for any action or
determination taken or made in good faith with respect to the Plan, and shall,
to the extent permitted by law, be fully indemnified and protected by the
Company with respect to any such action or determination.

4.    Shares Subject to Plan.

(a)    Limitation on Overall Number of Shares Available for Delivery under the
Plan. Subject to adjustment as provided in Section 9(c) hereof, the total number
of Shares reserved and available for delivery under the Plan shall be 6,000,000.
Any Shares delivered under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares.

(b)    Application of Limitation to Grants of Awards. No Award may be granted if
the number of Shares to be delivered in connection with such an Award exceeds
the number of Shares remaining available for delivery under the Plan, minus the
number of Shares deliverable in settlement of or relating to then outstanding
Awards. The Committee may adopt reasonable counting procedures to ensure
appropriate counting, avoid double counting (as, for example, in the case of
tandem or substitute awards) and make adjustments if the number of Shares
actually delivered differs from the number of Shares previously counted in
connection with an Award.

(c)    Availability of Shares Not Delivered under Awards and Adjustments to
Limits.

(i)    If any Shares subject to an Award, on or after the Effective Date, are
forfeited, expire or otherwise terminate without issuance of such Shares, or any
Award, on or after the Effective Date, is settled for cash, or otherwise does
not result in the issuance of all or a portion of the Shares subject to such
Award, the Shares to which those Awards were subject shall, to the extent of
such forfeiture, expiration, termination, non-issuance or cash settlement, again
be available for delivery with respect to Awards under the Plan, subject to
Section 4(c)(iv) below.

(ii)    Substitute Awards shall not reduce the Shares authorized for delivery
under the Plan or authorized for delivery to a Participant in any period.

(iii)    Any Share that again becomes available for delivery pursuant to this
Section 4(c) shall be added back as one Share.

(iv)    Notwithstanding anything to the contrary contained herein, Shares
subject to an Award under the Plan shall not again be made available for
issuance or delivery under the Plan if such Shares are (A) Shares tendered in
payment of an Option, (B) Shares delivered or withheld by the Company to satisfy
any tax withholding obligation or (C) Shares covered by a stock-settled Stock
Appreciation Right or other Awards that were not issued upon the settlement of
the Award.

(v)    Notwithstanding anything in this Section 4(c) to the contrary, but
subject to adjustment as provided in Section 9(c) hereof, the maximum aggregate
number of Shares that may be delivered under the Plan as a result of the
exercise of the Incentive Stock Options shall be 2,000,000 Shares. In no event
shall any Incentive Stock Options be granted under the Plan after the
tenth anniversary of the date on which the Board adopts the Plan.

 

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5.    Eligibility; Per-Participant Limitations. Awards may be granted under the
Plan only to Eligible Persons. Subject to adjustment as provided in Section 9(c)
of this Plan, in any fiscal year of the Company during any part of which the
Plan is in effect, no Participant may be granted Awards with respect to more
than 400,000 Shares. Subject to adjustment as provided in Section 9(c) of this
Plan, in any fiscal year of the Company during any part of which the Plan is in
effect, any Director who is not an Employee may not be granted Awards with
respect to more than 55,000 Shares.

6.    Specific Terms of Awards.

(a)    General. Awards may be granted on the terms and conditions set forth in
this Section 6. In addition, the Committee may impose on any Award, or the
exercise thereof, at the date of grant or thereafter (subject to Section 9(e)),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine, including terms requiring forfeiture
of Awards in the event of termination of the Participant’s Continuous Service
and terms permitting a Participant to make elections relating to his or her
Award. Except as otherwise expressly provided herein, the Committee shall retain
full power and discretion to accelerate, waive or modify, at any time, any term
or condition of an Award that is not mandatory under the Plan. Except in cases
in which the Committee is authorized to require other forms of consideration
under the Plan, or to the extent other forms of consideration must be paid to
satisfy the requirements of applicable law, no consideration other than services
may be required for the grant (as opposed to the exercise) of any Award.

(b)    Options. The Committee is authorized to grant Options to any Eligible
Person on the following terms and conditions:

(i)    Exercise Price. Other than in connection with Substitute Awards, the
exercise price per Share purchasable under an Option shall be determined by the
Committee, provided that such exercise price shall not be less than 100% of the
Fair Market Value of a Share on the date of grant of the Option and shall not,
in any event, be less than the par value of a Share on the date of grant of the
Option. If an Employee owns or is deemed to own (by reason of the attribution
rules applicable under Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company (or any parent corporation
or subsidiary corporation of the Company, as those terms are defined in
Sections 424(e) and (f) of the Code, respectively) and an Incentive Stock Option
is granted to such Employee, the exercise price of such Incentive Stock Option
(to the extent required by the Code at the time of grant) shall be no less than
110% of the Fair Market Value of a Share on the date such Incentive Stock Option
is granted. The Committee shall not be permitted to (A) lower the exercise price
per Share of an Option after it is granted, (B) cancel an Option when the
exercise price per Share exceeds the Fair Market Value of the underlying Shares
in exchange for cash or another Award (other than in connection with Substitute
Awards), (C) cancel an outstanding Option in exchange for an Option with an
exercise price that is less than the exercise price of the original Options or
(D) take any other action with respect to an Option that may be treated as a
repricing pursuant to the applicable rules of the Listing Market, without
approval of the Company’s stockholders.

 

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(ii)    Time and Method of Exercise. The Committee shall determine the time or
times at which or the circumstances under which an Option may be exercised in
whole or in part (including based on achievement of performance goals and/or
future service requirements), the method by which notice of exercise is to be
given and the form of exercise notice to be used, the time or times at which
Options shall cease to be or become exercisable following termination of
Continuous Service or upon other conditions, the methods by which the exercise
price may be paid or deemed to be paid (including in the discretion of the
Committee a cashless exercise procedure), the form of such payment, including,
without limitation, cash, Shares (including without limitation the withholding
of Shares otherwise deliverable pursuant to the Award), other Awards or awards
granted under other plans of the Company or a Related Entity, or other property
(including notes, or other contractual obligations of Participants to make
payment on a deferred basis provided that such deferred payments are not in
violation of Section 13(k) of the Exchange Act, any rule or regulation adopted
thereunder or any other applicable law), and the methods by or forms in which
Shares will be delivered or deemed to be delivered to Participants.

