exv10w16



 





Exhibit 10.16




EXTERRAN HOLDINGS, INC.

AMENDED AND RESTATED 2007 STOCK INCENTIVE PLAN




I. PURPOSE




     The purpose of the EXTERRAN HOLDINGS, INC. 2007 STOCK INCENTIVE PLAN is to provide a means through
which Exterran Holdings, Inc., a Delaware corporation, and its Affiliates may attract
highly-qualified persons to serve as Directors or to enter the employ of the Company and its
Affiliates and to provide a means whereby those individuals, whose present and potential
contributions to the Company and its Affiliates are of importance, can acquire and maintain stock
ownership, thereby strengthening their concern for the welfare of the Company and its Affiliates. A
further purpose of the Plan is to provide such individuals with additional incentive and reward
opportunities designed to enhance the profitable growth of the Company and its Affiliates.
Accordingly, the Plan provides for the grant of Options, Restricted Stock, Restricted Stock Units,
Stock Appreciation Rights and Performance Awards, or any combination of the foregoing, as is best
suited to the circumstances of the particular Employee or Director as determined by the Committee
in its sole discretion.



II. DEFINITIONS




     The following definitions shall be applicable throughout the Plan unless specifically modified
by any paragraph:



     (a) “Affiliate” means any corporation, partnership, limited liability company or partnership,
association, trust or other organization which, directly or indirectly, controls, is controlled by,
or is under common control with, the Company. For purposes of the preceding sentence, “control”
(including, with correlative meanings, the terms “controlled by” and “under common control with”),
as used with respect to any entity or organization, shall mean the possession, directly or
indirectly, of the power (i) to vote more than 50% of the securities having ordinary voting power
for the election of directors of the controlled entity or organization, or (ii) to direct or cause
the direction of the management and policies of the controlled entity or organization, whether
through the ownership of voting securities or by contract or otherwise.



     (b) “Award” means, individually or collectively, any Options, Restricted Stock, Restricted
Stock Units, Stock Appreciation Rights or Performance Awards granted under the terms of the Plan.



     (c) “Award Notice” means a written notice setting forth the terms of an Award.



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



     (e) “Cause” means (i) the commission by a Participant of an act of fraud, embezzlement or
willful breach of a fiduciary duty to the Company or an Affiliate (including the unauthorized
disclosure of confidential or proprietary material information of the Company or an Affiliate),
(ii) a conviction of a Participant (or a plea of nolo contendere in lieu thereof) for a felony or a
crime involving fraud, dishonesty or moral turpitude, (iii) willful failure of a Participant to
follow the written directions of the chief executive officer of the Company or the Board, in the
case of executive officers of the Company; (iv) willful misconduct as an Employee of the Company or
an Affiliate; (v) willful failure of a Participant to render services to the Company or an
Affiliate in accordance with his employment arrangement, which failure amounts to a material
neglect of his duties to the Company or an Affiliate or (vi) substantial dependence, as determined
by the Committee, in its sole discretion, on any drug, immediate precursor or other substance
listed on Schedule IV of the Federal Comprehensive Drug Abuse Prevention and Control



Page 1









 







Act of 1970, as amended. With respect to any Participant residing outside of the United
States, the Committee may revise the definition of “Cause” as appropriate to conform to the laws of
the applicable non-U.S. jurisdiction.



     (f) “Code” means the U.S. Internal Revenue Code of 1986, as amended. References in the Plan to
any section of the Code shall be deemed to include any amendments or successor provisions to such
section and any regulations under such section.



     (g) “Committee” means the Committee defined in Paragraph IV(a) of the Plan.



     (h) “Common Stock” means the common stock, par value $.01 per share, of the Company, or any
security into which such common stock may be changed by reason of any transaction or event of the
type described in Paragraph XII.



     (i) “Company” means Exterran Holdings, Inc., a Delaware corporation, or any successors
thereto.



     (j) “Corporate Change” means:



     (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
40% or more of either (A) the then outstanding shares of common stock of the Company (the
“Outstanding Company Common 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”); provided, however, that for purposes of this subsection (i), any
acquisition by any Person pursuant to a transaction which complies with clause (A) of subsection
(iii) of this definition shall not constitute a Corporate Change; or



     (ii) Individuals, who, as of the date hereof, constitute the Board (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 date hereof 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 for purposes of this definition
as though such individual was a member of the Incumbent Board, but excluding, for these purposes,
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) The consummation of a reorganization, merger or consolidation involving the Company or
any of its subsidiaries, or the sale, lease or other disposition of all or substantially all of the
assets of the Company and its subsidiaries, taken as a whole (other than to an entity wholly owned,
directly or indirectly, by the Company) (each, a “Corporate Transaction”), in each case, unless,
following such Corporate Transaction, (A) all or substantially all of the individuals and entities
who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the Resulting Corporation in substantially the same
proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities, as the case may be, and (B) at
least a majority of the members of the board of directors of the Resulting Corporation 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 Corporate Transaction. The term



Page 2









 




“Resulting Corporation” means (1) the Company or its successor, or (2) if as a result of a
Corporate Transaction the Company or its successor becomes a subsidiary of another entity, then
such entity or the parent of such entity, as applicable, or (3) in the event of a Corporate
Transaction involving the sale, lease or other disposition of all or substantially all of the
assets of the Company and its subsidiaries, taken as a whole, then the transferee of such assets in
such Corporate Transaction. Notwithstanding the foregoing, neither the sale, lease or other
disposition of assets by the Company or its subsidiaries to Universal Compression Partners, L.P. or
its subsidiaries or their successor nor the sale, lease or other disposition of any interest in
Universal Compression Partners, L.P., its general partner or its subsidiaries or their successors
shall, in and of itself, constitute a Corporate Change for purposes of this Plan.




     (k) “Director” means an individual elected to the Board by the stockholders of the Company or
by the Board under applicable corporate law and who is serving on the Board on the date the Plan is
adopted by the Board, or is subsequently elected to the Board, and is not an Employee.



     (l) “Disability” means any physical or mental condition for which the Participant would be
eligible to receive long-term disability benefits under the Company’s long-term disability plan.
With respect to any Participant residing outside of the United States, the Committee may revise the
definition of “Disability” as appropriate to conform to the laws of the applicable non-U.S.
jurisdiction.



