ex10_33.htm


    
      
        

      

    

    Exhibit
10.33

    
      


      INTERACTIVE INTELLIGENCE, INC.

      2006
EQUITY INCENTIVE PLAN

      (As
Amended May 30, 2008)

      


      1. Establishment, Objectives
and Duration.

       

      (a) Establishment of the
Plan. Interactive Intelligence, Inc. hereby establishes the 2006 Equity
Incentive Plan (“Plan”). The Plan is effective upon its approval by the
Company’s shareholders at the 2006 Annual Meeting (“Effective
Date”).

       

      (b) Objectives of the
Plan. The Plan’s objectives are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentives to Participants, and to optimize the profitability and growth of the
Company through incentives that are consistent with the Company’s goals and that
link Participants’ personal interests to those of the Company’s
shareholders.

       

      (c) Duration of the Plan.
No Award may be granted under the Plan after the day immediately preceding the
10th
anniversary of the Effective Date. The Plan will remain in effect with respect
to outstanding Awards until no Awards remain outstanding.

       

      2. Definitions.  As used in
the Plan, the following definitions will apply:

       

      (a) “Affiliate” means any
“parent corporation” or “subsidiary corporation” of the Company, as those terms
are defined, respectively, in Code Sections 424(e) and (f).

       

      (b) “Applicable Law” means
the legal requirements relating to stock incentive plans, if any, under
applicable provisions of federal securities laws, state corporate and securities
laws, the rules and regulations of any governing governmental agencies, the
Code, and the rules of any applicable stock exchange or national market
system.

       

      (c)  “Award” means,
individually or collectively, Nonqualified Stock Options, Incentive Stock
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Shares, Performance Units, and Other Stock-Based Awards granted
under the Plan.

       

      (d) “Award Agreement”
means an agreement entered into by the Company and a Participant setting forth
the terms and provisions applicable to an Award.

       

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

       

      (f) “Cashless Exercise”
means, to the extent permitted by Applicable Law, a program approved by the
Committee in which payment of the applicable Exercise Price of an Option may be
made all or in part by delivery (on a form prescribed by the Committee) of an
irrevocable direction to a securities broker to sell Shares and to deliver all
or part of the sale proceeds to the Company in payment of the aggregate Exercise
Price and, if applicable, the amount necessary to satisfy the Company’s
withholding obligations at the minimum statutory withholding rates, including,
but not limited to, U.S. federal and state income taxes, payroll taxes, and
foreign taxes, if applicable.

       

      (g) “Cause” means, unless
that term or an equivalent term is otherwise defined with respect to an Award by
the Participant's Award Agreement or by a written contract of employment or
service, any of the following: (i) the Participant's theft, dishonesty, willful
misconduct, breach of fiduciary duty for personal profit, or falsification of
any Company documents or records; (ii) the Participant's material failure to
abide by the Company's code of conduct or other policies (including, without
limitation, policies relating to confidentiality and reasonable workplace
conduct); (iii) the Participant's unauthorized use, misappropriation,
destruction or diversion of any tangible or intangible asset or corporate
opportunity of the Company (including, without limitation, the
Participant's

       


      
        
          
             

          

          
          

        

        
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      improper
use or disclosure of the Company's confidential or proprietary information);
(iv) any intentional act by the Participant that has a material detrimental
effect on the Company's reputation or business; (v) any material breach by the
Participant of any employment, service, consulting, non-disclosure,
non-competition, non-solicitation or other similar agreement between the
Participant and the Company, which breach is not cured pursuant to the terms of
the applicable agreement; or (vi) the Participant's conviction (including any
plea of guilty or nolo contendere) of any criminal act involving fraud,
dishonesty, misappropriation or moral turpitude, or that impairs the
Participant's ability to perform his or her duties with the
Company.

       

      (h) “Change in Control”
means the occurrence of one or more of the following:

       

      (i) The
acquisition by any “person” (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act of the “beneficial ownership” (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Company representing fifty (50%) percent or more of (A) the then outstanding
shares of common stock of the Company, or (B) the combined voting power of the
Company’s then outstanding voting securities; provided, however, that the
following acquisitions will not constitute a Change in Control: (I) any
acquisition directly from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (II) any acquisition by the Company,
or (III) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any entity controlled by the
Company;

       

      (ii) The
Company is party to a merger or consolidation, or series of related
transactions, that results in the voting securities of the Company outstanding
immediately prior thereto failing to continue to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity), directly or indirectly, at least fifty (50%) percent of
the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation;

       

      (iii) the sale
or disposition of all or substantially all of the Company’s assets, or
consummation of any transaction, or series of related transactions, having
similar effect (other than to a Subsidiary);

       

      (iv) A change
in the composition of the Board within any consecutive two-year period, as a
result of which fewer than a majority of the directors are Incumbent Directors;
or

       

      (v) The
liquidation or dissolution of the Company.

       

      Notwithstanding
the preceding provisions of this Subsection or any other provision of the Plan,
with respect to any provision or feature of the Plan that constitutes or
provides for a deferred compensation plan subject to Code Section 409A, the
term “Change in Control” means a change in the ownership or effective control of
the Company, or in the ownership of a substantial portion of the assets of the
Company, within the meaning of Code Section 409A(a)(2)(A)(v) and interpretive
regulations.

       

      (i) “Code” means the
Internal Revenue Code of 1986, as amended, and its interpretive
regulations.

       

      (j) “Committee” means the
Committee, as specified in Section 3(a), appointed by the Board to
administer the Plan; provided, however, that, where appropriate, “Committee”
also means (i) the Board, which, pursuant to Section 3(b), administers the Plan
with respect to Non-Employee Directors; and (ii) any delegate of the Committee
that, pursuant to Section 3(d), has the authority to grant Awards to
Participants who are not subject to Section 16(b) of the Exchange Act and who
are not (and are not anticipated to be during the term of the Award) “covered
employees” under Code Section 162(m).

       

      (k) “Company” means
Interactive Intelligence, Inc., an Indiana corporation, and any successor
thereto as provided in Section 23. 

       

      (l) “Continuous Service”
means an Employee’s provision of services in any capacity to the Company or any
Affiliate that is not interrupted or terminated. Continuous Service will not be
considered interrupted in the

       


      
        
          
             

          

          
          

        

        
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      case of
(i) any leave of absence approved by the Company or (ii) transfers
between locations of the Company or between the Company, any Affiliate, or any
successor. A leave of absence approved by the Company may include medical leave,
military leave, or any other personal leave approved by an authorized Company
representative. For purposes of Incentive Stock Options, no such leave may
exceed 90 days, unless reemployment upon expiration of the leave is
guaranteed by statute or contract.

       

      (m) “Disability” means the
inability to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a period of not less than 12
months.

       

      (n) “Dividend” means a
dividend declared and paid on Shares subject to an Award.

       

      (o) “Employee” means any
employee of the Company or an Affiliate.

       

      (p) “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

       

      (q) “Exercise Price” means
the price at which a Participant may purchase a Share pursuant to an
Option.

       

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

       

      (i) Where a
public market exists for the Share, the Fair Market Value will be (A) the
closing sales price for a Share for the last market trading day prior to the
time of the determination (or, if no sales were reported on that date, on the
last trading date on which sales were reported) on the New York Stock Exchange,
the Nasdaq National Market or the principal securities exchange on which the
Share is listed for trading, whichever is applicable, or (B) if the Share
is not traded on any such exchange or national market system, the average of the
closing bid and asked prices of a Share on the Nasdaq Small Cap Market, in each
case, as reported in The Wall Street Journal or such other source as the
Committee deems reliable; or

       

      (ii) In the
absence of an established market for the Share of the type described above, the
Committee will determine the Share’s Fair Market Value in good faith using a
reasonable valuation methodology, and that determination will be conclusive and
binding on all persons.

       

      (s) “Freestanding SAR”
means a SAR that is granted independently of any Options, as described in
Section 8.

