EX-10.1 2007 STOCK INCENTIVE PLAN



 





As adopted February 9, 2007,

For Shareholder Approval May 18, 2007




EMS TECHNOLOGIES, INC.

2007 STOCK INCENTIVE PLAN




TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	ARTICLE I DEFINITIONS
	 	 	1	 
	(a) “Award”
	 	 	1	 
	(b) “Board”
	 	 	1	 
	(c) “Code”
	 	 	1	 
	(d) “Committee”
	 	 	1	 
	(e) “Company”
	 	 	1	 
	(f) “Director”
	 	 	1	 
	(g) “Disinterested Person”
	 	 	1	 
	(h) “Employee”
	 	 	1	 
	(i) “Employer”
	 	 	2	 
	(j) “Fair Market Value”
	 	 	2	 
	(k) “Grantee”
	 	 	3	 
	(l) “ISO”
	 	 	3	 
	(m) “1934 Act”
	 	 	3	 
	(n) “Officer”
	 	 	3	 
	(o) “Option”
	 	 	3	 
	(p) “Option Agreement”
	 	 	3	 
	(q) “Optionee”
	 	 	3	 
	(r) “Option Price”
	 	 	4	 
	(s) “Parent”
	 	 	4	 
	(t) “Plan”
	 	 	4	 
	(u) “Purchasable”
	 	 	4	 
	(v) “Qualified Domestic Relations Order”
	 	 	4	 
	(w) “Restricted Stock”
	 	 	4	 
	(x) “Restriction Agreement”
	 	 	4	 
	(y) “Stock”
	 	 	4	 
	(z) “Subsidiary”
	 	 	4	 
	 
	 	 	 	 
	ARTICLE II THE PLAN
	 	 	5	 
	Section 2.1 Name
	 	 	5	 
	Section 2.2 Purpose
	 	 	5	 
	Section 2.3 Effective Date
	 	 	5	 
	Section 2.4 Termination Date
	 	 	5	 







 









 








TABLE OF CONTENTS (Cont’d)




	 	 	 	 	 
	 	 	Page
	ARTICLE III ELIGIBILITY
	 	 	5	 
	 
	 	 	 	 
	ARTICLE IV ADMINISTRATION
	 	 	5	 
	Section 4.1 Duties and Powers of the Committee
	 	 	5	 
	Section 4.2 Interpretation; Rules
	 	 	6	 
	Section 4.3 No Liability
	 	 	6	 
	Section 4.4 Majority Rule
	 	 	6	 
	Section 4.5 Company Assistance
	 	 	7	 
	 
	 	 	 	 
	ARTICLE V SHARES OF STOCK SUBJECT TO PLAN
	 	 	7	 
	Section 5.1 Limitations
	 	 	7	 
	Section 5.2 Antidilution
	 	 	7	 
	 
	 	 	 	 
	ARTICLE VI OPTIONS
	 	 	9	 
	Section 6.1 Types of Options Granted
	 	 	9	 
	Section 6.2 Option Grant and Agreement
	 	 	9	 
	Section 6.3 Optionee Limitations
	 	 	9	 
	Section 6.4 Certain Limitation
	 	 	10	 
	Section 6.5 Option Price
	 	 	11	 
	Section 6.6 Exercise Period
	 	 	11	 
	Section 6.7 Option Exercise
	 	 	11	 
	Section 6.8 Nontransferability of Option
	 	 	12	 
	Section 6.9 Termination of Employment
	 	 	13	 
	Section 6.10 Employment Rights
	 	 	13	 
	Section 6.11 Certain Successor Options
	 	 	14	 
	Section 6.12 Conditions to Issuing Option Stock
	 	 	14	 
	Section 6.13 Automatic Option Grants to Certain
Directors
	 	 	14	 
	 
	 	 	 	 
	ARTICLE VII RESTRICTED STOCK
	 	 	16	 
	Section 7.1 Awards of Restricted Stock
	 	 	16	 
	Section 7.2 Non-Transferability
	 	 	16	 
	Section 7.3 Lapse of Restrictions
	 	 	16	 
	Section 7.4 Termination of Employment
	 	 	17	 
	Section 7.5 Treatment of Dividends
	 	 	17	 
	Section 7.6 Delivery of Shares
	 	 	17	 
	Section 7.7 Payment of Withholding Taxes
	 	 	18	 
	 
	 	 	 	 
	ARTICLE VIII TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
	 	 	18	 
	 
	 	 	 	 
	ARTICLE IX MISCELLANEOUS
	 	 	19	 
	Section 9.1 Replacement or Amended Grants
	 	 	19	 
	Section 9.2 Forfeiture for Competition
	 	 	19	 
	Section 9.3 Plan Binding on Successors
	 	 	19	 
	Section 9.4 Headings Not a Part of Plan
	 	 	19	 






 









 






EMS TECHNOLOGIES, INC.