     (m) “Employee” means any person who is an employee of the Company or any Affiliate. If an
entity ceases to be an Affiliate of the Company, a Participant employed by such entity shall be
deemed to have terminated his employment with the Company and its Affiliates and shall cease to be
an Employee under the Plan. For any and all purposes under the Plan, the term “Employee” shall
exclude an individual hired as an independent contractor, leased employee, consultant, or a person
otherwise designated by the Committee, the Company or an Affiliate at the time of hire as not
eligible to participate in or receive benefits under the Plan, even if such ineligible individual
is subsequently determined to be an employee by any governmental or judicial authority. For
purposes of any Award granted to a person residing outside of the United States, the Committee may
revise the definition of “Employee” as appropriate to conform to the laws of the applicable
non-U.S. jurisdiction.



     (n) “Fair Market Value” of a share of Common Stock means, as of any specified date: (i) if the
Common Stock is listed on a national securities exchange or quoted on the National Association of
Securities Dealers, Inc. Automated Quotation System (“NASDAQ”), the closing sales price of a share
of Common Stock on that date, or if no prices are reported on that date, on the last preceding day
on which the Common Stock was traded, as reported by such exchange or NASDAQ, as the case may be;
and (ii) if the Common Stock is not listed on a national securities exchange or quoted on the
NASDAQ, but is traded in the over-the-counter market, the average of the bid and asked prices for a
share of Common Stock on the most recent date on which the Common Stock was publicly traded. In the
event the Common Stock is not publicly traded at the time a determination of its value is required
to be made hereunder, the determination of its Fair Market Value shall be made by the Committee in
such manner as it deems appropriate.



     (o) “Incentive Stock Option” means an Option granted under Paragraph VII of the Plan that is
an incentive stock option within the meaning of Section 422 of the Code.



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



     (q) “Non-Qualified Option” means an Option granted under Paragraph VII of the Plan that is not
an Incentive Stock Option.



     (r) “Option” means an option to purchase shares of Common Stock granted under Paragraph VII of
the Plan that may be either an Incentive Stock Option or a Non-Qualified Option.



Page 3









 





     (s) “Participant” means an Employee or Director who has been granted an Award under the Plan.



     (t) “Performance Award” means an opportunity for a Participant to earn additional compensation
if certain Performance Measures or other criteria are met, as described in Paragraph XI of the
Plan.



     (u) “Performance Measure” means any performance objective established by the Committee in its
sole discretion, including, but not limited to, one or more of the following:



     (1) the price of a share of Common Stock;



     (2) the Company’s earnings per share;



     (3) the Company’s market share;



     (4) the market share of a business unit of the Company designated by the Committee;



     (5) the Company’s sales;



     (6) the sales of a business unit of the Company designated by the Committee;



     (7) the net income (before or after taxes) of the Company or any business unit of the Company
designated by the Committee;



     (8) the cash flow return on investment, cash value added, and/or working cash flow of the
Company or any business unit of the Company designated by the Committee;



     (9) the earnings before or after interest, leasing expense, taxes, depreciation, distributions
on mandatorily redeemable preferred stock, and/or amortization of the Company or any business unit
of the Company designated by the Committee;



     (10) the economic value added;



     (11) the return on stockholders’ equity achieved by the Company;



     (12) the return on capital employed of the Company or any business unit of the Company
designated by the Committee; or



     (13) the total stockholders’ return achieved by the Company.


A Performance Measure may be subject to adjustment for changes in accounting standards required by
the Financial Accounting Standards Board after the goal is established, for specified significant
items or events, and may be absolute, relative to one or more other companies, or relative to one
or more indexes, and may be contingent upon future performance of the Company or any Affiliate,
division, or department thereof.




     (v) “Plan” means the Exterran Holdings, Inc. Amended and Restated 2007 Stock Incentive Plan,
as amended from time to time.



     (w) “Restricted Stock” means Common Stock subject to certain restrictions, as described in
Paragraph VIII of the Plan.



Page 4









 





     (x) “Restricted Stock Unit” means a promise to deliver a share of Common Stock, or the Fair
Market Value of such share in cash, in the future if certain criteria are met, as described in
Paragraph IX of the Plan.



     (y) “Retirement” means a Termination of Service, other than due to Cause or death, on or after
the Participant attains (i) age 65 or (ii) age 55 and with the written consent of the Committee.
Notwithstanding the foregoing, with respect to a Participant residing outside of the United States,
the Committee may revise the definition of “Retirement” as appropriate to conform to the laws of
the applicable non-U.S. jurisdiction.



     (z) “Stock Appreciation Right” means a right entitling the Participant to the difference
between the Fair Market Value of a share of Common Stock on the date of exercise and the Fair
Market Value of a share of Common Stock on the date of grant, as described in Paragraph X of the
Plan.



     (aa) “Termination of Service” means a Participant’s termination of employment, if an Employee,
or a termination of service, if a Director, as the case may be. A Participant who is both an
Employee and a Director shall not incur a Termination of Service until the Participant terminates
both positions.



III. EFFECTIVE DATE AND DURATION OF THE PLAN




     The Plan, as amended and restated, shall become effective upon the date of its adoption by the
Board. No further Awards may be granted under the Plan after 7 years from the effective date of
the Plan. The Plan shall remain in effect until all Awards granted under the Plan have been
exercised or expired or vested or forfeited.



     The amendments made to the Exterran Holdings, Inc. 2007 Stock Incentive Plan pursuant to this
amendment and restatement shall apply to all Awards granted under the Plan, including Awards made
prior to the effective date of this amendment and restatement.



IV. ADMINISTRATION




     (a) Composition of Committee. The Plan shall be administered by the Compensation Committee of
the Board or such other committee, if any, that may be designated by the Board to administer the
Plan (the “Committee”); provided, however, that any and all members of the Committee shall satisfy
any independence requirements prescribed by any stock exchange on which the Company lists its
Common Stock; provided, further, that Awards may be granted to individuals who are subject to
Section 16(b) of the 1934 Act only if the Committee is comprised solely of two or more
“Non-Employee Directors” as defined in Securities and Exchange Commission Rule 16b-3 (as amended
from time to time, and any successor rule, regulation or statute fulfilling the same or similar
function); provided, further, that any Award intended to qualify for the “performance-based
compensation” exception under Section 162(m) of the Code shall be granted only if the Committee is
comprised solely of two or more “outside directors” within the meaning of Section l62(m) of the
Code and regulations pursuant thereto.



     (b) Powers. Subject to Paragraph IV(d), and the express provisions of the Plan, the Committee
shall have authority, in its discretion, to determine which Employees or Directors shall receive an
Award, the time or times when such Award shall be made, the terms and conditions of an Award, the
type of Award that shall be made, the number of shares subject to an Award and the value of an
Award. In making such determinations, the Committee shall take into account the nature of the
services rendered by the respective Employees or Directors, their present and potential
contribution to the Company’s success and such other factors as the Committee, in its sole
discretion, shall deem relevant.