       

      (t) “Incentive Stock
Option” or “ISO” means an Option
intended to qualify as an incentive stock option within the meaning of Code
Section 422.

       

      (u) “Incumbent Directors”
means directors who either (i) were directors of the Company as of the Effective
Date of this Plan, or (ii) are elected, or nominated for election, to the Board
with the affirmative votes of a least a majority of those directors whose
election or nomination was not in connection with an actual or threatened proxy
contest related to the election of directors to the Company.

       

      (v) “Non-Employee
Director” means any individual who is a member of the Board of Directors
of the Company or an Affiliate and who is not an Employee.

       

      (w) “Nonqualified Stock
Option” means an Option that is not intended to meet the requirements of
Code Section 422.

       

      (x) “Option” means an
Incentive Stock Option or a Nonqualified Stock Option granted under the Plan, as
described in Section 7.

       

      (y) “Other Stock-Based
Award” means a Share-based or Share-related Award granted pursuant to
Section 13.

       


      
        
          
             

          

          
          

        

        
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      (z) “Participant” means a
current or former Employee, Non-Employee Director, consultant of the Company or
any other individual who the Committee selects (or selected) to receive an
Award.

       

      (aa) “Performance-Based
Exception” means the performance-based exception from the tax
deductibility limitations of Code Section 162(m).

       

      (bb) “Performance Measure”
means any performance goal that the Committee, in its discretion, may select
from among any of the following performance goals: total shareholder return,
stock price, net customer sales, volume, gross profit, gross margin, operating
profit, operating margin, earnings from continuing operations before income
taxes, earnings from continuing operations, earnings per share from continuing
operations, net operating profit after tax, net earnings, net earnings per
share, return on assets, return on investment, return on equity, return on
invested capital, cost of capital, average capital employed, cash flow, cash
flow from operations, working capital, working capital as a percentage of net
customer sales, asset growth, asset turnover, market share, orders received,
days sales outstanding and operating unit results.

       

      (cc) “Performance Period”
means the period during which a Performance Measure or other performance goal
must be met.

       

      (dd) “Performance Share”
means an Award granted to a Participant pursuant to Section 11.

       

      (ee) “Performance Unit”
means an Award granted to a Participant pursuant to
Section 12.

       

      (ff) “Period of
Restriction” means the period during which Restricted Stock, Restricted
Stock Units or Other Stock-Based Awards are subject to a substantial risk of
forfeiture and are not transferable, as provided in Sections 9, 10 and
13.

       

      (gg) “Plan” means this
Interactive Intelligence, Inc. 2006 Equity Incentive Plan, as amended from time
to time.

       

      (hh) “Prior Plans” means
the Interactive Intelligence, Inc. 1999 Stock Option and Incentive Plan and the
Interactive Intelligence, Inc. Outside Directors Stock Option Plan.

       

      (ii) “Restricted Stock”
means an Award granted to a Participant pursuant to Section 9.

       

      (jj) “Restricted Stock
Units” means an Award granted to a Participant pursuant to
Section 10.

       

      (kk) “Retirement” means,
with respect to an Employee, termination of employment after attaining age 65,
or such other age as the Company specifies in its written policies.

       

      (ll) “SEC” means the United
States Securities and Exchange Commission.

       

      (mm) “Section” means,
except where used in direct reference to a provision of the Code or the Exchange
Act, a provision of this Plan.

       

      (nn) “Share” means a share
of the Company’s common stock, par value $0.01 per share, subject to adjustment
pursuant to Section 18.

       

      (oo) “Stock Appreciation
Right” or “SAR” means an Award
granted to a Participant, either alone or in connection with a related Option,
pursuant to Section 8.

       

      (pp) “Subsidiary” means any
corporation in which the Company owns, directly or indirectly, at least 50% of
the total combined voting power of all classes of stock, or any other entity
(including, but not limited to,

       


      
        
          
             

          

          
          

        

        
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      limited
liability companies, partnerships and joint ventures) in which the Company owns,
directly or indirectly, at least 50% of the combined equity.

       

      (qq) “Subsidiary
Disposition” means the disposition by the Company of its equity holdings
in any Subsidiary effected by a merger or consolidation involving that
Subsidiary, the sale of all or substantially all of the assets of that
Subsidiary, or the Company’s sale or distribution of substantially all of the
outstanding capital stock of that Subsidiary.

       

      (rr) “Tandem SAR” means a
SAR that is granted in connection with a related Option, as described in
Section 8.

       

      (ss) “Voting Securities”
means voting securities of the Company entitled to vote generally in the
election of directors.

       

      3. Administration
of the Plan.

       

      (a) The Committee. The
Plan will be administered by the Compensation and Stock Option Committee of the
Board or such other committee (“Committee”) as the Board selects consisting of
two or more members of the Board each of whom is intended to be a “non-employee
director” within the meaning of Rule 16b-3 (or any successor rule) of the
Exchange Act, an “outside director” under regulations promulgated under Code
Section 162(m), and an “independent director” under Nasdaq Stock Market or other
applicable exchange listing standards. The members of the Committee will be
appointed from time to time by, and will serve at the discretion of, the
Board.

       

      (b) Board as the
Committee. Notwithstanding subsection (a) above, the Board will
constitute the Committee and administer the Plan with respect to Non-Employee
Directors, determine the terms of Awards, and their related Award Agreements, to
Non-Employee Directors, and grant Awards to Non-Employee Directors.

       

      (c) Authority of the
Committee. Subject to Applicable Law and the Plan’s provisions, and
except as the Board may provide otherwise, the Committee will have full, final
and discretionary authority to take all actions it determines necessary to
administer the Plan, including, without limitation, the following
actions:

       

      (i) select
the individuals to whom Awards may from time to time be granted under the
Plan;

       

      (ii) determine
whether and to what extent Awards are granted under the Plan;

       

      (iii) determine
the size, type, terms, and conditions of any Awards granted under the
Plan;

       

      (iv) approve
forms of Award Agreements for use under the Plan;

       

      (v) establish
Performance Measures or other performance goals for any Performance Period and
determine whether those goals were satisfied;

       

      (vi) amend the
terms of any outstanding Award granted under the Plan in the event of a
Participant’s termination of employment or service or in the event of a Change
in Control, provided that, except as otherwise provided in Section 19, no
such amendment will reduce the Exercise Price of outstanding Options or the
grant price of outstanding SARs without the approval of the shareholders of the
Company, and provided further, that any amendment that would adversely affect
the Participant’s rights under an outstanding Award will not be made without the
Participant’s written consent;

       

      (vii) construe
and interpret the terms of the Plan and any Award Agreement entered into under
the Plan, and decide all questions of fact arising in the application of the
Plan and any Award Agreement; and

       

      (viii) take such
other action, not inconsistent with the Plan’s terms, as the Committee deems
appropriate.

       


      
        
          
             

          

          
          

        

        
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      (d) Delegation of
Authority. As permitted by Applicable Law, the Committee may delegate, to
one or more officers of the Company, its authority, including the power and
authority to make Awards to Participants who are not subject to Section 16(b) of
the Exchange Act and who are not (and are not anticipated to be during the term
of the Award) “covered employees” under Code Section 162(m), pursuant to such
conditions and limitations as the Committee may establish. The Committee may
delegate authority pursuant to this provision only by resolution or other valid
action it reflects in writing.

       

      (e) Effect of Committee’s
Decision. The Committee’s decisions, determinations and interpretations
will be final, binding and conclusive on all persons, including the Company, its
Subsidiaries, Employees, Non-Employee Directors, consultants, other Participants
and their estates and beneficiaries.