(iii)    Form of Settlement. The Committee may, in its sole discretion, provide
that the Shares to be issued upon exercise of an Option shall be in the form of
Restricted Stock, or other similar securities.

(iv)    Incentive Stock Options. The terms of any Incentive Stock Option granted
under the Plan shall comply in all respects with the provisions of Section 422
of the Code. Anything in the Plan to the contrary notwithstanding, no term of
the Plan relating to Incentive Stock Options (including any Stock Appreciation
Right issued in tandem therewith) shall be interpreted, amended or altered, nor
shall any discretionary authority granted under the Plan be exercised, so as to
disqualify either the Plan or any Incentive Stock Option under Section 422 of
the Code, unless the Participant has first requested, or consents to, the change
that will result in such disqualification. Thus, if and to the extent required
to comply with Section 422 of the Code, Options granted as Incentive Stock
Options shall be subject to the following special terms and conditions:

(A)    the Option shall not be exercisable for more than ten years after the
date such Incentive Stock Option is granted; provided, however, that if a
Participant owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of the Company (or any parent corporation or subsidiary
corporation of the Company, as those terms are defined in Sections 424(e) and
(f) of the Code, respectively) and the Incentive Stock Option is granted to such
Participant, the term of the Incentive Stock Option shall be (to the extent
required by the Code at the time of the grant) for no more than five years from
the date of grant;

(B)    the aggregate Fair Market Value (determined as of the date the Incentive
Stock Option is granted) of the Shares with respect to which Incentive Stock
Options granted under the Plan and all other option plans of the Company (and
any parent corporation or subsidiary corporation of the Company, as those terms
are defined in Sections 424(e) and (f) of the Code, respectively) that become
exercisable for the first time by the Participant during any calendar year shall
not (to the extent required by the Code at the time of the grant) exceed
$100,000; and

 

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(C)    if Shares acquired by exercise of an Incentive Stock Option are disposed
of within two years following the date the Incentive Stock Option is granted or
one year following the transfer of such Shares to the Participant upon exercise,
the Participant shall, promptly following such disposition, notify the Company
in writing of the date and terms of such disposition and provide such other
information regarding the disposition as the Committee may reasonably require.

(c)    Stock Appreciation Rights. The Committee may grant Stock Appreciation
Rights to any Eligible Person in conjunction with all or part of any Option
granted under the Plan or at any subsequent time during the term of such Option
(a “Tandem Stock Appreciation Right”), or without regard to any Option (a
“Freestanding Stock Appreciation Right”), in each case upon such terms and
conditions as the Committee may establish in its sole discretion, not
inconsistent with the provisions of the Plan, including the following:

(i)    Right to Payment. A Stock Appreciation Right shall confer on the
Participant to whom it is granted a right to receive, upon exercise thereof, the
excess of (A) the Fair Market Value of one Share on the date of exercise over
(B) the grant price of the Stock Appreciation Right as determined by the
Committee. The grant price of a Stock Appreciation Right shall not be less than
100% of the Fair Market Value of a Share on the date of grant. The Committee
shall not be permitted to (A) lower the grant price per Share of a Stock
Appreciation Right after it is granted, (B) cancel a Stock Appreciation Right
when the grant price per Share exceeds the Fair Market Value of the underlying
Shares in exchange for another Award (other than in connection with Substitute
Awards), (C) cancel an outstanding Stock Appreciation Right in exchange for a
Stock Appreciation Right with a grant price that is less than the grant price of
the original Stock Appreciation Right or (D) take any other action with respect
to a Stock Appreciation Right that may be treated as a repricing pursuant to the
applicable rules of the Listing Market, without stockholder approval.

(ii)    Other Terms. The Committee shall determine the date of grant or
thereafter the time or times at which and the circumstances under which a Stock
Appreciation Right may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements), the time
or times at which Stock Appreciation Rights shall cease to be or become
exercisable following termination of Continuous Service or upon other
conditions, the method of exercise, method of settlement, form of consideration
payable in settlement, method by or forms in which Shares will be delivered or
deemed to be delivered to Participants, whether or not a Stock Appreciation
Right shall be in tandem or in combination with any other Award and any other
terms and conditions of any Stock Appreciation Right.

(iii)    Tandem Stock Appreciation Rights. Any Tandem Stock Appreciation Right
may be granted at the same time as the related Option is granted or, for Options
that are not Incentive Stock Options, at any time thereafter before exercise or
expiration of such Option. Any Tandem Stock Appreciation Right related to an
Option may be exercised only when the related Option would be exercisable and
the Fair Market Value of the Shares subject to the related Option exceeds the
exercise price at which Shares can be acquired pursuant to the Option. In
addition, if a Tandem Stock Appreciation Right exists with respect to less than
the full number of Shares covered by a related Option, then an exercise or
termination of such Option shall not reduce the number of Shares to which the
Tandem Stock Appreciation Right

 

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applies until the number of Shares then exercisable under such Option equals the
number of Shares to which the Tandem Stock Appreciation Right applies. Any
Option related to a Tandem Stock Appreciation Right shall no longer be
exercisable to the extent the Tandem Stock Appreciation Right has been
exercised, and any Tandem Stock Appreciation Right shall no longer be
exercisable to the extent the related Option has been exercised.

(d)    Restricted Stock Awards. The Committee is authorized to grant Restricted
Stock Awards to any Eligible Person on the following terms and conditions:

(i)    Grant and Restrictions. Restricted Stock Awards shall be subject to such
restrictions on transferability, risk of forfeiture and other restrictions, if
any, as the Committee may impose, or as otherwise provided in this Plan during
the Restriction Period. The terms of any Restricted Stock Award granted under
the Plan shall be set forth in a written Award Agreement which shall contain
provisions determined by the Committee and not inconsistent with the Plan. The
restriction may lapse separately or in combination at such times, under such
circumstances (including based on achievement of performance goals and/or future
service requirements), in such installments or otherwise, as the Committee may
determine at the date of grant or thereafter. Except to the extent restricted
under the terms of the Plan and any Award Agreement relating to a Restricted
Stock Award, a Participant granted Restricted Stock shall have all of the rights
of a stockholder, including the right to vote the Restricted Stock and the right
to receive dividends thereon, provided that any dividends with respect to a
Restricted Stock Award shall be withheld by the Company for the account of the
Participant holding such Restricted Stock Award, and interest may be credited on
the amount of the dividends withheld at a rate and subject to such terms as
determined by the Committee. The dividends so withheld by the Company and
attributable to any particular share of Restricted Stock (and earnings thereon,
if applicable) shall be subject to the restrictions and a risk of forfeiture to
the same extent as the share of Restricted Stock, shall be distributed to the
Participant upon the release of restrictions on such share and, if such share is
forfeited, the Participant shall have no right to such dividends. During the
period that the Restricted Stock Award is subject to a risk of forfeiture,
subject to Section 9(b) below and except as otherwise provided in the Award
Agreement, the Restricted Stock may not be sold, transferred, pledged,
hypothecated, margined or otherwise encumbered by the Participant or
Beneficiary.