Page 5









 





     (c) Additional Powers. The Committee shall have such additional powers as are delegated to it
by the other provisions of the Plan. Subject to the express provisions of the Plan, this shall
include the power to construe the Plan and the respective notices provided hereunder, to prescribe
rules and regulations relating to the Plan, and to determine the terms, restrictions and provisions
of the notice relating to each Award, including such terms, restrictions and provisions as shall be
required in the judgment of the Committee to cause designated Options to qualify as Incentive Stock
Options, and to make all other determinations necessary or advisable for administering the Plan.
The Committee may correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any notice relating to an Award in the manner and to the extent it shall deem expedient
to carry it into effect. Any determination or decision made by the Committee or its delegate
(pursuant to Paragraph IV(d)) under the terms of the Plan shall be made in the sole discretion of
the Committee or such delegate and shall be final and binding on all persons, including the Company
and Participants, but subject to ratification by the Board if the Board so provides.



     (d) Delegation of Powers. Subject to Paragraph IV(a) above, the Committee may delegate to the
Board or to the Chief Executive Officer or one or more other senior officers of the Company the
authority to grant Awards to Employees who are not subject to Section 16(b) of the 1934 Act.
Further, the Committee may delegate to the Governance Committee of the Board the authority to make
non-discretionary (routine) Awards to Directors, including to determine which Director shall
receive an Award, the time or times when such an Award shall be made, the terms and conditions of
such an Award, the type of Award that shall be made to a Director, the number of shares subject to
such an Award, and the value of such an Award; provided, however, that the Committee may not
delegate its authority to grant discretionary (non-routine) awards to Directors. The Committee may
delegate to the Chief Executive Officer or one or more other senior officers of the Company its
administrative functions under this Plan with respect to the Awards. Any delegation described in
this paragraph shall contain such limitations and restrictions as the Committee may provide and
shall comply in all respects with the requirements of applicable law, including the Delaware
General Corporation Law. The Committee may engage or authorize the engagement of a third party
administrator or administrators to carry out administrative functions under the Plan.



     No member of the Committee or officer of the Company or an Affiliate to whom the Committee has
delegated authority in accordance with the provisions of Paragraph IV of this Plan shall be liable
for anything done or omitted to be done by him or her, by any member of the Committee or by any
officer of the Company or Affiliate in connection with the performance of any duties under this
Plan, except for his or her own willful misconduct or as expressly provided by statute.



     (e) Awards Outside of the United States. With respect to any Participant or eligible Employee
who is resident outside of the United States, the Committee may, in its sole discretion, amend or
vary the terms of the Plan in order to conform such terms with the requirements of local law, to
meet the goals and objectives of the Plan, and may, in its sole discretion, establish
administrative rules and procedures to facilitate the operation of the Plan in such non-U.S.
jurisdictions. The Committee may, where it deems appropriate in its sole discretion, establish one
or more sub-plans of the Plan for these purposes.



V. SHARES SUBJECT TO THE PLAN; AWARD LIMITATIONS




     (a) Shares Subject to the Plan. Subject to adjustment as provided in Paragraph XII, the
aggregate number of shares of Common Stock that may be issued under the Plan shall not exceed
4,750,000. The issuance of Common Stock under the Plan shall be counted against the overall number
of shares available for delivery under a fungible reserve approach. Any Shares of Common Stock
issued or reserved for issuance pursuant to Options or Stock Appreciation Rights shall be counted
against the aggregate share limitation of the Plan as one share for every share subject thereto.
Each Share of Common Stock issued pursuant to Restricted Stock or Restricted Stock Units shall be
counted against the aggregate share



Page 6









 







limitation of the Plan as two shares for every share subject thereto. However, (a) if any
Options or other stock-settled Awards are cancelled, expired, forfeited, settled in cash, or
otherwise terminated without issuing the underlying shares of Common Stock to the Participant, such
shares shall remain available for future grant under the Plan, and (b) if issued but unvested
shares of Restricted Stock are forfeited, such shares shall become available for future grant under
the Plan. Shares of Common Stock that are otherwise issuable to the Participant pursuant to an
Award that are withheld to satisfy tax withholding obligations or to pay the exercise price of an
Option shall be counted against the aggregate limitation of the Plan as provided herein and shall
not become available for future grant under the Plan.



     (b) Share and Value Limitation on Individual Awards. The maximum number of shares of Common
Stock that may be issuable under Awards granted to any one individual during any twelve month
period shall not exceed 500,000 shares of Common Stock (subject to adjustment in the
manner as provided in Paragraph XII). In addition, the maximum amount of cash compensation that may
be paid under Awards intended to qualify for the “performance-based compensation” exception under
Section 162(m) of the Code granted to any one individual during any twelve month period may not
exceed $5,000,000. The limitations set forth in this paragraph are intended to permit certain
awards under the Plan to constitute “performance-based” compensation for purposes of Section 162(m)
of the Code.



     (c) Stock Offered. Subject to the limitations set forth in Paragraph V(a), the stock to be
offered pursuant to the grant of an Award may be authorized but unissued Common Stock or Common
Stock previously issued and outstanding and reacquired by the Company. Any of such shares which
remain unissued and which are not subject to outstanding Awards at the termination of the Plan
shall cease to be subject to the Plan but, until termination of the Plan, the Company shall at all
times make available a sufficient number of shares to meet the requirements of the Plan.



     (d) Vesting Restrictions. Notwithstanding any provision of this Plan to the contrary (other
than accelerated vesting in the event of a Participant’s Termination of Service due to death,
Disability or Retirement or due to a Corporate Change), the following additional vesting
restrictions shall be applied to Awards granted under VIII or IX (collectively, “Full Value
Awards”):




	 	(i)	 	Where the vesting or the right to payment of a Full Value Award is based solely
on the Participant’s continued employment with the Company, such Full Value Award shall
have a minimum vesting period of three years from the date of grant with no more than
one-third of such Full Value Award vesting in any twelve month period, and
	 
	 	(ii)	 	Where the vesting or the right to payment of a Full Value Award is based upon
the attainment of one or more Performance Measures, such Full Value Award shall have a
minimum vesting period of one year from the date of grant.





     The Committee may, in its discretion, grant a waiver of these restrictions at the date of
grant or at any time during the vesting period; provided, however, that such waiver does not result
in a violation of Code Section 409A and that the number of shares of Common Stock underlying Full
Value Awards for which waivers have been granted do not exceed in the aggregate 10% of the Common
Stock authorized to be issued under the Plan.