       

      4. Shares
Subject to the Plan; Effect of Grants; Individual Limits.

       

      (a) Number of Shares Available
for Grants. Subject to adjustment as provided in Section 18, the
maximum number of Shares that may be issued pursuant to Awards under the Plan
shall be (i) 2,150,000 Shares, plus (ii) up to
320,000 Shares available for issuance under the Prior Plans, as previously
approved by the shareholders of the Company, as of the Effective Date, but that
are not underlying any outstanding stock options or other awards under the Prior
Plans as of the Effective Date, plus (iii) any Shares
allocable to outstanding stock options or other awards under the Prior Plans as
of the Effective Date to the extent that on or after the Effective Date such
stock options or other awards expire, are forfeited or otherwise terminate
unexercised; provided, however, that in no event shall the maximum number of
Shares issued pursuant to Awards under the Plan exceed 5,850,933 Shares (which
is the sum of 2,150,000 Shares set forth above, plus the number of Shares
available for issuance under the Prior Plans as of the Effective Date, plus the
aggregate number of shares subject to options previously granted and outstanding
under the Prior Plans as of the Effective Date). From and after the Effective
Date, no further grants or awards shall be made under the Prior Plans; however,
grants or awards made under the Prior Plans before the Effective Date shall
continue in effect in accordance with their terms.

       

      (b) Limit on Awards of Incentive
Stock Options. Subject to adjustment as provided in Section 18, the
maximum aggregate number of Shares that may be delivered in connection with
Incentive Stock Options under the Plan will not exceed 1,500,000
Shares.

       

      (c) Limits on Awards to
Individual Participants. Subject to adjustment as provided in
Section 18, the following rules will apply with respect to Awards to
individual Participants:

       

      (i) Total Limit: The
maximum aggregate number of Shares that can be granted to any one Participant in
a particular calendar year pursuant to any and all Awards is 100,000
Shares.

       

      (ii) Incentive Stock
Options: The maximum aggregate number of Shares with respect to which
Incentive Stock Options may be granted in any particular calendar year to any
one Participant is 100,000 Shares.

       

      (iii)  Restricted Stock and
Restricted Stock Units: The maximum aggregate number of Shares of
Restricted Stock and Shares with respect to which Restricted Stock Units may be
granted in a particular calendar year to any one Participant is 50,000
Shares.

       

      (iv) Performance Shares and
Performance Units: The maximum aggregate number of Performance Shares
that may be granted in a particular calendar year to any one Participant is
50,000 Shares, and the maximum aggregate compensation that can be paid pursuant
to Performance Units awarded in any one calendar year to any one Participant
is $250,000 or a
number of Shares having an aggregate Fair Market Value not in excess of that
amount.

       

      (d) Forfeited Shares. If
Awards are forfeited or terminated for any reason before being exercised, fully
vested, or settled, then the Shares underlying those Awards will cease to count
against the limitations in subsections (a) and (b) and will become available for
Awards under the Plan.

       


      
        
          
             

          

          
          

        

        
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      (e) Shares for Withholding
Obligations. Any Shares subject to any Award that are withheld or
otherwise not issued upon exercise of any Award to satisfy the Participant’s
withholding obligations or in payment of any subscription price or the Exercise
Price, and Shares subject to an Award (or any portion of an Award) that is
settled in cash in lieu of settlement in Shares, will reduce the number of
Shares available for grant under the limitations in subsections (a) and
(b).

       

      (f) Awards Settled in
Cash. Awards valued by reference to Shares that may be settled in
equivalent cash value will count against the limitations in this Section 4 to
the same extent as if settled in Shares.

       

      5. Eligibility
and Participation.

       

      (a) Eligibility.
Employees, Non-Employee Directors, consultants of the Company and other
individuals are eligible to participate in the Plan.

       

      (b) Actual Participation.
Subject to the provisions of the Plan, the Committee may, from time to time,
select from all eligible Employees, Non-Employee Directors, consultants of the
Company and other individuals those to whom Awards will be granted and will
determine the nature and amount of each Award.

       

      (c) Service as an
Employee. For purposes of an Employee's participation in the Plan, and
the interpretation of the Plan's provisions, no event will constitute a
termination of employment unless the event is a termination of Continuous
Service.

       

      6. Types of
Awards.

       

      (a) Type of Awards.
Awards under the Plan may be in the form of Options (both Nonqualified Stock
Options and/or Incentive Stock Options), SARs, Restricted Stock, Restricted
Stock Units, Performance Shares, Performance Units and Other Stock-Based
Awards.

       

      (b) Designation of Award.
Each Award will be designated in the Award Agreement.

       

      7. Options.

       

      (a) Grant of Options.
Subject to the terms and provisions of the Plan, Options may be granted to
Participants in such number and upon such terms, and at any time and from time
to time, as the Committee determines.

       

      (b) Award Agreement. Each
Option grant will be evidenced by an Award Agreement that specifies the Exercise
Price, the duration of the Option, the number of Shares to which the Option
pertains, the Option vesting schedule, and such other provisions as the
Committee determines including, without limitation, repurchase provisions,
rights of first refusal, forfeiture provisions, form of payment (cash, Shares,
or other consideration) upon settlement of the Award, and payment contingencies.
The Award Agreement will also specify whether the Option is intended to be an
Incentive Stock Option or a Nonqualified Stock Option. Options that are intended
to be Incentive Stock Options will be subject to the limitations set forth in
Code Section 422 and will be subject to Section 7(m).

       

      (c) Exercise Price.
Except for Options adjusted pursuant to Section 18 and replacement Options
granted in connection with a merger, acquisition, reorganization or similar
transaction, the Exercise Price of each Option will not be less than 100% of the
Fair Market Value of a Share on the date the Option is granted. However, in the
case of an Incentive Stock Option granted to a Participant who, at the time the
Option is granted, owns stock representing more than 10% of the voting power of
all classes of stock of the Company or any Affiliate, the Exercise Price of the
Option will not be less than 110% of the Fair Market Value of a Share on the
date the Option is granted.

       

      (d) Term of Options. The
term of an Option granted under the Plan will be determined by the Committee, in
its sole discretion; provided, however, that the term will not exceed ten
(10) years.
However, in the case of an Incentive Stock Option granted to a Participant who,
at the time the Option is granted, owns stock

       


      
        
          
             

          

          
          

        

        
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       representing
more than 10% of the voting power of all classes of stock of the Company or any
Affiliate, the term of the Incentive Stock Option will be five (5) years
from the date of grant or such shorter term as may be provided in the Award
Agreement.

       

      (e) Vesting of Options.
Options granted under this Section 7 will be exercisable at such times
(based on the passage of time or the achievement of performance goals) and be
subject to such restrictions and conditions as set forth in the Award Agreement,
which need not be the same for each grant or for each Participant.

       

      (f) Exercise of Options.
Options granted under this Section 7 will be exercised by the delivery of a
written notice to the Company, setting forth the number of Shares with respect
to which the Option is to be exercised and specifying the method of payment for
the Exercise Price. An Option’s Exercise Price will be payable to the
Company:

       

      (i) in cash
or its equivalent;

       

      (ii) by
tendering (either actually or constructively by attestation) Shares having an
aggregate Fair Market Value at the time of exercise equal to the Exercise Price,
provided that the Committee may, in its sole discretion, require that Shares
tendered for payment have been previously held by the Participant for a minimum
duration;

       

      (iii) in any
other manner then permitted by the Committee (including Cashless Exercise);
or

       

      (iv) by a
combination of any of the permitted methods of payment in subsections (i), (ii),
and (iii) above.

       

      The
Committee may limit any method of payment, other than that specified under (i),
for administrative convenience, to comply with Applicable Law or for any other
reason it deems appropriate.

       

      (g) Restrictions on Share
Transferability. The Committee may impose such restrictions on any Shares
acquired pursuant to the exercise of an Option granted under this Section 7
as it deems advisable, including, without limitation, restrictions under
applicable federal securities laws, under the requirements of any stock exchange
or market upon which the Shares are then listed and/or traded, and under any
blue sky or state securities laws applicable to the Shares.