(ii)    Forfeiture. Except as otherwise determined by the Committee, upon
termination of a Participant’s Continuous Service during the applicable
Restriction Period, the Participant’s Restricted Stock that is at that time
subject to a risk of forfeiture that has not lapsed or otherwise been satisfied
shall be forfeited and reacquired by the Company; provided that the Committee
may provide, by resolution or other action or in any Award Agreement, or may
determine in any individual case, that forfeiture conditions relating to
Restricted Stock Awards shall be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of Restricted Stock.

(iii)    Certificates for Stock. Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee shall determine. If certificates
representing Restricted Stock are registered in the name of the Participant, the
Committee may require that such certificates bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such
Restricted Stock, that the Company retain physical possession of the
certificates and that the Participant deliver a stock power to the Company,
endorsed in blank, relating to the Restricted Stock.

 

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(e)    Restricted Stock Unit Award. The Committee is authorized to grant
Restricted Stock Unit Awards to any Eligible Person on the following terms and
conditions:

(i)    Award and Restrictions. Satisfaction of a Restricted Stock Unit Award
shall occur upon expiration of the deferral period specified for such Restricted
Stock Unit Award by the Committee (or, if permitted by the Committee, as elected
by the participant in a manner that does not violate the requirements of
Section 409A of the Code). In addition, a Restricted Stock Unit Award shall be
subject to such restrictions (which may include a risk of forfeiture) as the
Committee may impose, if any, which restrictions may lapse at the expiration of
the deferral period or at other specified times (including based on achievement
of performance goals and/or future service requirements), separately or in
combination, in installments or otherwise as the Committee may determine. A
Restricted Stock Unit Award may be satisfied by delivery of Shares, cash equal
to the Fair Market Value of the specified number of Shares covered by the
Restricted Stock Units, or a combination thereof, as determined by the Committee
at the date of grant or thereafter. Prior to satisfaction of a Restricted Stock
Unit Award, a Restricted Stock Unit Award carries no voting or dividend or other
rights associated with Share ownership. Prior to satisfaction of a Restricted
Stock Unit Award, except as otherwise provided in an Award Agreement and as
permitted under Section 409A of the Code, a Restricted Stock Unit Award may not
be sold, transferred, pledged, hypothecated, margined or otherwise encumbered by
the Participant or any Beneficiary.

(ii)    Forfeiture. Except as otherwise determined by the Committee, upon
termination of a Participant’s Continuous Service during the applicable deferral
period or portion thereof to which forfeiture conditions apply (as provided in
the Award Agreement evidencing the Restricted Stock Unit Award), the
Participant’s Restricted Stock Unit Award that is at that time subject to a risk
of forfeiture that has not lapsed or otherwise been satisfied shall be
forfeited; provided that the Committee may provide, by resolution or other
action or in any Award Agreement, or may determine in any individual case, that
forfeiture conditions relating to a Restricted Stock Unit Award shall be waived
in whole or in part in the event of terminations resulting from specified
causes, and the Committee may in other cases waive in whole or in part the
forfeiture of any Restricted Stock Unit Award.

(f)    Bonus Stock and Awards in Lieu of Obligations. The Committee is
authorized to grant Shares to any Eligible Persons as a bonus, or to grant
Shares or other Awards in lieu of obligations to pay cash or deliver other
property under the Plan or under other plans or compensatory arrangements,
provided that, in the case of Eligible Persons subject to Section 16 of the
Exchange Act, the amount of such grants remains within the discretion of the
Committee to the extent necessary to ensure that acquisitions of Shares or other
Awards are exempt from liability under Section 16(b) of the Exchange Act. Shares
or Awards granted hereunder shall be subject to such other terms as shall be
determined by the Committee.

(g)    Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to any Eligible Person entitling the Eligible Person to receive
cash, Shares, other

 

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Awards or other property equal in value to the dividends paid with respect to a
specified number of Shares. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. Notwithstanding
anything in the Plan to the contrary, any cash, Shares, other Awards or other
property otherwise payable with respect to Dividend Equivalents as to any Award
to the extent such Award has not vested shall be withheld by the Company for the
account of the Participant holding such Award, and interest may be credited on
the amount withheld at a rate and subject to such terms as determined by the
Committee. The cash, Shares, other Awards or other property so withheld by the
Company and attributable to any particular Award, and any interest thereon,
shall be subject to the restrictions and a risk of forfeiture to the same extent
as such Award, shall be distributed to the Participant upon the vesting of such
Award and, if such Award is forfeited prior to its vesting, the Participant
shall have no right to such cash, Shares, other Awards or other property or any
interest thereon.

(h)    Performance Awards. The Committee is authorized to grant Performance
Awards to any Eligible Person payable in cash, Shares or other Awards, on terms
and conditions established by the Committee. The performance criteria to be
achieved during any Performance Period and the length of the Performance Period
shall be determined by the Committee upon the grant of each Performance Award;
provided, however, that a Performance Period shall not be shorter than twelve
(12) months nor longer than five (5) years. Except as provided in Section 9 or
as may be provided in an Award Agreement, Performance Awards will be distributed
only after the end of the relevant Performance Period. The performance goals to
be achieved for each Performance Period shall be conclusively determined by the
Committee and may be based upon any criteria that the Committee, in its sole
discretion, shall determine should be used for that purpose. The amount of the
Award to be distributed shall be conclusively determined by the Committee.
Performance Awards may be paid in a lump sum or in installments following the
close of the Performance Period or, in accordance with procedures established by
the Committee, on a deferred basis in a manner that does not violate the
requirements of Section 409A of the Code.