VI. ELIGIBILITY AND GRANT OF AWARDS




     Subject to the delegation of power in Paragraph IV(d), the Committee, in its sole discretion,
may from time to time grant Awards under the Plan as provided herein to any individual who, at the
time of grant, is an Employee or a Director. An Award may be granted on more than one occasion to
the same person, and, subject to the limitations set forth in the Plan. Awards may include
Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Awards or
any combination



Page 7









 







thereof. The Plan is discretionary in nature, and the grant of Awards by the Committee is
voluntary and occasional. The Committee’s selection of an eligible Employee or Director to receive
an Award in any year or at any time shall not require the Committee to select such Employee or
Director to receive an Award in any other year or at any other time. The selection of an Employee
or Director to receive one type of Award under the Plan does not require the Committee to select
such Employee or Director to receive any other type of Award under the Plan. The Committee shall
consider such factors as it deems pertinent in selecting Participants and in determining the type
and amount of their respective Awards.



VII. STOCK OPTIONS




     (a) Option Types and Option Period. Options may be in the form of Incentive Stock Options
and/or Non-Qualified Options for eligible Employees (as described below), as determined by the
Committee, in its sole discretion. Any Options granted to Directors shall be Non-Qualified
Options. Except as otherwise provided in Subparagraph (c) below or such shorter term as may be
provided in an Award Notice, each Option shall expire 7 years from its date of grant and, unless
provided otherwise in the Award Notice, shall be subject to earlier termination as follows:
Options, to the extent vested as of the date a Participant incurs a Termination of Service, may be
exercised only within three months of such date, unless such Termination of Service results from
(i) death, Retirement or Disability of the Participant, in which case all vested Options held by
such Participant may be exercised by the Participant, the Participant’s legal representative, heir
or devisee, as the case may be, within two years from the date of the Participant’s Termination of
Service, or (ii) Cause, in which event all outstanding vested Options held by such Participant
shall be automatically forfeited unexercised on such termination; provided, however, that
notwithstanding the foregoing, no termination event described in (i) above shall extend the
expiration date of an Option beyond the 7th anniversary of its date of grant or, such shorter
period, if any, as may be provided in the Award Notice.



     (b) Vesting. Subject to the further provisions of the Plan, Options shall vest and become
exercisable in accordance with such vesting schedule as the Committee may establish in its sole
discretion, including vesting upon the satisfaction of one or more Performance Measures. A
Participant may not exercise an Option except to the extent it has become vested. Unless otherwise
provided in the Award Notice, all unvested Options shall automatically become fully vested upon a
Participant’s Termination of Service due to his or her death, Disability or Retirement. Options
that are not vested on a Participant’s Termination of Service shall automatically terminate and be
cancelled unexercised on such date.



     (c) Special Limitations on Incentive Stock Options. An Incentive Stock Option may be granted
only to an Employee of the Company or any parent or subsidiary corporation (as defined in Section
424 of the Code) at the time the Option is granted. To the extent that the aggregate Fair Market
Value (determined at the time the respective Incentive Stock Option is granted) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time by an individual
during any calendar year under all incentive stock option plans of the Company and its parent and
subsidiary corporations exceeds $100,000, such Incentive Stock Options shall be treated as
Non-Qualified Options. The Committee shall determine, in accordance with applicable provisions of
the Code, any applicable treasury regulations and other administrative pronouncements, which of a
Participant’s Incentive Stock Options will not constitute Incentive Stock Options because of such
limitation and shall notify the Participant of such determination as soon as practicable after such
determination is made. No Incentive Stock Option shall be granted to an individual if, at the time
the Option is granted, such individual owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any parent or subsidiary corporation,
within the meaning of Section 422(b)(6) of the Code, unless (i) at the time such Option is granted
the Option price is at least 110% of the Fair Market Value of the Common Stock subject to the
Option and (ii) such Option by its terms is not exercisable after the expiration of five years from
the date of grant. An Incentive Stock Option shall not be transferable



Page 8









 







otherwise than by will or the laws of descent and distribution, and shall be exercisable
during the Participant’s lifetime only by such Participant or the Participant’s guardian or legal
representative.



     (d) Award Notice. Each Option shall be evidenced by an Award Notice in such form and
containing such provisions not inconsistent with the provisions of the Plan and under such terms as
the Committee from time to time shall establish, including, without limitation, provisions to
qualify an Incentive Stock Option under Section 422 of the Code. An Award Notice may provide for
the payment of the Option price, in whole or in part, by cash, a check acceptable to the Company,
the delivery of a number of already-owned shares of Common Stock (plus cash if necessary) having a
Fair Market Value equal to such Option price (provided such shares have been owned for more than
six months by the Participant), a “cashless broker exercise” of the Option through any other
procedures established or approved by the Committee with respect thereto, or any combination of the
foregoing. Further, an Award Notice may provide, in the sole discretion of the Committee, for the
surrender of the right to purchase shares under the Option in return for a payment in cash or
shares of Common Stock or a combination of cash and shares of Common Stock equal in value to the
excess of the Fair Market Value of the shares with respect to which the right to purchase is
surrendered over the Option price therefor, on such terms and conditions as the Committee in its
sole discretion may prescribe. In the case of any such right that is granted in connection with an
Incentive Stock Option, such right shall be exercisable only when the Fair Market Value of the
Common Stock exceeds the price specified therefor in the Option or the portion thereof to be
surrendered. The terms and conditions of the respective Award Notices need not be identical.
Subject to the consent of the Participant, the Committee may, in its sole discretion, amend an
outstanding Award Notice from time to time in any manner that is not inconsistent with the
provisions of the Plan (including, without limitation, an amendment that accelerates the time at
which the Option, or a portion thereof, may be exercisable).



     (e) Option Price and Payment. The price at which a share of Common Stock may be purchased
upon exercise of an Option shall be determined by the Committee but, subject to adjustment as
provided in Paragraph XII, such purchase price shall not be less than the Fair Market Value of a
share of Common Stock on the date such Option is granted. The Option or portion thereof shall be
exercised, and any applicable taxes shall be withheld, in accordance with such procedures as are
established or approved by the Committee.



     (f) Restrictions on Repricing of Options. Except as provided in Paragraph XII, the Committee
may not amend any outstanding Award Notice to lower the exercise price (or cancel and replace any
outstanding Option with Options having a lower exercise price).



     (g) Stockholder Rights and Privileges. The Participant shall be entitled to all the
privileges and rights of a stockholder only with respect to such shares of Common Stock as have
been purchased upon exercise of the Option and registered in the Participant’s name.