       

      (h) Termination for
Cause. Upon a Participant’s termination of employment or service for
Cause, all rights under any Options granted to the Participant will terminate
immediately, and the Participant will (if the Committee, in its sole discretion,
exercises its rights under this Section 7(h) within ten (10) days of the
termination) repay to the Company within ten (10) days of the Committee’s
written demand the amount of any gain the Participant had realized upon any
exercise within the 90-day period prior to the termination of any
Options.

       

      (i) Termination Due to Death or
Disability. Upon a Participant’s termination of employment or service due
to death or Disability, the Participant or the Participant’s beneficiary, as the
case may be, may exercise outstanding Options to the extent the Participant was
entitled to exercise the Options on the date of termination, but only within the
one (1)-year period immediately following the Participant’s termination due to
death or Disability, and in no event after the date the Options expire in
accordance with their terms.

       

      (j) Other Terminations.
Upon the termination of a Participant's employment or service by the Company
without Cause, upon the Participant's voluntary termination of employment or
service for a reason other than death or Disability, or upon the Employee’s
Retirement, the Participant may exercise outstanding Options to the extent that
the Participant was entitled to exercise the Options at the date of termination,
but only within the one (1) month period immediately following the Participant’s
termination, and in no event after the date the Options expire in accordance
with their terms.

       


      
        
          
             

          

          
          

        

        
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      (k) Forfeiture of
Options. Notwithstanding subsections (i) and (j) above, a Participant or
the Participant’s beneficiary, as the case may be, will, in connection with any
and all terminations of employment or service, forfeit all Options the
Participant was not entitled to exercise on the date of
termination.

       

      (l) Committee Discretion.
Notwithstanding the foregoing paragraphs of this Section 7, and subject to
paragraph (m) below, the Committee may, in its sole discretion, establish
different terms and conditions pertaining to the effect of a Participant’s
termination, to the extent permitted by Applicable Law.

       

      (m) Additional Rules For
Incentive Stock Options.

       

      (i)  Incentive
Stock Options may be granted only to Participants who are
Employees.

       

      (ii) No
Incentive Stock Option will be granted to a Participant as a result of which the
aggregate Fair Market Value (determined as of the date of grant) of the Shares
with respect to which Incentive Stock Options under Code Section 422 are
exercisable for the first time in any calendar year under the Plan and any other
stock option plans of the Company or any Affiliate, would exceed $100,000,
determined in accordance with Code Section 422(d). This limitation will be
applied by taking Options into account in the order in which they were
granted.

       

      (iii) An Award
of an Incentive Stock Option may provide that the Option may be exercised not
later than three (3) months following the Participant’s termination of
employment with the Company and all Subsidiaries, or not later than one (1) year
following death or a permanent and total disability within the meaning of Code
Section 22(e)(3).

       

      (iv) Notwithstanding
any other provisions of the Plan, if for any reason any Option granted under the
Plan that is intended to be an Incentive Stock Option fails to qualify as an
Incentive Stock Option, that Option will be deemed to be a Nonqualified Stock
Option and fully authorized and validly issued under the Plan.

       

      8. Stock
Appreciation Rights.

       

      (a) Grant of SARs.
Subject to the terms and provisions of the Plan, SARs may be granted to
Participants in such amounts and upon such terms, and at any time and from time
to time, as the Committee determines. The Committee may grant Freestanding SARs,
Tandem SARs, or any combination of these forms of SARs.

       

      (b) Award Agreement. Each
SAR grant will be evidenced by an Award Agreement that specifies the number of
Shares to which the SAR pertains, the grant price, the term of the SAR, and such
other provisions as the Committee determines.

       

      (c) Grant Price. The
grant price of a Freestanding SAR will not be less than 100% of the Fair Market
Value of a Share on the date of grant of the SAR, and the grant price of a
Tandem SAR will equal the Exercise Price of the related Option; provided,
however, that these limitations will not apply to Awards that are adjusted
pursuant to Section 18.

       

      (d) Term of SARs. The
term of a SAR granted under the Plan will be determined by the Committee, in its
sole discretion; provided, however, that the term will not exceed ten (10) years
from the date of grant.

       

      (e) Exercise of Tandem
SARs. A Tandem SAR may be exercised only with respect to the Shares for
which its related Option is then exercisable. To the extent exercisable, Tandem
SARs may be exercised for all or part of the Shares subject to the related
Option. The exercise of all or part of a Tandem SAR will result in the
forfeiture of the right to purchase a number of Shares under the related Option
equal to the number of Shares with respect to which the SAR is exercised.
Conversely, upon exercise of all or part of an Option with respect to which a
Tandem SAR has been granted, an equivalent portion of the Tandem SAR will
similarly be forfeited.

       


      
        
          
             

          

          
          

        

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

       

      (f) Exercise of Freestanding
SARs. Freestanding SARs may be exercised upon whatever terms and
conditions the Committee, in its sole discretion, imposes upon them and sets
forth in the applicable Award Agreement; provided, however, that except as
otherwise provided upon a termination of employment or service or pursuant to
Section 19 in the event of a Change in Control or Subsidiary Disposition,
no Freestanding SARs may be exercisable prior to one (1) year from the date of
grant.

       

      (g) Payment of SAR
Amount. SARs granted under this Section 8 will be exercised by the
delivery of a written notice to the Company setting forth the number of Shares
with respect to which the SAR is to be exercised. Upon exercise of a SAR, a
Participant will be entitled to receive payment from the Company in an amount
determined by multiplying:

       

      (i) the
difference between the Fair Market Value of a Share on the date of exercise over
the grant price; by

       

      (ii) the
number of Shares with respect to which the SAR is exercised.

       

      At the
discretion of the Committee as specified in the Award Agreement, the payment
upon SAR exercise may be in cash, in Shares of equivalent value, or in some
combination thereof.

       

      (h) Termination for
Cause. Upon a Participant’s termination of employment or service for
Cause, all rights under any SARs granted to the Participant will terminate
immediately, and the Participant will (if the Committee, in its sole discretion,
exercises its rights under this Section 8(h) within ten (10) days of the
termination) repay to the Company within ten (10) days of the Committee’s
written demand the amount of any gain the Participant had realized upon any
exercise within the 90-day period prior to the termination of any
SARs.

       

      (i) Termination Due to Death or
Disability. Upon a Participant’s termination of employment or service due
to death or Disability, the Participant or the Participant’s beneficiary, as the
case may be, may exercise outstanding SARs to the extent the Participant was
entitled to exercise the SARs on the date of termination, but only within the
one (1)-year period immediately following the Participant’s termination due to
death or Disability, and in no event after the date the SARs expire in
accordance with their terms.

       

      (j) Other Terminations.
Upon the termination of a Participant's employment or service by the Company
without Cause, upon the Participant’s voluntary termination of employment or
service for a reason other than death or Disability, or upon the Employee's
Retirement, the Participant may exercise outstanding SARs to the extent that the
Participant was entitled to exercise the SARs at the date of termination, but
only within the one (1) month period immediately following the Participant’s
termination, and in no event after the date the SARs expire in accordance with
their terms.

       

      (k) Forfeiture of SARs.
Notwithstanding subsections (i) and (j) above, a Participant or the
Participant’s beneficiary, as the case may be, will, in connection with any and
all terminations of employment or service, forfeit all outstanding SARs the
Participant was not entitled to exercise on the date of
termination.

       

      (l) Committee Discretion.
Notwithstanding the foregoing paragraphs of this Section 8, the Committee may,
in its sole discretion, establish different terms and conditions pertaining to
the effect of a Participant’s termination, to the extent permitted by Applicable
Law.

       


      
        
          
             

          

          
          

        

        
          10

          
            

          

        

        
          
          

        

      


      


       

      9. Restricted
Stock.

       

      (a) Grant of Restricted
Stock. Subject to the terms and provisions of the Plan, Restricted Stock
may be granted to Participants in such amounts and upon such terms, and at any
time and from time to time, as the Committee determines.

       

      (b)  Award Agreement. Each
Restricted Stock grant will be evidenced by an Award Agreement that specifies
the Period(s) of Restriction, the number of Shares of Restricted Stock granted,
and such other provisions as the Committee determines.