2007 STOCK INCENTIVE PLAN




ARTICLE I

DEFINITIONS




           As used herein, the following terms have the meanings hereinafter set forth unless the context
clearly indicates to the contrary:




     (a) “Award” shall mean a grant of Restricted Stock.




     (b) “Board” shall mean the Board of Directors of the Company.




     (c) “Code” shall mean the United States Internal Revenue Code of 1986, as amended,
including effective date and transition rules (whether or not codified). Any reference
herein to a specific section or sections of the Code shall be deemed to include a reference
to any corresponding provision of future law.




     (d) “Committee” shall mean a committee of at least two Directors appointed from time to
time by the Board, having the duties and authority set forth herein in addition to any other
authority granted by the Board; provided, however, that with respect to any Options or
Awards granted to an individual who is also an Officer or Director, the Committee shall
consist of at least two Non-Employee Directors (who need not be members of the Committee
with respect to Options or Awards granted to any other individuals), and all authority and
discretion shall be exercised by such Non-Employee Directors, and references herein to the
“Committee” shall mean such Non-Employee Directors insofar as any actions or determinations
of the Committee shall relate to or affect Options or Awards made to or held by any Officer
or Director.




     (e) “Company” shall mean EMS Technologies, Inc., a Georgia corporation.




     (f) “Director” shall mean a member of the Board.




     (g) “Employee” shall mean any employee of the Company or any Subsidiary of the Company.



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     (h) “Employer” shall mean the corporation that employs a Grantee.




     (i) “Fair Market Value” of the shares of Stock on any date shall mean




(i) the closing sales price, regular way, or in the absence thereof the mean
of the last reported bid and asked quotations, on such date on the exchange
having the greatest volume of trading in the shares during the thirty-day
period preceding such date (or if such exchange was not open for trading on
such date, the next preceding date on which it was open); or




(ii) if there is no price as specified in (i), the final reported sales
price, or if not reported in the following manner, the mean of the closing
high bid and low asked prices, in the over-the-counter market for the shares as reported by the National Association of Securities Dealers Automatic
Quotation System or, if not so reported, then as reported by the National
Quotation Bureau Incorporated, or if such organization is not in existence,
by an organization providing similar services, on such date (or if such date
is not a date for which such system or organization generally provides
reports, then on the next preceding date for which it does so); or




(iii) if there also is no price as specified in (ii), the price
determined by the Committee by reference to bid-and-asked quotations for the shares provided by members of an association of brokers and dealers
registered pursuant to subsection 15(b) of the 1934 Act, which members make
a market in the shares, for such recent dates as the Committee shall
determine to be appropriate for fairly determining current market value; or




(iv) if there also is no price as specified in
(iii), the amount determined in good faith by the Committee based on such
relevant facts, which may



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include opinions of independent experts, as may be
available to the Committee.




     (j) “Grantee” shall mean an Employee, former employee or other person who is an
Optionee or who has received an Award of Restricted Stock.




     (k) “ISO” shall mean an Option that complies with and is subject to the terms,
limitations and conditions of Code section 422 and any regulations promulgated with respect
thereto.




     (l) “1934 Act” shall mean the Securities Exchange Act of 1934, as amended from time to
time.




     (m) “Non-Employee Director” shall have the meaning set forth for such term or
corresponding concept in Rule 16b-3 under the 1934 Act, as the same may be in effect from
time to time, or in any successor rule thereto, and shall be determined for all purposes
under the Plan according to interpretative or “no-action” positions with respect thereto
issued by the Securities and Exchange Commission or its staff; provided, however, that to
the extent it is determined and intended that Options qualify as “performance-based
compensation” within the meaning of section 162(m) of the Code, a person shall be a
“Non-Employee Director” only if he or she is also an “outside director” within the meaning
of such section 162(m).




     (n) “Officer” shall mean a person who constitutes an officer of the Company for the
purposes of Section 16 of the 1934 Act, as determined by reference to such Section 16 and to
the rules, regulations, judicial decisions, and interpretative or “no-action” positions with
respect thereto of the Securities and Exchange Commission or its staff, as the same may be
in effect or set forth from time to time.




     (o) “Option” shall mean a contractual right to purchase Stock granted pursuant to the
provisions of Article VI hereof.