     (h) Options in Substitution for Options Granted by Other Employers. Options may be granted
under the Plan from time to time or approved by the Committee or the Board in substitution of
options held by individuals providing services to corporations or other entities who become
Employees or Directors as result of a merger or consolidation or other business transaction with
the Company or any Affiliate.



VIII. RESTRICTED STOCK




     (a) Restrictions to be Established by the Committee. Restricted Stock shall be subject to
restrictions on disposition by the Participant and an obligation of the Participant to forfeit and
surrender the shares to the Company under certain circumstances, and any other restrictions
determined by the



Page 9









 







Committee in its sole discretion on the date of grant; provided, however, that such
restrictions shall lapse upon:



     (i) the attainment of one or more Performance Measures;



     (ii) the Participant’s continued employment with the Company and its Affiliates or continued
service as a Director for a specified period of time;



     (iii) the occurrence of any event or the satisfaction of any other condition specified by the
Committee in its sole discretion; or



     (iv) a combination of any of the foregoing.



     Each grant of Restricted Stock may have different restrictions as established in the sole
discretion of the Committee.



     (b) Other Terms and Conditions. Restricted Stock shall be registered in the name of the
Participant. Unless provided otherwise in an Award Notice, the Participant shall have the right to
receive dividends with respect to Restricted Stock, to vote Restricted Stock, and to enjoy all
other stockholder rights, except that: (i) the Company shall retain custody of the Restricted Stock
until the Restrictions have expired; (ii) the Participant may not sell, transfer, pledge, exchange,
hypothecate or otherwise dispose of the Restricted Stock until the restrictions have expired; and
(iii) a breach of the terms and conditions established by the Committee pursuant to the Restricted
Stock Notice shall cause a forfeiture of the Restricted Stock. If a Participant’s Termination of
Service is due to his or her death or Disability, all Awards of Restricted Stock of such
Participant then outstanding shall immediately vest in full and all restrictions applicable to such
Awards shall terminate as of such date with all performance criteria, if any, applicable to such
Awards deemed met at 100% of target. At the time of grant, the Committee may, in its sole
discretion, establish additional terms, conditions or restrictions relating to the Restricted
Stock. Such additional terms, conditions or restrictions shall be set forth in an Award Notice
delivered in conjunction with the Award.



     (c) Payment for Restricted Stock. The Committee shall determine the amount and form of
payment required from the Participant in exchange for a grant of Restricted Stock, if any, provided
that in the absence of such a determination, a Participant shall not be required to make any
payment for Restricted Stock, except to the extent otherwise required by law.



     (d) Committee’s Discretion to Accelerate Vesting of Restricted Stock. The Committee may, in
its discretion and as of a date determined by the Committee, fully vest any or all of a
Participant’s Restricted Stock and, upon such vesting, all restrictions applicable to such
Restricted Stock shall terminate as of such date. Any action by the Committee pursuant to this
Subparagraph may vary among individual Participants and may vary among the Restricted Stock held by
any individual Participant. Notwithstanding the preceding provisions of this paragraph, the
Committee may not take any action described in this Subparagraph with respect to Restricted Stock
that has been granted to a “covered employee” (within the meaning of Treasury Regulation Section
1.162-27(c)(2)) if such Award has been designed to meet the exception for performance-based
compensation under Section 162(m) of the Code; provided, however, this prohibition shall not apply
to an acceleration pursuant to Paragraph XII or due to death or Disability of the Participant.



     (e) Award Notice. Each grant of Restricted Stock shall be evidenced by an Award Notice in
such form and containing such provisions not inconsistent with the provisions of the Plan and under
such terms as the Committee from time to time shall establish. The terms and provisions of the
respective Award Notices need not be identical. Subject to the consent of the Participant and the
restriction set forth in the



Page 10









 







last sentence of Subparagraph (d) above, the Committee may, in its sole discretion, amend an
outstanding Award Notice from time to time in any manner that is not inconsistent with the
provisions of the Plan.



IX. RESTRICTED STOCK UNITS




     (a) Restrictions to be Established by the Committee. Restricted Stock Units shall be subject
to a restriction on disposition by the Participant and an obligation of the Participant to forfeit
the Restricted Stock Units under certain circumstances, and any other restrictions determined by
the Committee in its sole discretion on the date of grant; provided, however, that such
restrictions shall lapse upon:



     (i) the attainment of one or more Performance Measures;



     (ii) the Participant’s continued employment with the Company and its Affiliates or continued
service as a Director for a specified period of time;



     (iii) the occurrence of any event or the satisfaction of any other condition specified by the
Committee in its sole discretion; or



     (iv) a combination of any of the foregoing.



     Each Award of Restricted Stock Units may have different restrictions as established in the sole
discretion of the Committee.



     (b) Other Terms and Conditions. The Participant shall not be entitled to vote the shares of
Common Stock underlying the Restricted Stock Units or enjoy any other stockholder rights unless and
until the restrictions have lapsed and such shares have been registered in the Participant’s name.
If a Participant’s Termination of Service is due to his or her death or Disability, all Restricted
Stock Units of such Participant then outstanding shall immediately vest in full and all
restrictions applicable to such Restricted Stock Units shall terminate as of such date with all
performance criteria, if any, applicable to such Restricted Stock Units deemed met at 100% of
target. At the time of grant, the Committee may, in its sole discretion, establish additional
terms, conditions or restrictions relating to the Restricted Stock Units. Such additional terms,
conditions or restrictions shall be set forth in an Award Notice delivered in conjunction with the
Award.



     (c) Payment. Upon the lapse of the restrictions described in the Award Notice, the
Participant shall receive as soon as practicable payment equal to the Fair Market Value of the
shares of Common Stock underlying the Restricted Stock Units on the vesting date, less applicable
withholding. Payment shall be in the form of shares of Common Stock, cash, other equity
compensation, or a combination thereof, as determined by the Committee. Any cash payment shall be
made in a lump sum or in installments, as prescribed in the Award Notice. Payment shall be made no
later than 2-1/2 months following the end of the year in which the Restricted Stock Units vest,
unless payment is to be made in installments, in which case such installments shall comply with the
rules under Section 409A of the Code.



     (d) Committee’s Discretion to Accelerate Vesting of Restricted Stock Units. The Committee
may, in its discretion and as of a date determined by the Committee, fully vest any portion or all
of a Participant’s Restricted Stock Units and, upon such vesting, all restrictions applicable to
such Restricted Stock Units shall terminate as of such date. Any action by the Committee pursuant
to this Subparagraph may vary among Participants and may vary among the Restricted Stock Units held
by any Participant. Notwithstanding the preceding provisions of this paragraph, the Committee may
not take any action described in this Subparagraph with respect to Restricted Stock Units that have
been granted to a “covered employee” (within the meaning of Treasury Regulation Section
1.162-27(c)(2)) if such Award has been designed to meet the exception for performance-based
compensation under Section 162(m) of



Page 11









 







the Code; provided, however, this prohibition shall not apply to an acceleration pursuant to
Paragraph XII or due to death or Disability of the Participant.