       

      (c) Period of
Restriction. Except as otherwise provided in subsection (h) below, or
pursuant to Section 19 in the event of a Change in Control or Subsidiary
Disposition, any Period of Restriction for an Award of Restricted Stock will not
be less than one (1) year. Notwithstanding Section 3(c) of this Plan, the
Committee does not have the discretion or authority to (i) grant any Award of
Restricted Stock under a Period of Restriction that is shorter than the minimum
Period of Restriction in this subsection (c), or (ii) shorten the Period of
Restriction of any outstanding grant of Restricted Stock.

       

      (d) Other Restrictions.
The Committee may impose such other conditions or restrictions on any Shares of
Restricted Stock granted pursuant to the Plan as it may deem advisable
including, without limitation, a requirement that Participants pay a stipulated
purchase price for each Share of Restricted Stock, a requirement that the
issuance of Shares of Restricted Stock be delayed, restrictions based upon the
achievement of specific performance goals, additional time-based restrictions,
or restrictions under Applicable Law or under the requirements of any stock
exchange or market upon which the Shares are listed or traded, or holding
requirements or sale restrictions placed on the Shares by the Company upon
vesting of the Restricted Stock. The Company may retain in its custody any
certificate evidencing the Shares of Restricted Stock and place on them a legend
and institute stop-transfer orders on the Shares, and the Participant will be
obligated to sign any stock power requested by the Company relating to the
Shares to give effect to the forfeiture provisions of the Restricted
Stock.

       

      (e) Removal of
Restrictions. Subject to Applicable Law, Restricted Stock will become
freely transferable by the Participant after the last day of the applicable
Period of Restriction. Once Restricted Stock is released from the restrictions,
the Participant will be entitled to receive a certificate evidencing the
Shares.

       

      (f) Voting Rights. Unless
otherwise determined by the Committee and set forth in a Participant’s Award
Agreement, to the extent permitted or required by Applicable Law, as determined
by the Committee, Participants holding Shares of Restricted Stock granted under
the Plan may exercise full voting rights with respect to those Shares during the
Period of Restriction.

       

      (g) Dividends and Other
Distributions. Except as otherwise provided in a Participant’s Award
Agreement, during the Period of Restriction, Participants holding Shares of
Restricted Stock will receive all regular cash Dividends paid with respect to
all Shares while they are so held, and, except as otherwise determined by the
Committee, all other distributions paid with respect to the Restricted Stock
will be credited to Participants subject to the same restrictions on
transferability and forfeitability as the Restricted Stock with respect to which
they were paid and paid at such time following full vesting as are paid the
Shares of Restricted Stock with respect to which the distributions were
made.

       

      (h) Termination Due to Death or
Disability. Except as otherwise determined by the Committee, upon a
Participant’s termination of employment or service due to death or
Disability:

       

      (i) With
respect to an Award of Restricted Stock with a time-based Period of Restriction,
the restrictions on the Ratable Portion of the Award will lapse, and those
Shares will be free of restrictions and will not be forfeited. The “Ratable
Portion” of an Award of Restricted Stock is equal to:

       


      
        
          
             

          

          
          

        

        
          11

          
            

          

        

        
          
          

        

      


      


       

      (a) the
number of Shares of Restricted Stock awarded to the Participant multiplied by
the portion (expressed as a percentage) of the Restricted Period that expired on
the date of the Participant’s death or Disability, reduced by

       

      (b) the
number of Shares of Restricted Stock awarded with respect to which the
restrictions had lapsed as of the date of the Participant’s death or
Disability.

       

      (ii) With
respect to an Award of Restricted Stock with a performance-based Period of
Restriction, any unvested portion of the Award will vest on a pro rata monthly
basis, including full credit for partial months elapsed, and will be paid
(A) based on the level of performance achieved as of the date of the
termination, if determinable, or (B) at the target level, if not
determinable. The amount of the vested Award may be computed under the following
formula: unvested number of Shares times (number of full months elapsed in
shortest possible vesting period divided by number of full months in shortest
possible vesting period) times percent performance level achieved immediately
prior to the effective date of the termination of employment or
service.

       

      (i) Other Terminations of
Employment. Immediately after a Participant’s termination of employment
or service for a reason other than death or Disability, except as provided in
Section 19 or as the Committee may otherwise determine, a Participant will
forfeit all Restricted Stock that, at the time of termination, remains subject
to the restrictions imposed by paragraph (c) of this Section 9.

       

      10. Restricted
Stock Units.

       

      (a) Grant of Restricted Stock
Units. Subject to the terms and provisions of the Plan, Restricted Stock
Units may be granted to Participants in such amounts and upon such terms, and at
any time and from time to time, as the Committee determines.

       

      (b) Award Agreement. Each
grant of Restricted Stock Units will be evidenced by an Award Agreement that
specifies the applicable Period of Restriction, the number of Restricted Stock
Units granted, the settlement date, and such other provisions as the Committee
determines.

       

      (c)  Value of Restricted Stock
Units. The initial value of a Restricted Stock Unit will equal the Fair
Market Value of a Share on the date of grant; provided, however, that this
requirement will not apply to Awards that are adjusted pursuant to
Section 18.

       

      (d) Period of
Restriction. Except as otherwise provided in subsection (g) below, or
pursuant to Section 19 in the event of a Change in Control or Subsidiary
Disposition, any Period of Restriction for an Award of Restricted Stock Units
will not be less than one (1) year. Notwithstanding Section 3(c), the Committee
does not have the discretion or authority to (i) grant any Award of Restricted
Stock Units under a Period of Restriction that is shorter than the minimum
Period of Restriction in this subsection (d), or (ii) shorten the Period of
Restriction of any outstanding grant of Restricted Stock Units.

       

      (e) Form and Timing of
Settlement. Except as otherwise provided in Section 19 or a
Participant’s Award Agreement, settlement and payment of Restricted Stock Units
will be made at a specified settlement date that will not be earlier than the
last day of the Period of Restriction. The Committee, in its sole discretion as
specified in the Award Agreement, may settle earned Restricted Stock Units by
delivery of Shares or by payment in cash of an amount equal to the Fair Market
Value of the Shares on the settlement date (or a combination
thereof).

       

      (f) Voting Rights. A
Participant will not have voting rights or other rights as a shareholder with
respect to the Shares subject to an Award of Restricted Stock Units granted
under the Plan until the time, if at all, when the Shares are issued to the
Participant pursuant to the terms of the applicable Award
Agreement.

       

      (g) Termination Due to Death or
Disability. Except as otherwise determined by the Committee, upon a
Participant’s termination of employment or service due to death or
Disability:

       


      
        
          
             

          

          
          

        

        
          12

          
            

          

        

        
          
          

        

      


      


       

      (i) With
respect to an Award of Restricted Stock Units with a time-based Period of
Restriction, the restrictions on the Ratable Portion of the Award will lapse,
and those Restricted Stock Units will be free of restrictions and will not be
forfeited. The “Ratable Portion” of an Award of Restricted Stock Units is equal
to:

       

      (a) the
number of Restricted Stock Units awarded to the Participant multiplied by the
portion (expressed as a percentage) of the Restricted Period that expired on the
date of the Participant’s death or Disability, reduced by

       

      (b) the
number of Restricted Stock Units awarded with respect to which the restrictions
had lapsed as of the date of the Participant’s death or Disability.

       

      (ii)  With
respect to an Award of Restricted Stock Units with a performance-based Period of
Restriction, any unvested portion of the Award will vest on a pro rata monthly
basis, including full credit for partial months elapsed, and will be paid
(A) based on the level of performance achieved as of the date of the
termination, if determinable, or (B) at the target level, if not
determinable. The amount of the vested Award may be computed under the following
formula: unvested number of Restricted Stock Units times (number of full months
elapsed in shortest possible vesting period divided by number of full months in
shortest possible vesting period) times percent performance level achieved
immediately prior to the effective date of the termination of employment or
service.