(i)    Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to any Eligible Person such other
Awards that may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, Shares, as deemed by the
Committee to be consistent with the purposes of the Plan. Other Stock-Based
Awards may be granted to Participants either alone or in addition to other
Awards granted under the Plan, and such Other Stock-Based Awards shall also be
available as a form of payment in the settlement of other Awards granted under
the Plan. The Committee shall determine the terms and conditions of such Awards.
Shares delivered pursuant to an Award in the nature of a purchase right granted
under this Section 6(i) shall be purchased for such consideration, (including
without limitation loans from the Company or a Related Entity provided that such
loans are not in violation of the Sarbanes Oxley Act of 2002, as amended, or any
rule or regulation adopted thereunder or any other applicable law) paid for at
such times, by such methods, and in such forms, including, without limitation,
cash, Shares, other Awards or other property, as the Committee shall determine.

 

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7.    Certain Provisions Applicable to Awards.

(a)    Stand-Alone, Additional, Tandem and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with or in substitution or exchange for, any other
Award or any award granted under another plan of the Company, any Related Entity
or any business entity to be acquired by the Company or a Related Entity, or any
other right of a Participant to receive payment from the Company or any Related
Entity. Subject to compliance with the Code, such additional, tandem and
substitute or exchange Awards may be granted at any time. If an Award is granted
in substitution or exchange for another Award or award, the Committee shall
require the surrender of such other Award or award in consideration for the
grant of the new Award. In addition, Awards may be granted in lieu of cash
compensation, including in lieu of cash amounts payable under other plans of the
Company or any Related Entity, in which the value of Shares subject to the Award
is equivalent in value to the cash compensation (for example, Restricted Stock
or Restricted Stock Units), or in which the exercise price, grant price or
purchase price of the Award in the nature of a right that may be exercised is
equal to the Fair Market Value of the underlying Shares minus the value of the
cash compensation surrendered (for example, Options or Stock Appreciation Right
granted with an exercise price or grant price “discounted” by the amount of the
cash compensation surrendered), provided that any such determination to grant an
Award in lieu of cash compensation must be made in a manner intended to be
exempt from or comply with Section 409A of the Code.

(b)    Term of Awards. The term of each Award shall be for such period as may be
determined by the Committee provided that in no event shall the term of any
Option or Stock Appreciation Right exceed a period of ten years (or in the case
of an Incentive Stock Option such shorter term as maybe required under
Section 422 of the Code).

(c)    Form and Timing of Payment Under Awards; Deferrals. Subject to the terms
of the Plan and any applicable Award Agreement, payments to be made by the
Company or a Related Entity upon the exercise of an Option or other Award or
settlement of an Award may be made in such form as the Committee shall
determine, including, without limitation, cash, Shares, other Awards or other
property, and may be made in a single payment or transfer, in installments or on
a deferred basis, provided that any determination to pay in installments or on a
deferred basis shall be made by the Committee at the date of grant. Any
installment or deferral provided for in the preceding sentence shall, however,
subject to the terms of the Plan, be subject to the Company’s compliance with
the provisions of the Sarbanes Oxley Act of 2002, as amended, the rules and
regulations adopted by the Securities and Exchange Commission thereunder, all
applicable rules of the Listing Market, and in a manner intended to be exempt
from or otherwise satisfy the requirements of Section 409A of the Code. Subject
to Section 7(e) of this Plan, any such settlement shall be at a value determined
by the Committee in its sole discretion, which, without limitation, may in the
case of an Option or Stock Appreciation Right be limited to the amount if any by
which the Fair Market Value of a Share on the settlement date exceeds the
exercise or grant price. Installment or deferred payments may be required by the
Committee (subject to Section 7(e) of this Plan, including the consent
provisions thereof in the case of any deferral of an outstanding Award not
provided for in the original Award Agreement) or permitted at the election of
the Participant on terms and conditions established by the Committee. The
acceleration of the settlement of any Award, and the payment of any Award in

 

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installments or on an deferred basis, shall be done all in a manner that is
intended to be exempt from or otherwise satisfy the requirements of Section 409A
of the Code. The Committee may, without limitation, make provision for the
payment or crediting of a reasonable interest rate on installment or deferred
payments or the grant or crediting of Dividend Equivalents or other amounts in
respect of installment or deferred payments denominated in Shares.

(d)    Exemptions from Section 16(b) Liability. It is the intent of the Company
that the grant of any Awards to, or other transaction by, a Participant who is
subject to Section 16 of the Exchange Act shall be exempt from Section 16
pursuant to an applicable exemption (except for transactions acknowledged in
writing to be non-exempt by such Participant). Accordingly, if any provision of
this Plan or any Award Agreement does not comply with the requirements of
Rule 16b-3 then applicable to any such transaction, such provision shall be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 so that such Participant shall avoid liability under
Section 16(b).

(e)    Code Section 409A.

(i)    The Award Agreement for any Award that the Committee reasonably
determines to constitute a “nonqualified deferred compensation plan” under
Section 409A of the Code (a “Section 409A Plan”), and the provisions of the
Section 409A Plan applicable to that Award, shall be construed in a manner
consistent with the applicable requirements of Section 409A of the Code, and the
Committee, in its sole discretion and without the consent of any Participant,
may amend any Award Agreement (and the provisions of the Plan applicable
thereto) if and to the extent that the Committee determines that such amendment
is necessary or appropriate to comply with the requirements of Section 409A of
the Code.

(ii)    If any Award constitutes a Section 409A Plan, then the Award shall be
subject to the following additional requirements if, and to the extent, required
to comply with Section 409A of the Code.