     (e) Award Notice. Restricted Stock Units shall be evidenced by an Award Notice in such form
and containing such provisions not inconsistent with the provisions of the Plan and under such
terms as the Committee from time to time shall establish. The terms and provisions of the
respective Award Notices need not be identical. Subject to the consent of the Participant and the
restriction set forth in the last sentence of Subparagraph (d) above, the Committee may, in its
sole discretion, amend an outstanding Award Notice from time to time in any manner that is not
inconsistent with the provisions of the Plan.



X. STOCK APPRECIATION RIGHTS




     (a) Restrictions to be Established by the Committee. Stock Appreciation Rights shall be
subject to a restriction on disposition by the Participant and an obligation of the Participant to
forfeit the Stock Appreciation Rights under certain circumstances, and any other restrictions
determined by the Committee in its sole discretion on the date of grant; provided, however, that
such restrictions shall lapse upon:



     (i) the attainment of one or more Performance Measures;



     (ii) the Participant’s continued employment with the Company and its Affiliates or continued
service as a Director for a specified period of time;



     (iii) the occurrence of any event or the satisfaction of any other condition specified by the
Committee in its sole discretion; or



     (iv) a combination of any of the foregoing.



     Each Award of Stock Appreciation Rights may have different restrictions as established in the sole
discretion of the Committee.



     (b) Other Terms and Conditions. If a Participant’s Termination of Service is due to his or
her death or Disability, all Stock Appreciation Rights of such Participant then outstanding shall
immediately vest in full and all restrictions applicable to such Stock Appreciation Rights shall
terminate as of such date with all performance criteria, if any, applicable to such Stock
Appreciation Rights deemed met at 100% of target. At the time of grant, the Committee may, in its
sole discretion, establish additional terms, conditions or restrictions relating to the Stock
Appreciation Rights. Such additional terms, conditions or restrictions shall be set forth in the
Award Notice delivered in conjunction with the Award.



     (c) Exercise Price and Payment. Subject to adjustment as provided in Paragraph XII, the
exercise price of the Stock Appreciation Rights shall not be less than the Fair Market Value of the
shares of Common Stock underlying the Stock Appreciation Rights on the date of grant. Upon the
lapse of the restrictions described in the Award Notice, the Participant shall be entitled to
exercise his or her Stock Appreciation Rights at any time up until the end of the period specified
in the Award Notice. The Stock Appreciation Rights, or portion thereof, shall be exercised and any
applicable taxes withheld, in accordance with such procedures as are established or approved by the
Committee. Upon exercise of the Stock Appreciation Rights, the Participant shall be entitled to
receive payment in an amount equal to: (i) the difference between the Fair Market Value of the
underlying shares of Common Stock subject to the Stock Appreciation Rights on the date of exercise
and the exercise price; times (ii) the number of shares of Common Stock with respect to which the
Stock Appreciation Rights are exercised; less (iii) any applicable withholding taxes. Payment shall
be made in the form of shares of Common Stock or cash, or a combination thereof, as determined by
the Committee. Cash shall be paid in a lump sum payment and shall be based on the Fair Market Value
of the underlying Common Stock on the exercise date.



Page 12









 





     (d) Committee’s Discretion to Accelerate Vesting of Stock Appreciation Rights. The Committee
may, in its discretion and as of a date determined by the Committee, fully vest any portion or all
of a Participant’s Stock Appreciation Rights and, upon such vesting, all restrictions applicable to
such Stock Appreciation Rights shall terminate as of such date. Any action by the Committee
pursuant to this Subparagraph may vary among Participants and may vary among the Stock Appreciation
Rights held by any Participant. Notwithstanding the preceding provisions of this paragraph, the
Committee may not take any action described in this Subparagraph with respect to any Stock
Appreciation Rights that have been granted to a “covered employee” (within the meaning of Treasury
Regulation Section 1.162-27(c)(2)) if such Award has been designed to meet the exception for
performance-based compensation under Section 162(m) of the Code; provided, however, this
prohibition shall not apply to an acceleration pursuant to Paragraph XII or due to death or
Disability of the Participant.



     (e) Award Notice. Stock Appreciation Rights shall be evidenced by an Award Notice in such
form and containing such provisions not inconsistent with the provisions of the Plan and under such
terms as the Committee from time to time shall establish. The terms and provisions of the
respective Award Notices need not be identical. Subject to the consent of the Participant and the
restriction set forth in the last sentence of Subparagraph (d) above, the Committee may, in its
sole discretion, amend an outstanding Award Notice from time to time in any manner that is not
inconsistent with the provisions of the Plan.



XI. PERFORMANCE AWARDS




     (a) Performance Period. The Committee shall establish, with respect to and at the time of
each Performance Award, the maximum value of the Performance Award and the performance period over
which the performance applicable to the Performance Award shall be measured.



     (b) Performance Measures and Other Criteria. A Performance Award shall be awarded to a
Participant contingent upon future performance of the Company or any Affiliate, or a division or
department of the Company or any Affiliate, during the performance period. With respect to
Performance Awards intended to qualify as performance-based compensation under Section 162(m) of
the Code, the Committee shall establish the Performance Measures applicable to such performance
either (i) prior to the beginning of the performance period or (ii) within 90 days after the
beginning of the performance period if the outcome of the performance targets is substantially
uncertain at the time such targets are established, but not later than the date that 25% of the
performance period has elapsed. The Committee shall provide that the vesting of the Performance
Award will be based upon the Participant’s continued employment with the Company or its Affiliates
or continued service as a Director for a specified period of time and



     (i) the attainment of one or more Performance Measures, or a combination thereof:



     (ii) the occurrence of any event or the satisfaction of any other condition specified by the
Committee in its sole discretion; or



     (iii) a combination of any of the foregoing.


The Committee, in its sole discretion, may also provide for an adjustable Performance Award
value-based upon the level of achievement of Performance Measures.




     (b) Vesting. If a Participant’s Termination of Service is due to his or her death or
Disability, all Performance Awards of such Participant then outstanding shall immediately vest in
full and all restrictions applicable to such Awards shall terminate as of such date with all
performance criteria, if any, applicable to such Awards deemed met at 100% of target.