       

      (h) Other Terminations of
Employment. Upon a Participant’s termination of employment or service for
a reason other than death or Disability, except as provided in Section 19 or as
the Committee may otherwise determine, a Participant will forfeit all Restricted
Stock Units that, at the time of termination, remain subject to the restrictions
imposed by paragraph (d) of this Section 10.

       

      11. Performance
Shares.

       

      (a) Grant of Performance
Shares. Subject to the terms and provisions of the Plan, Performance
Shares may be granted to Participants in such amounts and upon such terms, and
at any time and from time to time, as the Committee determines.

       

      (b) Award Agreement. Each
grant of Performance Shares will be evidenced by an Award Agreement that
specifies the applicable Performance Period(s) and performance goal(s), the
number of Performance Shares granted, and such other provisions as the Committee
determines; provided, however, that except as otherwise provided in a
Participant’s Award Agreement, upon a termination of employment or service or
pursuant to Section 19 in the event of a Change in Control or Subsidiary
Disposition, in no case will a Performance Period be for a period of less than
one (1) year.

       

      (c) Value of Performance
Shares. The initial value of a Performance Share will equal the Fair
Market Value of a Share on the date of grant; provided, however, that this
restriction will not apply to Awards that are adjusted pursuant to
Section 18.

       

      (d) Form and Timing of
Payment. As soon as practicable following the completion of the
Performance Period applicable to outstanding Performance Shares, the Committee
will certify in writing the extent to which the applicable performance goals
have been attained and the resulting final value of the Award earned by the
Participant and to be paid upon its settlement. By the fifteenth (15th) day of
the third (3rd) month following the completion of the Performance Period
applicable to outstanding Performance Shares, payment will be made to each
eligible Participant of the final value of the Performance Shares. The
Committee, in its sole discretion as specified in the Award Agreement, may pay
earned Performance Shares by delivery of Shares or by payment in cash of an
amount equal to the Fair Market Value of the Shares (or a combination
thereof).

       

      (e) Voting Rights. A
Participant will not have voting rights or other rights as a shareholder with
respect to the Shares subject to an Award of Performance Shares granted under
the Plan until the time, if at all, when the Shares are issued to the
Participant pursuant to the terms of the applicable Award
Agreement.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      (f) Termination of Employment or
Service.

       

      (i) Except as
otherwise determined by the Committee, upon a Participant’s termination of
employment or service due to death or Disability, the Performance Shares will be
paid based on a pro rata monthly basis, including full credit for partial months
elapsed, and will be paid (A) based on the level of performance achieved as
of the date of the termination, if determinable, or (B) at the target
level, if not determinable. The amount of the Award to be paid may be computed
under the following formula: total Performance Shares times (number of full
months elapsed in shortest possible vesting period divided by number of full
months in shortest possible vesting period) times percent performance level
achieved immediately prior to the effective date of the termination of
employment or service.

       

      (ii) Except as
otherwise determined by the Committee, if a Participant terminates employment or
service with the Company for any reason other than death or Disability prior to
the end of the Performance Period respecting an Award of Performance Shares, the
Participant will forfeit any and all right to payment under the Performance
Shares.

       

      12. Performance
Units.

       

      (a) Grant of Performance
Units. Subject to the terms and conditions of the Plan, Performance Units
may be granted to Participants in such amounts and upon such terms, and at any
time and from time to time, as the Committee determines.

       

      (b) Award Agreement. Each
grant of Performance Units will be evidenced by an Award Agreement that
specifies the number of Performance Units granted, the Performance Period(s) and
performance goal(s), and such other provisions as the Committee determines;
provided, however, that except as otherwise provided in a Participant’s Award
Agreement upon a termination of employment or service or pursuant to
Section 19 in the event of a Change in Control or Subsidiary Disposition,
in no case will a Performance Period be for a period of less than one (1)
year.

       

      (c) Value of Performance
Units. The Committee will set performance goal(s) in its discretion that,
depending on the extent to which they are met, will determine the number and/or
value of Performance Units that will be paid to Participants.

       

      (d) Form and Timing of
Payment. As soon as practicable following the completion of the
Performance Period applicable to outstanding Performance Units, the Committee
will certify in writing the extent to which the applicable performance goals
have been attained and the resulting final value of the Award earned by the
Participant and to be paid upon its settlement. By the fifteenth (15th) day of
the third (3rd) month following the completion of the Performance Period
applicable to outstanding Performance Units, payment will be made to each
eligible Participant of the final value of the Performance Units. The Committee,
in its sole discretion as specified in the Award Agreement, may pay earned
Performance Units in cash or in Shares that have an aggregate Fair Market Value
equal to the value of the earned Performance Units (or a combination
thereof).

       

      (e) Voting Rights. A
Participant will not have voting rights or other rights as a shareholder with
respect to the Shares subject to an Award of Performance Units granted under the
Plan until such time, if at all, as Shares are issued to the Participant
pursuant to the terms of the applicable Award Agreement.

       

      (f) Termination of Employment or
Service.

       

      (i) Except as
otherwise determined by the Committee, upon a Participant’s termination of
employment or service due to death or Disability, the Performance Units will be
paid based on a pro rata monthly
basis, including full credit for partial months elapsed, and will be paid
(A) based on the level of performance achieved as of the date of the
termination, if determinable, or (B) at the target level, if not


       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      determinable.
The amount of the Award to be paid may be computed under the following formula:
total Performance Units times (number of full months elapsed in shortest
possible vesting period divided by number of full months in shortest possible
vesting period) times percent performance level achieved immediately prior to
the effective date of the termination of employment or service.

       

      (ii) Except as
otherwise determined by the Committee, if a Participant terminates employment or
service with the Company for any reason other than death or Disability prior to
the end of the Performance Period respecting an Award of Performance Units, the
Participant will forfeit any and all right to payment under the Performance
Units.

       

      13. Other
Stock-Based Awards.

       

      (a) Grant. The Committee
has the right to grant Other Stock-Based Awards that may include, without
limitation, (i) the grant of Shares based on attainment of performance goal(s)
established by the Committee, (ii) the payment of Shares as a bonus or in lieu
of cash based on attainment of performance goal(s) established by the Committee,
and (iii) the payment of Shares in lieu of cash under other Company incentive or
bonus programs.

       

      (b) Period of
Restriction. Except as otherwise provided in a Participant’s Award
Agreement, upon a termination of employment or service or pursuant to
Section 19 in the event of a Change in Control or Subsidiary Disposition,
Other Stock-Based Awards granted pursuant to this Section 13 will have a
minimum Period of Restriction of one (1) year, which period may, in the
Committee’s discretion, lapse on a pro-rated, graded, or cliff basis (as
specified in an Award Agreement); provided, however, that in the Committee’s
discretion, up to five percent (5%) of the Shares available for issuance under
the Plan may have a shorter Period of Restriction. Notwithstanding the above, an
Award of payment in Shares in lieu of cash under other Company incentive or
bonus programs will not be subject to the minimum Period of Restriction
limitations described above and will not be applied against or included when
calculating the 5% limitation in the previous sentence.

       

      (c) Other Company
Programs. Notwithstanding subsection (b) above, an Award that is payable
in Shares in lieu of cash under another Company incentive or bonus program (and
not this Plan) will not be subject to any Period of Restriction.

       

      (d) Payment of Other Stock-Based
Awards. Subject to Section 13(b), payment under or settlement of any such
Awards will be made in such manner and at such times as the Committee
determines. The Committee may provide that settlement of Other Stock-Based
Awards will be deferred, on a mandatory basis or at the election of the
Participant, pursuant to a deferred compensation plan designed to comply with
Code Section 409A.

       

      (e) Termination of Employment or
Service. The Committee will determine the extent to which the Participant
will have the right to receive Other Stock-Based Awards following termination of
the Participant’s employment or service with the Company and its Subsidiaries.
Those provisions will be determined in the sole discretion of the Committee, may
be included in an agreement entered into with each Participant, but need not be
uniform among all Other Stock-Based Awards, and may reflect distinctions based
on the reasons for termination of employment or service.