(A)    Payments under the Section 409A Plan may be made only upon [i] the
Participant’s “separation from service”, [ii] the date the Participant becomes
“disabled”, [iii] the Participant’s death, [iv] a specified time (or pursuant to
a fixed schedule) specified in the Award Agreement at the date of the deferral
of such compensation, [v] a “change in the ownership or effective control of the
corporation, or in the ownership of a substantial portion of the assets” of the
Company or [vi] the occurrence of an “unforeseeable emergency”;

(B)    The time or schedule for any payment of the deferred compensation may not
be accelerated, except to the extent provided in applicable Treasury Regulations
or other applicable guidance issued by the Internal Revenue Service;

(C)    Any elections, with respect to the deferral of such compensation or the
time and form of distribution of such deferred compensation shall comply with
the requirements of Section 409A(a)(4) of the Code; and

(D)    In the case of any Participant who is “specified employee”, a
distribution on account of a “separation from service” may not be made before
the date which is six months after the date of the Participant’s “separation
from service” (or, if earlier, the date of the Participant’s death).

 

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For purposes of the foregoing, the terms in quotations shall have the same
meanings as those terms have for purposes of Section 409A of the Code and the
Treasury Regulations promulgated thereunder, and the limitations set forth
herein shall, be applied in such manner (and only to the extent) as shall be
necessary to comply with any requirements of Section 409A of the Code that are
applicable to the Award.

(iii)    Notwithstanding the foregoing, or any provision of this Plan or any
Award Agreement, the Company does not make any representation to any Participant
or Beneficiary that any Awards made pursuant to this Plan are exempt from, or
satisfy the requirements of, Section 409A of the Code, and the Company shall
have no liability or other obligation to indemnify or hold harmless the
Participant or any Beneficiary for any tax, additional tax, interest or
penalties that the Participant or any Beneficiary may incur in the event that
any provision of this Plan, or any Award Agreement, or any amendment or
modification thereof, or any other action taken with respect thereto, is deemed
to violate any of the requirements of Section 409A of the Code.

8.    Change of Control.

(a)    Effect of “Change of Control.” If, and only to the extent, determined by
the Committee in its sole discretion and without any requirement that each
Participant be treated consistently upon the occurrence of a “Change of
Control,” as defined in Section 8(b):

(i)    Any Option or Stock Appreciation Right that was not previously vested and
exercisable as of the time of the Change of Control, shall become immediately
vested and exercisable, subject to applicable restrictions set forth in
Section 9(a) hereof.

(ii)    Any restrictions, deferral of settlement and forfeiture conditions
applicable to a Restricted Stock Award, Restricted Stock Unit Award or an Other
Stock-Based Award subject only to future service requirements granted under the
Plan shall lapse and such Awards shall be deemed fully vested as of the time of
the Change of Control, except to the extent of any waiver by the Participant and
subject to applicable restrictions set forth in Section 9(a) hereof.

(iii)    With respect to any outstanding Award subject to achievement of
performance goals and conditions under the Plan, the Committee may, in its
discretion, consider such Awards to have been earned and payable based on
achievement of performance goals or based upon target performance (either in
full or pro-rata based on the portion of the Performance Period completed as of
the Change of Control).

Notwithstanding the foregoing or any provision in any Award Agreement to the
contrary, and unless the Committee otherwise determines in a specific instance,
or as is provided in any employment or other agreement between the Participant
and the Company any Subsidiary, and unless the Committee otherwise determines,
in a specific instance, each outstanding Option, Stock Appreciation Right,
Restricted Stock Award, Restricted Stock Unit Award, Performance Award or Other
Stock-Based Award shall not be accelerated as described in

 

16

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Sections 8(a)(i), (ii) and (iii), if either (A) the Company is the surviving
entity in the Change of Control and the Option, Stock Appreciation Right,
Restricted Stock Award, Restricted Stock Unit Award, Performance Award or Other
Stock-Based Award continues to be outstanding after the Change of Control on
substantially the same terms and conditions as were applicable immediately prior
to the Change of Control or (B) the successor company or its parent company
assumes or substitutes for the applicable Award, as determined in accordance
with Section 9(c)(ii) hereof. For the purposes of this Agreement, an Option,
Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or
Other Stock-Based Award shall be considered assumed or substituted for if,
following the Change of Control, the Award confers the right to purchase or
receive for each Share subject to the Option, Stock Appreciation Right,
Restricted Stock Award, Restricted Stock Unit Award or Other Stock-Based Award
immediately prior to the Change of Control, on substantially the same vesting
and other terms and conditions as were applicable to the Award immediately prior
to the Change of Control, the consideration (whether stock, cash or other
securities or property) received in the transaction constituting a Change of
Control by holders of Shares for each Share held on the effective date of such
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares);
provided, however, that if such consideration received in the transaction
constituting a Change of Control is not solely common stock of the successor
company or its parent or subsidiary, the Committee may, with the consent of the
successor company or its parent or subsidiary, provide that the consideration to
be received upon the exercise or vesting of an Option, Stock Appreciation Right,
Restricted Stock Award, Restricted Stock Unit Award or Other Stock-Based Award,
for each Share subject thereto, will be solely common stock of the successor
company or its parent or subsidiary substantially equal in fair market value to
the per share consideration received by holders of Shares in the transaction
constituting a Change of Control. The determination of such substantial equality
of value of consideration shall be made by the Committee in its sole discretion
and its determination shall be conclusive and binding.

(b)    Definition of “Change of Control.” Unless otherwise specified in any
employment or other agreement for services between the Participant and the
Company or any Subsidiary, or in an Award Agreement, a “Change of Control” shall
mean the occurrence of any of the following:

(i)    The acquisition by any Person of Beneficial Ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of more than fifty percent
(50%) of either (A) the value of then outstanding equity securities of the
Company (the “Outstanding Company Stock”) or (B) the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of directors (the “Outstanding Company Voting Securities”) (the
foregoing Beneficial Ownership hereinafter being referred to as a “Controlling
Interest”); provided, however, that for purposes of this Section 8(b), the
following acquisitions shall not constitute or result in a Change of
Control: (v) any acquisition directly from the Company; (w) any acquisition by
the Company; (x) any acquisition by any Person that as of the Effective Date
owns Beneficial Ownership of a Controlling Interest; (y) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Related Entity; or (z) any acquisition by any entity pursuant to a
transaction which complies with clauses (A) or (B) of subsection (iii) below; or

 

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(ii)    During any period of two (2) consecutive years (not including any period
prior to the Effective Date) individuals who constitute the Board on the
Effective Date (the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual becoming a
director subsequent to the Effective Date whose election, or nomination for
election by the Company’s stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or