Page 13









 





     (c) Award Criteria. In determining the value of a Performance Award, the Committee shall take
into account a Participant’s responsibility level, performance, potential, other Awards, total
annual compensation and such other considerations as it deems appropriate. The Committee, in its
sole discretion, may provide for a reduction in the value of a Participant’s Performance Award
during the performance period.



     (d) Payment. Following the end of the performance period, the holder of a Performance Award
shall be entitled to receive payment as soon as practicable of an amount not exceeding the maximum
value of the Performance Award, based on the achievement of the Performance Measures for such
performance period, as determined and certified in writing by the Committee. Payment of a
Performance Award may be made in cash, Common Stock, Options or other equity compensation, or a
combination thereof, as determined by the Committee. Payment shall be made in a lump sum or in
installments as prescribed in the Award Notice. If a Performance Award covering shares of Common
Stock is to be paid in cash, such payment shall be based on the Fair Market Value of a share of
Common Stock on the payment date. Payment shall be made no later than 2-1/2 months following the
end of the year in which the Performance Award vests, unless payment is to be made in installments,
in which case such installments shall comply with the rules under Section 409A of the Code.



     (e) Award Notice. Each Performance Award shall be evidenced by a Award Notice in such form
and containing such provisions not inconsistent with the provisions of the Plan and under such
terms as the Committee from time to time shall establish. The terms and provisions of the
respective Award Notices need not be identical. Subject to the consent of the Participant, the
Committee may, in its sole discretion, amend an outstanding Award Notice from time to time in any
manner that is not inconsistent with the provisions of the Plan.



XII. RECAPITALIZATION OR REORGANIZATION




     (a) No Effect on Right or Power. The existence of the Plan and the Awards granted hereunder
shall not affect in any way the right or power of the Board or the stockholders of the Company to
make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s
or any Affiliate’s capital structure or its business, any merger or consolidation of the Company or
any Affiliate, any issue of debt or equity securities ahead of or affecting Common Stock or the
rights thereof, the dissolution or liquidation of the Company or any Affiliate or any sale, lease,
exchange or other disposition of all or any part of its assets or business or any other corporate
act or proceeding.



     (b) Subdivision or Consolidation of Shares; Stock Dividends. If, and whenever, prior to the
expiration of an Award previously granted, the Company shall effect a subdivision or consolidation
of shares of Common Stock or the payment of a dividend on Common Stock which is paid in the form of
Company stock without receipt of consideration by the Company, the number of shares of Common Stock
with respect to which such Award may thereafter be exercised or satisfied, shall be adjusted as
follows: (i) in the event of an increase in the number of outstanding shares, the number shares of
Common Stock subject to the Award shall be proportionately increased, and the purchase price per
share shall be proportionately reduced; and (ii) in the event of a reduction in the number of
outstanding shares, the number shares of Common Stock subject to the Award shall be proportionately
reduced, and the purchase price per share shall be proportionately increased, other than in the
event of a Company-directed share repurchase program. Any fractional share resulting from such
adjustment shall be rounded up to the next whole share. Such proportionate adjustments will be made
for purposes of making sure that to the extent possible, the fair value of the Awards after the
subdivision, consolidation or dividend is equal to the fair value before the change.



Page 14









 





     (c) Corporate Changes. Except as otherwise specifically provided in an Award Notice,
effective upon a Corporate Change (or at such earlier time as the Committee may provide), all
Options then outstanding shall immediately become exercisable in full, all Restricted Stock shall
vest in full and cease to be subject to any restrictions, all Restricted Stock Units shall vest in
full and cease to be subject to any restrictions, any Stock Appreciation Rights shall immediately
be exercisable in full, and all Awards, the payout of which is subject to Performance Measures,
shall vest in full and become immediately payable at such levels as the Committee in its sole
discretion shall determine. In addition, the Committee, acting in its sole discretion without the
consent or approval of any Participant, may effect one or more of the following alternatives, which
alternatives may vary among individual Participants and which may vary among Awards held by any
individual Participant: (i) require the mandatory surrender to the Company by selected Participants
of some or all of the outstanding Options, stock-settled Restricted Stock Units and stock-settled
Stock Appreciation Rights held by such Participants as of a date, before or after such Corporate
Change, specified by the Committee, in which event the Committee shall thereupon cancel such Awards
and the Company shall pay (or cause to be paid) to each such Participant an amount of cash per
share equal to the excess, if any, of the amount calculated in Subparagraph (d) below (the “Change
of Control Value”) of the shares subject to such Awards over the exercise price(s), if any, under
such Awards for such shares, or (ii) provide that the number and class of shares of Common Stock
covered by such Awards shall be adjusted so that such Awards shall thereafter cover securities of
the surviving or acquiring corporation or other property (including, without limitation, cash) as
determined by the Committee in its sole discretion.



     (d) Change of Control Value. For the purposes of clause (i) in Subparagraph (c) above, the
“Change of Control Value” shall equal the amount determined in clause (i), (ii) or (iii), whichever
is applicable, as follows: (i) the per share price offered to stockholders of the Company in any
such merger, consolidation, sale of assets or dissolution transaction, (ii) the price per share
offered to stockholders of the Company in any tender offer or exchange offer whereby a Corporate
Change takes place, or (iii) if such Corporate Change occurs other than pursuant to a tender or
exchange offer, the fair market value per share of the shares into which such Awards being
surrendered are exercisable or payable, as determined by the Committee as of the date determined by
the Committee to be the date of cancellation and surrender of such Awards. In the event that the
consideration offered to stockholders of the Company in any transaction described in this
Subparagraph (d) or Subparagraph (c) above consists of anything other than cash, the Committee
shall determine the fair cash equivalent of the portion of the consideration offered which is other
than cash.



     (e) Other Changes in the Common Stock. In the event of changes in the outstanding Common
Stock by reason of recapitalization, reorganization, merger, consolidation, combination, stock
split, stock dividend, spin-off, exchange or other relevant changes in capitalization or
distributions to the holders of Common Stock occurring after the date of the grant of any Award and
not otherwise provided for by this Paragraph XII, which would have the effect of diluting or
enlarging the rights of Participants, such Award and any notice evidencing such Award shall be
subject to equitable or proportionate adjustment by the Committee at its sole discretion as to the
number and price of shares of Common Stock or other consideration subject to such Award. In the
event of any such change in the outstanding Common Stock or distribution to the holders of Common
Stock, or upon the occurrence of any other event described in this Paragraph XII, the aggregate
number of shares available under the Plan and the maximum number of shares that may be subject to
Awards granted to any one individual may be appropriately adjusted to the extent, if any,
determined by the Committee, whose determination shall be conclusive. Such proportionate
adjustments will be made for purposes of making sure that to the extent possible, the fair value of
the Awards after the subdivision, consolidation or dividend is equal to the fair value before the
change.