       

      14. Performance-Based
Exception.

       

      (a) If the
Committee intends for an Award to qualify for the Performance-Based Exception,
it shall specify that the attainment of one or more Performance Measures will
determine the degree of granting, vesting or payout with respect to the Award.
The Committee may establish Performance Measures, in its discretion, on a
corporate-wide basis or with respect to one or more business units, divisions,
subsidiaries, business segments, functions, salary grade level, or position, and
in either absolute terms or relative to the performance of one or more
comparable companies or an index covering multiple companies.

       


      
        
          
             

          

          
          

        

        
          15

          
            

          

        

        
          
          

        

      


      


       

      (b) Unless
otherwise determined by the Committee, measurement of Performance Measures will
exclude the impact of charges for restructurings, discontinued operations,
extraordinary items, and other unusual or non-recurring items, as well as the
cumulative effects of tax or accounting changes, each as determined in
accordance with generally accepted accounting principles or identified in the
Company’s financial statements, notes to the financial statements, management’s
discussion and analysis, or other filings with the SEC.

       

      (c) Performance
Measures may differ for Awards granted to any one Participant or to different
Participants.

       

      (d) Achievement
of Performance Measures in respect of Awards intended to qualify under the
Performance-Based Exception will be measured over a Performance Period specified
in the Award Agreement, and the goals will be established not later than
90 days after the beginning of the Performance Period or, if less than
90 days, the number of days that is equal to 25% of the relevant
Performance Period applicable to the Award.

       

      (e) The
Committee will have the discretion to adjust the determinations of the degree of
attainment of the pre-established Performance Measures; provided, however, that
Awards that are designed to qualify for the Performance-Based Exception may not
be adjusted upward (the Committee may, in its discretion, adjust the Awards
downward).

       

      15. Transferability
of Awards; Beneficiaries.

       

      (a) Awards Not
Transferable. Except as provided in this Section 15, Awards under the
Plan will not be assignable or transferable by the Participant, except by will
or by the laws of descent and distribution, and will not be subject in any
manner to assignment, alienation, pledge, encumbrance or charge. During the
lifetime of a Participant, an Award will be exercised only by the Participant or
the Participant’s guardian or legal representative.

       

      (b) Death of Participant.
Notwithstanding subsection (a), the Committee may provide in an Award Agreement
that the Participant has the right to designate a beneficiary or beneficiaries
who will be entitled to any rights, payments, or other benefits of the Award
following the Participant’s death. In the event of the Participant’s death, the
Participant’s beneficiary may exercise the Award, to the extent the Award
Agreement permits, in the same manner and to the same extent that the
Participant could have exercised the Award on the date of his of her
death.

       

      (c) Designation of
Beneficiary. If an Award Agreement provides that a Participant has the
right to designate a beneficiary or beneficiaries, the Participant must
designate his or her beneficiary or beneficiaries in the manner the Committee
prescribes in the Award Agreement.

       

      (d) Failure to Designate a
Beneficiary. If a Participant’s Award Agreement allows the Participant to
designate a beneficiary or beneficiaries of the Award, and the Participant dies
without a beneficiary designation valid under subsection (c), the Award may be
exercised, within the limits of subsection (b), by the legatee of the Award
under the Participant’s will, by the Participant’s estate in accordance with the
Participant’s will, or the laws of descent and distribution.

       

      16. Taxes.

       

      Prior to
the delivery of any Shares or cash pursuant to an Award, the Company has the
right and power to deduct or withhold, or require the Participant to remit to
the Company, an amount sufficient to satisfy all applicable tax withholding
requirements. The Company may permit or require a Participant to satisfy all or
part of the tax withholding obligations in connection with an Award by (a)
having the Company withhold otherwise deliverable Shares, or (b) delivering
to the Company Shares already owned for a period of at least six (6) months (or
such longer or shorter period as may be required to avoid a charge to earnings
for financial accounting purposes), in each case having a value equal to the
amount to be withheld, which will not exceed the amount determined by the
applicable minimum statutory tax withholding rate (or such other rate as will
not result in a negative accounting impact). For these purposes, the value of
the Shares to be withheld or delivered will be equal to the Fair Market Value as
of the date that the taxes are required to be withheld.

       


      
        
          
             

          

          
          

        

        
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      17. Conditions
Upon Issuance of Shares.

       

      (a) Shares
will not be issued pursuant to the exercise or settlement of an Award, unless
the exercise of the Award and the issuance and delivery of the Shares pursuant
thereto will comply with Applicable Law.

       

      (b) As a
condition to the exercise or settlement of an Award, the Company may require the
person exercising the Award to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute the Shares if, in the opinion of counsel
for the Company, such a representation is required by any Applicable
Law.

       

      18. Adjustments
Upon Changes in Capitalization.

       

      In the
event of any merger, reorganization, consolidation, recapitalization,
liquidation, stock dividend, split-up, spin-off, stock split, reverse stock
split, share combination, share exchange, or any change in the corporate
structure affecting the Shares, or in the event of payment of a dividend or
distribution to the shareholders of the Company in a form other than Shares
(excepting normal cash dividends) or other corporate event that has a material
effect on the Fair Market Value of the Shares, such adjustment will be made in
the number and kind of Shares that may be delivered under the Plan, the
individual limits set forth in Section 4(c), and, with respect to
outstanding Awards, in the number and kind of Shares subject to outstanding
Awards, the Exercise Price, grant price or other price of Shares subject to
outstanding Awards, any performance conditions relating to Shares, the market
price of Shares, or per-Share results, and other terms and conditions of
outstanding Awards, as may be determined to be appropriate and equitable by the
Committee, in its sole discretion, to prevent dilution or enlargement of rights;
provided, however, that, unless otherwise determined by the Committee, the
number of Shares subject to any Award will always be rounded down to a whole
number. Adjustments made by the Committee pursuant to this Section 18 will
be final, binding, and conclusive.

       

      19. Change in
Control, Cash-Out and Termination of Underwater Options/SARs, and Subsidiary
Disposition.

       

      (a) Change in Control.
Except as otherwise provided in a Participant’s Award Agreement, if a
Participant’s employment or service is involuntarily terminated, for whatever
reason, at any time within twelve (12) months after a Change in Control, unless
otherwise specifically prohibited under Applicable Law:

       

      (i) any and
all outstanding Awards granted under the Plan with time-based vesting provisions
will vest on a pro rata monthly basis, including full credit for partial months
elapsed; and

       

      (ii) any and
all Awards granted under the Plan with performance-based vesting provisions will
vest on a pro rata monthly basis, including full credit for partial months
elapsed, and will be paid (A) based on the level of performance achieved as
of the date of the termination, if determinable, or (B) at the target
level, if not determinable. The amount of the vested Award may be computed under
the following formula: total Award number of Shares times (number of full months
elapsed in shortest possible vesting period divided by number of full months in
shortest possible vesting period) times percent performance level achieved
immediately prior to the effective date of the termination.

       

      (b) Cash-Out and Termination of
Underwater Options/SARs. The Committee may, in its sole discretion,
determine that (i) all outstanding Options and SARs will be terminated upon
the occurrence of a Change in Control and that each Participant will receive,
with respect to each Share subject to the Options or SARs, an amount in cash
equal to the excess of the consideration payable with respect to one Share in
connection with the Change in Control over the Option Exercise Price or the SAR
grant price; and (ii) Options and SARs outstanding as of the date of the
Change in Control may be cancelled and terminated without payment if the
consideration payable with respect to one Share in connection with the Change in
Control is less than the Option Exercise Price or the SAR grant
price.