(iii)    Consummation of (A) a reorganization, merger, statutory share exchange
or consolidation or similar transaction involving (x) the Company or (y) any of
its Subsidiaries, but in the case of this clause (y) only if equity securities
of the Company are issued or issuable in connection with the transaction (each
of the events referred to in this clause (A) being hereinafter referred to as a
“Business Reorganization”), or (B) a sale or other disposition of all or
substantially all of the assets of the Company, or the acquisition of assets or
equity of another entity by the Company or any of its Subsidiaries (each an
“Asset Sale”), in each case, unless, following such Business Reorganization or
Asset Sale, (1) all or substantially all of the individuals and entities who
were the Beneficial Owners, respectively, of the Outstanding Company Stock and
Outstanding Company Voting Securities immediately prior to such Business
Reorganization or Asset Sale beneficially own, directly or indirectly, more than
fifty percent (50%) of the value of the then outstanding equity securities and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of members of the board of directors (or
comparable governing body of an entity that does not have such a board), as the
case may be, of the entity resulting from such Business Reorganization or Asset
Sale (including, without limitation, an entity which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets
either directly or through one or more subsidiaries) (the “Continuing Entity”)
in substantially the same proportions as their ownership, immediately prior to
such Business Reorganization or Asset Sale, of the Outstanding Company Stock and
Outstanding Company Voting Securities, as the case may be (excluding any
outstanding equity or voting securities of the Continuing Entity that such
Beneficial Owners hold immediately following the consummation of the Business
Reorganization or Asset Sale as a result of their ownership, prior to such
consummation, of equity or voting securities of any company or other entity
involved in or forming part of such Business Reorganization or Asset Sale other
than the Company); (2) no Person (excluding any employee benefit plan (or
related trust) of the Company or any Continuing Entity, or any entity controlled
by the Continuing Corporation or any Person that as of the Effective Date owns
Beneficial Ownership of a Controlling Interest) beneficially owns, directly or
indirectly, fifty percent (50%) or more of the value of the then outstanding
equity securities of the Continuing Entity or the combined voting power of the
then outstanding voting Securities of the Continuing Entity except to the extent
that such ownership existed prior to the Business Reorganization or Asset Sale
and (3) at least a majority of the members of the Board of Directors or other
governing body of the Continuing Entity were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Reorganization or Asset Sale; or

(iv)    Approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

 

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9.    General Provisions.

(a)    Compliance With Legal and Other Requirements. The Company may, to the
extent deemed necessary or advisable by the Committee, postpone the issuance or
delivery of Shares or payment of other benefits under any Award until completion
of such registration or qualification of such Shares or other required action
under any federal or state law, rule or regulation, listing or other required
action with respect to the Listing Market, or compliance with any other
obligation of the Company, as the Committee may consider appropriate, and may
require any Participant to make such representations, furnish such information
and comply with or be subject to such other conditions as it may consider
appropriate in connection with the issuance or delivery of Shares or payment of
other benefits in compliance with applicable laws, rules, regulations, listing
requirements or other obligations.

(b)    Limits on Transferability; Beneficiaries. No Award or other right or
interest granted under the Plan shall be pledged, hypothecated or otherwise
encumbered or subject to any lien, obligation or liability of such Participant
to any party, or assigned or transferred by such Participant other than by will
or the laws of descent and distribution or to a Beneficiary upon the death of a
Participant, and such Awards or rights that may be exercisable shall be
exercised during the lifetime of the Participant only by the Participant or his
or her guardian or legal representative, except that Awards and other rights
(other than Incentive Stock Options and Stock Appreciation Rights in tandem
therewith) may be transferred to one or more Beneficiaries or other transferees
during the lifetime of the Participant, and may be exercised by such transferees
in accordance with the terms of such Award, but only if and to the extent such
transfers are permitted by the Committee pursuant to the express terms of an
Award Agreement (subject to any terms and conditions which the Committee may
impose thereon), are by gift or pursuant to a domestic relations order, and are
to a “Permitted Assignee” that is a permissible transferee under the applicable
rules of the Securities and Exchange Commission for registration of shares of
stock on a Form S-8 registration statement. For this purpose, a Permitted
Assignee shall mean (i) the Participant’s spouse, children or grandchildren
(including any adopted and step children or grandchildren), parents,
grandparents or siblings, (ii) a trust for the benefit of one or more of the
Participant or the persons referred to in clause (i), (iii) a partnership,
limited liability company or corporation in which the Participant or the persons
referred to in clause (i) are the only partners, members or stockholders or
(iv) a foundation in which any person or entity designated in clauses (i), (ii)
or (iii) above control the management of assets. A Beneficiary, transferee or
other person claiming any rights under the Plan from or through any Participant
shall be subject to all terms and conditions of the Plan and any Award Agreement
applicable to such Participant, except as otherwise determined by the Committee,
and to any additional terms and Conditions deemed necessary or appropriate by
the Committee.

(c)    Adjustments.

(i)    Adjustments to Awards. In the event that any extraordinary dividend or
other distribution (whether in the form of cash, Shares or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off,

 

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combination, repurchase, share exchange, liquidation, dissolution or other
similar corporate transaction or event affects the Shares and/or such other
securities of the Company or any other issuer, then the Committee shall, in such
manner as it may deem appropriate and equitable (and subject to compliance with
Section 409A of the Code), substitute, exchange or adjust any or all of (A) the
number and kind of Shares which may be delivered in connection with Awards
granted thereafter, (B) the number and kind of Shares by which annual per person
Award limitations are measured under Section 4 hereof, (C) the number and kind
of Shares subject to or deliverable in respect of outstanding Awards, (D) the
exercise price, grant price or purchase price relating to any Award and/or make
provision for payment of cash or other property in respect of any outstanding
Award and (E) any other aspect of any Award that the Committee determines to be
appropriate.