     (p) “Option Agreement” shall mean an agreement between the Company and an
Optionee setting forth the terms of an Option.




     (q) “Optionee” shall mean a person to whom an Option has been granted hereunder.



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     (r) “Option Price” shall mean the price at which an Optionee may purchase a share of
Stock pursuant to an Option.




     (s) “Parent”, when used with respect to any subject corporation, shall mean any other
corporation that owns stock possessing 50% or more of the total combined voting power of all
classes of stock of the subject corporation or that owns such stock of another corporation
in an unbroken chain of corporations having such ownership of the stock of another
corporation and ending with the subject corporation.




     (t) “Plan” shall mean the 2007 Stock Incentive Plan of the Company.




     (u) “Purchasable,” when used to describe Stock, shall refer to Stock that may be
purchased by an Optionee under the terms of this Plan on or after a certain date specified
in the applicable Option Agreement.




     (v) “Qualified Domestic Relations Order” shall have the meaning set forth in the Code
or in the Employee Retirement Income Security Act of 1974, as amended, or the rules and
regulations promulgated under the Code or such Act.




     (w) “Restricted Stock” shall mean Stock issued, subject to restrictions, to an
Employee pursuant to Article VII hereof.




     (x) “Restriction Agreement” shall mean the agreement setting forth the terms of an
Award, and executed by a Grantee as provided in Section 7.1 hereof.




     (y) “Stock” shall mean the $.10 par value common stock of the Company or, in the event
that the outstanding shares of such stock are hereafter changed into or
exchanged for shares of a different class of stock or securities of the Company or some
other corporation, such other stock or securities.




     (z) “Subsidiary”, when used with respect to any subject corporation, shall mean any
other corporation as to which the subject corporation is a Parent.



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ARTICLE II

THE PLAN




     2.1 Name. This plan shall be known as the “EMS Technologies, Inc. 2007 Stock Incentive Plan.”



     2.2 Purpose. The purpose of the Plan is to advance the interests of the Company, its
shareholders, and any Subsidiary of the Company, by offering certain Employees and Directors an
opportunity to acquire or increase their proprietary interests in the Company. Options and Awards
will promote the growth and profitability of the Company and any Subsidiary of the Company, because
Grantees will be provided with an additional incentive to achieve the Company’s objectives through
participation in its success and growth.



     2.3 Effective Date. The Plan shall become effective on the date of its approval by vote of a
majority of the shares of the Company represented at a meeting of the shareholders at which a
quorum is present.



     2.4 Termination Date. No further Options or Awards shall be granted hereunder on or after the
tenth anniversary of the date on which the Plan becomes effective, but all Options or Awards
granted prior to that time shall remain in effect in accordance with their terms.



ARTICLE III

ELIGIBILITY




     The persons eligible to participate in this Plan shall consist only of Directors and those
Employees whose participation the Committee determines is in the best interests of the Company.
However, no ISO’s may be granted, and no Options or Awards may be granted to any Director or
Officer. Persons who are not Employees but who serve as directors of any Subsidiary of the Company
shall also be eligible to participate in this Plan, and references herein to “Employee” shall be
deemed to include any such persons to the extent appropriate for him or her to become a Grantee.



ARTICLE IV

ADMINISTRATION




     4.1 Duties and Powers of the Committee. The Plan shall be administered by the Committee. The
Committee hold its meetings at such times and places as it may determine. The Committee shall



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keep
minutes of its meetings and shall make such rules and regulations for the conduct of its business
as it may deem necessary. The Committee shall have the power to act by unanimous written consent
in lieu of a meeting, and shall have the right to meet telephonically. In administering the Plan,
the Committee’s actions and determinations shall be binding on all interested parties. The
Committee shall have the power to grant Options or Awards in accordance with the provisions of the
Plan. Subject to the provisions of the Plan, the Committee shall have the discretion and authority
to determine those individuals to whom Options or Awards will be granted, the number of shares of
Stock subject to each Option or Award, such other matters as are specified herein, and any other
terms and conditions of an Option Agreement or Restriction Agreement; provided, however, that the
Committee may in its discretion delegate to the Chief Executive Officer of the Company, solely with
respect to Employees who are not Officers, the authority to determine those individuals to whom
Options will be granted and the number of shares of Stock subject to each Option, on terms and
conditions and within maximum numbers of shares specified by the Committee. To the extent not
inconsistent with the provisions of the Plan, the Committee shall have the authority to amend or
modify an outstanding Option Agreement or Restriction Agreement, or to waive any provision thereof,
provided that the Grantee consents to such action.