     (f) No Adjustments Unless Otherwise Provided. Except as hereinbefore expressly provided, the
issuance by the Company of shares of stock of any class or securities convertible into shares of
stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of
rights or warrants to



Page 15









 







subscribe therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of
Common Stock subject to Awards theretofore granted or the purchase price per share, if applicable.



XIII. AMENDMENT AND TERMINATION OF THE PLAN




     The Board in its discretion may terminate the Plan at any time with respect to any shares of
Common Stock for which Awards have not theretofore been granted. The Board shall have the right to
alter or amend the Plan or any part thereof from time to time; provided that no change in the Plan
may be made that would impair the rights of a Participant with respect to any outstanding Award
without the consent of the Participant, and provided, further, that the Board may not, without
approval of the stockholders of the Company (a) amend the Plan to increase the maximum aggregate
number of shares that may be issued under the Plan or change the class of individuals eligible to
receive Awards under the Plan, (b) amend or delete Paragraphs V(d) and VII(f), or (c) amend
Paragraph XII to delete items (a) or (b).



XIV. MISCELLANEOUS




     (a) No Right To An Award. Neither the adoption of the Plan nor any action of the Board or of
the Committee shall be deemed to give any individual any right to be granted an Option, Restricted
Stock, Restricted Stock Units, Stock Appreciation Rights, or a Performance Award, or any other
rights hereunder except as may be evidenced by an Award Notice, and then only to the extent and on
the terms and conditions expressly set forth therein.



     (b) Unfunded Status of Plan. The Plan is intended to constitute an “unfunded” plan for
incentive and deferred compensation purposes, including Section 409A of the Code. The Committee may
authorize the creation of trusts or other arrangements to meet the obligations created under the
Plan to deliver shares of Common Stock or make payments; provided the Committee first determines in
its sole discretion that the structure of such trusts or other arrangements shall not cause any
change in the “unfunded” status of the Plan.



     (c) No Employment/Membership Rights Conferred. Nothing contained in the Plan or any Award
shall (i) confer upon any Employee any right to continued employment with the Company or any
Affiliate or (ii) interfere in any way with the right of the Company or any Affiliate to terminate
his or her employment at any time. Nothing contained in the Plan shall confer upon any Director any
right to service, or interfere in any way with the right of the Company to terminate his or her
service at any time.



     (d) Compliance with Securities Laws. The Company shall not be obligated to issue any shares
of Common Stock pursuant to an Award granted under the Plan at any time when the shares covered by
such Award have not been registered pursuant to applicable U.S. federal, state or non-U.S.
securities laws, or, in the opinion of legal counsel for the Company, the issuance and sale of such
shares is not covered under an applicable exemption from such registration requirements.



     (e) No Fractional Shares. No fractional shares of Common Stock nor cash in lieu of fractional
shares of Common Stock shall be distributed or paid pursuant to an Award. For purposes of the
foregoing, any fractional shares of Common Stock shall be rounded up to the nearest whole share.



     (f) Tax Obligations; Withholding of Shares. Except with respect to non-Employee Directors and
as otherwise provided under the Plan, no later than the date as of which an amount first becomes
includible in a Participant’s taxable income for U.S. federal, state, local or non-U.S. income or
social insurance tax purposes with respect to an Award granted under the Plan, the Participant
shall pay to the



Page 16









 







Company or the Affiliate employing the Participant, or make arrangements satisfactory to the
Company or the Affiliate employing the Participant for the payment of any such income or social
insurance taxes of any kind required by law to be withheld with respect to such taxable amount.
Notwithstanding the foregoing, the Company and its Affiliates may, in its sole discretion, withhold
a sufficient number of shares of Common Stock that are otherwise issuable to the Participant
pursuant to an Award to satisfy any such income or social insurance taxes of any kind required by
law to be withheld, as may be necessary in the opinion of the Company or the Affiliate to satisfy
all obligations for the payment of such taxes. For purposes of the foregoing, the Committee may
establish such rules, regulations and procedures as it deems necessary or appropriate.



     (g) No Restriction on Corporate Action. Nothing contained in the Plan shall be construed to
prevent the Company or an Affiliate from taking any action that is deemed by the Company or such
Affiliate to be appropriate or in its best interest, regardless of whether such action would have
an adverse effect on the Plan or any Award made under the Plan. No Employee, Participant,
representative of an Employee or Participant, or other person shall have any claim against the
Company or any Affiliate as a result of any such action.



     (h) Restrictions on Transfer. An Award (other than an Incentive Stock Option, which shall be
subject to the transfer restrictions set as forth in Paragraph VII(c)) shall not be transferable
otherwise than (i) by will or the laws of descent and distribution, (ii) pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder, or (iii) if vested, with the consent of
the Committee, in its sole discretion provided that any such transfer is permitted under the
applicable securities laws. Notwithstanding the foregoing, Restricted Stock, once vested and free
of any restrictions, may be transferred at will.



     (i) Limitations Period. Any Participant who believes he or she is being denied any benefit or
right under the Plan may file a written claim with the Committee. Any claim must be delivered to
the Committee within forty-five (45) days of the specific event giving rise to the claim. Untimely
claims will not be processed and shall be deemed denied. The Committee, or its designee, will
notify the Participant of its decision in writing as soon as administratively practicable. Claims
not responded to by the Committee in writing within one hundred and twenty (120) days of the date
the written claim is delivered to the Committee shall be deemed denied. The Committee’s decision is
final and conclusive and binding on all persons. No lawsuit relating to the Plan may be filed
before a written claim is filed with the Committee and is denied or deemed denied and any lawsuit
must be filed within one year of such denial or deemed denial or be forever barred.



     (j) Section 409A of the Code. It is intended that any Awards under the Plan satisfy the
requirements of Section 409A of the Code to avoid imposition of applicable taxes thereunder. Thus,
notwithstanding anything in this Plan to the contrary, if any Plan provision or Award under the
Plan would result in the imposition of an applicable tax under Section 409A of the Code and related
regulations and Treasury pronouncements, that Plan provision or Award may be reformed by the
Committee solely to the extent the Committee, in its sole discretion, determines is necessary to
avoid imposition of the applicable tax and no action taken to comply with Section 409A shall be
deemed to adversely affect the Participant’s rights to an Award.



     (k) Governing Law. The Plan shall be governed by, and construed in accordance with, the laws
of the State of Delaware, without regard to its conflicts of laws principles.




Page 17