(ii)    Adjustments in Case of Certain Transactions. In the event of any merger,
consolidation or other reorganization which the Company does not survive, or in
the event of any Change of Control (and subject to the provisions of Section 8
of this Plan relating to the vesting of Awards in the event of any Change of
Control), any outstanding Awards may be dealt with in accordance with any of the
following approaches, without the requirement of obtaining any consent or
agreement of a Participant as such, as determined by the agreement effectuating
the transaction or, if and to the extent not so determined, as determined by the
Committee: (A) the continuation of the outstanding Awards by the Company, if the
Company is a surviving entity, (B) the assumption or substitution for, as those
terms are defined below, the outstanding Awards by the surviving entity or its
parent or subsidiary, (C) full exercisability or vesting and accelerated
expiration of the outstanding Awards or (D) settlement of the value of the
outstanding Awards in cash or cash equivalents or other property followed by
cancellation of such Awards (which value, in the case of Options or Stock
Appreciation Rights, shall be measured by the amount, if any, by which the Fair
Market Value of a Share exceeds the exercise or grant price of the Option or
Stock Appreciation Right as of the effective date of the transaction). For the
purposes of this Plan, an Option, Stock Appreciation Right, Restricted Stock
Award, Restricted Stock Unit Award or Other Stock-Based Award shall be
considered assumed or substituted for if, following the applicable transaction,
the Award confers the right to purchase or receive, for each Share subject to
the Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock
Unit Award or Other Stock-Based Award immediately prior to the applicable
transaction, or substantially the same vesting and other terms and conditions as
were applicable to the Award immediately prior to the applicable transaction,
the consideration (whether stock, cash or other securities or property) received
in the applicable transaction by holders of Shares for each Share held on the
effective date of such transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the applicable transaction is not solely common stock of the successor
company or its parent or subsidiary, the Committee may, with the consent of the
successor company or its parent or subsidiary, provide that the consideration to
be received upon the exercise or vesting an Option, Stock Appreciation Right,
Restricted Stock Award, Restricted Stock Unit Award or Other Stock-Based Award,
for each Share thereto, will be solely common stock of the successor company or
its parent or subsidiary substantially equal in fair market value to the per
share consideration received by holders of Shares in the applicable transaction.
The determination of such substantial equality of value of consideration shall
be made by the Committee in its sole discretion and its determination shall be
conclusive and binding. The Committee shall give

 

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written notice of any proposed transaction referred to in this Section 9(c)(ii)
a reasonable period of time prior to the closing date for such transaction
(which notice may be given either before or after the approval of such
transaction), in order that Participants may have a reasonable period of time
prior to the closing date of such transaction within which to exercise any
Awards that are then exercisable (including any Awards that may become
exercisable upon the closing date of such transaction). A Participant may
condition his or her exercise of any Awards upon the consummation of the
transaction.

(iii)    Other Adjustments. Subject to compliance with the Code, the Committee
is authorized to make adjustments in the terms and conditions of, and the
criteria included in, Awards (including Awards subject to satisfaction of
performance goals, or performance goals and conditions relating thereto) in
recognition of unusual or nonrecurring events (including, without limitation,
acquisitions and dispositions of businesses and assets) affecting the Company,
any Related Entity or any business unit, or the financial statements of the
Company or any Related Entity, or in response to changes in applicable laws,
regulations, accounting principles, tax rates and regulations or business
conditions or in view of the Committee’s assessment of the business strategy of
the Company, any Related Entity or business unit thereof, performance of
comparable organizations, economic and business conditions, personal performance
of a Participant and any other circumstances deemed relevant. Adjustments
permitted hereby may include, without limitation, increasing the exercise price
of Options and Stock Appreciation Rights, increasing performance goals or other
adjustments that may be adverse to the Participant.

(d)    Award Agreements. Each Award Agreement shall either be (i) in writing in
a form approved by the Committee and executed by the Company by an officer duly
authorized to act on its behalf or (ii) an electronic notice in a form approved
by the Committee and recorded by the Company (or its designee) in an electronic
recordkeeping system used for the purpose of tracking one or more types of
Awards as the Committee may provide; in each case and if required by the
Committee, the Award Agreement shall be executed or otherwise electronically
accepted by the recipient of the Award in such form and manner as the Committee
may require. The Committee may authorize any officer of the Company to execute
any or all Award Agreements on behalf of the Company. The Award Agreement shall
set forth the material terms and conditions of the Award as established by the
Committee consistent with the provisions of the Plan.

(e)    Taxes. The Company and any Related Entity are authorized to withhold from
any Award granted, any payment relating to an Award under the Plan, including
from a distribution of Shares, or any payroll or other payment to a Participant,
amounts of withholding and other taxes due or potentially payable in connection
with any transaction involving an Award, and to take such other action as the
Committee may deem advisable to enable the Company or any Related Entity and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Shares or other property and to make cash
payments in respect thereof in satisfaction of a Participant’s tax obligations,
either on a mandatory or elective basis in the discretion of the Committee. The
amount of withholding tax paid with respect to an Award by the withholding of
Shares otherwise deliverable pursuant to the Award or by deliveringShares
already owned shall not exceed the minimum statutory withholding required with
respect to that Award.

 

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(f)    Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue or terminate the Plan, or the Committee’s authority to grant Awards
under the Plan, without the consent of stockholders or Participants, except that
any amendment or alteration to the Plan shall be subject to the approval of the
Company’s stockholders not later than the annual meeting next following such
Board action if such stockholder approval is required by any federal or state
law or regulation (including, without limitation, Rule 16b-3) or the rules of
the Listing Market, and the Board may otherwise, in its discretion, determine to
submit other such changes to the Plan to stockholders for approval; provided
that, except as otherwise permitted by the Plan or Award Agreement, without the
consent of an affected Participant, no such Board action may materially and
adversely affect the rights of such Participant under the terms of any
previously granted and outstanding Award. The Committee may waive any conditions
or rights under, or amend, alter, suspend, discontinue or terminate any Award
theretofore granted and any Award Agreement relating thereto, except as
otherwise provided in the Plan; provided that, except as otherwise permitted by
the Plan or Award Agreement, without the consent of an affected Participant, no
such Committee or the Board action may materially and adversely affect the
rights of such Participant under terms of such Award.

(g)    Clawback of Benefits.