       


      
        
          
             

          

          
          

        

        
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      (c) Subsidiary
Disposition. The Committee will have the authority, exercisable either in
advance of any actual or anticipated Subsidiary Disposition or at the time of an
actual Subsidiary Disposition and either at the time of the grant of an Award or
at any time while an Award remains outstanding, to provide for the automatic
full vesting and exercisability of one or more outstanding unvested Awards under
the Plan and the termination of restrictions on transfer and repurchase or
forfeiture rights on the Awards, in connection with a Subsidiary Disposition,
but only with respect to those Participants who are at the time engaged
primarily in Continuous Service with the Subsidiary involved in the Subsidiary
Disposition. The Committee also will have the authority to condition any such
Award vesting and exercisability or release from limitations upon the subsequent
termination of the affected Participant’s Continuous Service with that
Subsidiary within a specified period following the effective date of the
Subsidiary Disposition. The Committee may provide that any Awards so vested or
released from limitations in connection with a Subsidiary Disposition, will
remain fully exercisable until the expiration or sooner termination of the
Award.

       

      20. Amendment,
Suspension or Termination of the Plan.

       

      (a) Amendment, Modification and
Termination. The Board may at any time and from time to time, alter,
amend, suspend or terminate the Plan in whole or in part; provided, however,
that no amendment that requires shareholder approval, as described in subsection
(b) below, will be effective unless the amendment is approved by the requisite
vote of shareholders of the Company entitled to vote thereon within the
applicable time period.

       

      (b) Amendments Requiring
Shareholder Approval. The Board will seek shareholder approval of any
amendment the Board determines would require shareholder approval under the
applicable rules of any national securities exchange or other market system, and
such an amendment will become effective only upon its approval by the Company’s
shareholders. Except for adjustments made pursuant to Section 18, plan
amendments that require shareholder approval include, without limitation, any
amendment that would (i) increase the maximum number of Shares for which Awards
may be granted under the Plan; (ii) reduce the Exercise Price of outstanding
Options or the grant price of outstanding SARs; (iii) extend the term of the
Plan or the maximum term of Options granted under the Plan; or (iv) change the
class of persons eligible for grants of Awards under the Plan. Except as
provided in Section 18, the Committee may not take any action: (1) to
reprice, replace, regrant through cancellation or modify an outstanding Option
or SAR if the effect of such action would be to reduce the Exercise Price of the
Option or the grant price of the SAR; or (2) to cancel an outstanding
Option or SAR having an Exercise Price or grant price above the then-current
Fair Market Value of the Shares in exchange for the grant of another type of
Award, without, in each case, first obtaining approval of the shareholders of
the Company of such action.

       

      (c) Adjustment of Awards Upon
the Occurrence of Certain Unusual or Nonrecurring Events. The Committee
may make adjustments in the terms and conditions of, and the criteria included
in, Awards in recognition of unusual or nonrecurring events (including, without
limitation, the events described in Section 18) affecting the Company or
the financial statements of the Company or of changes in Applicable Law,
regulations, or accounting principles, whenever the Committee determines that
such adjustments are appropriate to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan.
With respect to any Awards intended to comply with the Performance-Based
Exception, unless otherwise determined by the Committee, any such exception will
be specified at such times and in such manner as will not cause such Awards to
fail to qualify under the Performance-Based Exception.

       

      (d) Awards Previously
Granted. No termination, amendment or modification of the Plan or of any
Award will adversely affect in any material way any Award previously granted
under the Plan without the written consent of the Participant holding the Award,
unless the termination, modification or amendment is required by Applicable Law
and except as otherwise provided under the Plan.

       

      (e) Compliance with the
Performance-Based Exception. If an Award is intended comply with the
requirements of the Performance-Based Exception, the Committee may apply any
restrictions it deems appropriate such that the Awards maintain eligibility for
the Performance-Based Exception. If changes are made to Code Section 162(m) to
permit greater flexibility with respect to any Award or Awards available under
the Plan, the Committee may, subject to this Section 20, make any
adjustments to the Plan or Award Agreements it deems appropriate.

       


      
        
          
             

          

          
          

        

        
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      21. Reservation
of Shares.

       

      (a) The
Company, during the term of the Plan, will at all times reserve and keep
available a number of Shares sufficient to satisfy the Plan’s requirements.
Shares issued under the Plan may be either authorized but unissued Shares, or
Shares held in the Company’s treasury.

       

      (b) The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, will relieve the
Company of any liability in respect of the failure to issue or sell the Shares
as to which the requisite authority is not obtained.

       

      22. Rights of
Participants.

       

      (a) Continued Service.
The Plan will not confer upon any Participant any right to continue employment
or service with the Company, nor will it interfere in any way with his or her
right or the Company’s right to terminate a Participant’s employment or service
at any time, with or without cause.

       

      (b) Participant. No
Employee, Non-Employee Director, consultant or other individual will have the
right to be selected to receive an Award under the Plan, or, having been so
selected, to be selected to receive future Awards.

       

      23. Successors.

       

      All
obligations of the Company under the Plan and with respect to Awards will be
binding on any successor to the Company, whether the existence of the successor
is the result of a direct or indirect purchase, merger, consolidation, or other
event, or a sale or disposition of all or substantially all of the business
and/or assets of the Company, and references to the “Company” in the Plan and in
any Award Agreements will be deemed to refer to such successors.

       

      24. Legal
Construction.

       

      (a) Gender, Number and
References. Except where otherwise indicated by the context, any
masculine term used in the Plan also will include the feminine, the plural will
include the singular, and the singular will include the plural. Any reference in
the Plan to a Section of the Plan either in the Plan or any Award Agreement or
to an act or code or rule or regulation will be deemed to refer to that Section
of the Plan, act, code, rule or regulation, as may be amended from time to time,
or to any successor Section of the Plan, act, code, rule or
regulation.

       

      (b) Severability. In the
event any provision of the Plan is held illegal or invalid for any reason, the
illegality or invalidity will not affect the remaining parts of the Plan, and
the Plan will be construed and enforced as if the illegal or invalid provision
had not been included.

       

      (c)  Requirements of Law.
The granting of Awards and the issuance of Shares or cash under the Plan will be
subject to all Applicable Law and to such approvals by any governmental agencies
or national securities exchanges as may be required.

       

      (d) Governing Law. To the
extent not preempted by federal law, the Plan and all Award Agreements under the
Plan will be construed in accordance with and governed by the laws of the State
of Indiana, excluding any conflicts or choice of law rule or principle that
might otherwise refer construction or interpretation of this Plan to the
substantive law of another jurisdiction.

       

      (e) Non-Exclusive Plan.
Neither the adoption of the Plan by the Board nor its submission to the
Company’s shareholders for approval will be construed as creating any
limitations on the power of the Board or a committee of the Board to adopt any
other incentive arrangements it may deem desirable.

       

      
        
          
          

        

        
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      (f) Code Section 409A
Compliance. To the extent applicable, it is intended that this Plan and
any Awards granted hereunder comply with the requirements of Code
Section 409A and any related regulations or other guidance promulgated with
respect to that section by the U.S. Department of the Treasury or the Internal
Revenue Service. Any provision that would cause the Plan or any Award granted
under the Plan to fail to satisfy Code Section 409A will have no force or
effect until amended to comply with Code Section 409A, which amendment may
be retroactive to the extent permitted by Code Section 409A. With respect
to any Award hereunder that constitutes “deferred compensation” within the
meaning of Code Section 409A, notwithstanding any other provision of the Plan or
the applicable Award Agreement, (i) any amount that is payable on account of a
separation from service to a “specified employee, ” as defined in Code Section
409A(a)(2)(B)(i), will not be paid earlier than the date that is six (6) months
following the specified employee’s separation from service; and (ii) an Award
recipient will not be treated as having terminated employment or service until
that individual has incurred a separation from service within the meaning of
Code Section 409A. The determination of which individuals are “specified
employees” will be made in accordance with such rules and practices, consistent
with Code Section 409A and interpretive regulations, as established from time to
time by the Board, or its designee, in its discretion.

       

       

       

       

       

       

       

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