(i)    The Company may (A) cause the cancellation of any Award, (B) require
reimbursement of any Award by a Participant or Beneficiary and (C) effect any
other right of recoupment of equity or other compensation provided under this
Plan or otherwise in accordance with any Company policies that currently exist
or that may from time to time be adopted or modified in the future by the
Company and/or applicable law (each, a “Clawback Policy”), provided that the
following conditions are satisfied: (1) there is an accounting restatement of
the Company’s financial statements or results and (2) the restatement results
from a noncompliance by the Company with any requirements under or related to
the federal securities laws. In such an event, the clawback will be in an amount
of up to the total economic gain from any stock-based grants within the
five-year period preceding the restatement. By accepting an Award, a Participant
is also agreeing to be bound by any existing or future Clawback Policy adopted
by the Company, or any amendments that may from time to time be made to the
Clawback Policy in the future by the Company in its discretion (including
without limitation any Clawback Policy adopted or amended to comply with
applicable laws or stock exchange requirements) and is further agreeing that all
of the Participant’s Award Agreements may be unilaterally amended by the
Company, without the Participant’s consent, to the extent that the Company, in
its discretion, determines to be necessary or appropriate to comply with any
Clawback Policy.

(ii)    If the Participant, without the consent of the Company, while employed
by or providing services to the Company or any Subsidiary or after termination
of such employment or service, violates a non-competition, non-solicitation or
non-disclosure covenant or agreement or otherwise engages in activity that is in
conflict with Company’s Corporate Governance Guidelines, Code of Business Ethics
or any other corporate governance materials specified by the SEC or exchange on
which common stock of the Company is listed,

 

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then (i) any outstanding, vested or unvested, earned or unearned portion of the
Award may, at the Committee’s discretion, be canceled and (ii) the Committee, in
its discretion, may require the Participant or other person to whom any payment
has been made or Shares or other property have been transferred in connection
with the Award to forfeit and pay over to the Company, on demand, all or any
portion of the gain (whether or not taxable) realized upon the exercise of any
Option or Stock Appreciation Right and the value realized (whether or not
taxable) on the vesting or payment of any other Award during the time period
specified in the Award Agreement or otherwise specified by the Committee.

(h)    Limitation on Rights Conferred Under Plan. Neither the Plan nor any
action taken hereunder or under any Award shall be construed as (i) giving any
Eligible Person or Participant the right to continue as an Eligible Person or
Participant or in the employ or service of the Company or a Related Entity,
(ii) interfering in any way with the right of the Company or a Related Entity to
terminate any Eligible Person’s or Participant’s Continuous Service at any time,
(iii) giving an Eligible Person or Participant any claim to be granted any Award
under the Plan or to be treated uniformly with other Participants and Employees
or (iv) conferring on a Participant any of the rights of a stockholder of the
Company or any Related Entity including, without limitation, any right to
receive dividends or distributions, any right to vote or act by written consent,
any right to attend meetings of stockholders or any right to receive any
information concerning the Company’s or any Related Entity’s business, financial
condition, results of operation or prospects, unless and until such time as the
Participant is duly issued Shares on the stock books of the Company or any
Related Entity in accordance with the terms of an Award. None of the Company,
its officers or its directors shall have any fiduciary obligation to the
Participant with respect to any Awards unless and until the Participant is duly
issued Shares pursuant to the Award on the stock books of the Company in
accordance with the terms of an Award. Neither the Company, nor any Related
Entity, nor any of the their respective officers, directors, representatives or
agents is granting any rights under the Plan to the Participant whatsoever, oral
or written, express or implied, other than those rights expressly set forth in
this Plan or the Award Agreement.

(i)    Unfunded Status of Awards; Creation of Trusts. The Plan is intended to
constitute an “unfunded” plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant or obligation to deliver
Shares pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give any such Participant any rights that are greater than those
of a general creditor of the Company or Related Entity that issues the Award;
provided that the Committee may authorize the creation of trusts and deposit
therein cash, Shares, other Awards or other property, or make other arrangements
to meet the obligations of the Company or Related Entity under the Plan. Such
trusts or other arrangements shall be consistent with the “unfunded” status of
the Plan unless the Committee otherwise determines with the consent of each
affected Participant. The trustee of such trusts may be authorized to dispose of
trust assets and reinvest the proceeds in alternative investments, subject to
such terms and conditions as the Committee may specify and in accordance with
applicable law.

(j)    Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board
nor its submission to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board or a committee
thereof to adopt such other incentive arrangements as it may deem desirable.

 

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(k)    Payments in the Event of Forfeitures; Fractional Shares. Unless otherwise
determined by the Committee, in the event of a forfeiture of an Award with
respect to which a Participant paid cash or other consideration, the Participant
shall be repaid the amount of such cash or other consideration. No fractional
Shares shall be issued or delivered pursuant to the Plan or any Award. The
Committee shall determine whether cash, other Awards or other property shall be
issued or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.

(l)    Governing Law. Except as otherwise provided in any Award Agreement, the
validity, construction and effect of the Plan, any rules and regulations under
the Plan and any Award Agreement shall be determined in accordance with the laws
of the State of Wisconsin without giving effect to principles of conflict of
laws, and applicable federal law.

(m)    Non-U.S. Laws. The Committee shall have the authority to adopt such
modifications, procedures and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company or
its Related Entities may operate to assure the viability of the benefits from
Awards granted to Participants performing services in such countries and to meet
the objectives of the Plan.

(n)    Construction and Interpretation. Whenever used herein, nouns in the
singular shall include the plural and the masculine pronoun shall include the
feminine gender. Headings of Articles and Sections hereof are inserted for
convenience and reference and constitute no part of the Plan.

(o)    Severability. If any provision of the Plan or any Award Agreement shall
be determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.

(p)    Plan Effective Date and Stockholder Approval; Termination of Plan. The
Plan shall become effective on the Effective Date, subject to subsequent
approval, within 12 months of its adoption by the Board, by stockholders of the
Company eligible to vote in the election of directors, by a vote sufficient to
meet the requirements of Code Section 422, Rule 16b-3 under the Exchange Act (if
applicable), applicable requirements under the rules of any stock exchange or
automated quotation system on which the Shares may be listed or quoted and other
laws, regulations and obligations of the Company applicable to the Plan. Awards
may be granted subject to stockholder approval, but may not be exercised or
otherwise settled in the event the stockholder approval is not obtained. The
Plan shall terminate at the earliest of (i) such time as no Shares remain
available for issuance under the Plan, (ii) termination of this Plan by the
Board or (iii) the tenth anniversary of the Effective Date. Awards outstanding
upon expiration of the Plan shall remain in effect until they have been
exercised or terminated, or have expired.

 

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