     4.2 Interpretation; Rules. Subject to the express provisions of the Plan, the
Committee also shall have complete authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, and to make all other determinations necessary or advisable
in the administration of the Plan, including, without limitation, the amending or altering of any
Options or Awards granted hereunder as may be required to comply with or to conform to any federal,
state or local laws or regulations.



     4.3 No Liability. Neither any member of the Board nor any member of the Committee shall be liable to any person for any act
or determination made in good faith with respect to the Plan or any Option or Award granted
hereunder.



     4.4 Majority Rule. A majority of the members of the Committee shall constitute a quorum, and
any action taken by a majority at a meeting at which a quorum is present, or any action taken
without a meeting evidenced by a writing executed by all the members of the Committee, shall
constitute the action of the Committee.



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     4.5 Company Assistance. The Company shall supply full and timely information to the Committee
on all matters relating to eligible persons, their employment, death, retirement, disability or
other termination of employment, and such other pertinent facts as the Committee may require. The
Company shall furnish the Committee with such clerical and other assistance as is necessary in the
performance of its duties.



ARTICLE V

SHARES OF STOCK SUBJECT TO PLAN




     5.1 Limitations. Shares subject to an Option or issued as an Award may be either
authorized and unissued shares or shares issued and later acquired by the Company. Subject to any
antidilution adjustment pursuant to the provisions of Section 5.2 hereof, the maximum number of
shares of Stock that may be issued hereunder shall be 2,000,000 (of which a maximum of 350,000
shares may be issued as Restricted Stock). Shares (i) covered by any unexercised portion of an
Option that has terminated for any reason, or (ii) covered by any forfeited portion of an Award
(except any portion as to which the Grantee has received, and not forfeited, dividends or other
benefits of ownership other than voting rights), may each again be optioned or awarded under the
Plan, and such shares shall not be considered as having been optioned or issued in computing the
number of shares of Stock remaining available for option or award hereunder.



     5.2 Antidilution.




     (a) In the event that the outstanding shares of Stock are changed into or exchanged for
a different number or kind of shares or other securities of the Company by reason of merger,
consolidation, reorganization, recapitalization,
reclassification, combination or exchange of shares, stock split or stock dividend, or
in the event that any spin-off, spin-out or other distribution of assets materially affects
the price of the Company’s stock:




     (i) The aggregate number and kind of shares of Stock for which Options or
Awards may be granted hereunder shall be adjusted proportionately by the Committee;
and




     (ii) The rights of Optionees (concerning the number of shares subject to
Options and the Option Price) under



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outstanding Options and the rights of the
holders of Awards (concerning the terms and conditions of the lapse of any
then-remaining restrictions), shall be adjusted proportionately by the Committee.




     (b) If the Company shall be a party to any reorganization in which it does not survive,
involving merger, consolidation, or acquisition of the stock or substantially all the assets
of the Company, the Committee, in its discretion, may:




     (i) notwithstanding other provisions hereof, declare that all Options
granted under the Plan shall become exercisable immediately notwithstanding the
provisions of the respective Option Agreements regarding exercisability, that all
such Options shall terminate a specified period of time after the Committee gives
written notice of the immediate right to exercise all such Options and of the
decision to terminate all Options not exercised within such period, and that all
then-remaining restrictions pertaining to Awards under the Plan shall immediately
lapse; or




     (ii) notify all Grantees that all Options or Awards granted under the Plan
shall be assumed by the successor corporation or substituted on an equitable basis
with options or restricted stock issued by such successor corporation.




     (c) If the Company is to be liquidated or dissolved in connection with a reorganization
described in paragraph 5.2(b), the provisions of such paragraph shall apply. In all other
instances, the adoption of a plan of dissolution or
liquidation of the Company shall, notwithstanding other provisions hereof, cause all
then-remaining restrictions pertaining to Awards under the Plan to lapse, and shall cause
every Option outstanding under the Plan to terminate to the extent not exercised prior to
the adoption of the plan of dissolution or liquidation by the shareholders, provided that,
notwithstanding other provisions hereof, the Committee may declare all Options granted under
the Plan to be exercisable at any time on or before the fifth business day following such
adoption notwithstanding the provisions of the respective Option Agreements regarding
exercisability.




     (d) The adjustments described in paragraphs (a) through



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(c) of this Section 5.2, and
the manner of their application, shall be determined solely by the Committee, and any such
adjustment may provide for the elimination of fractional share interests. The adjustments
required under this Article V shall apply to any successors of the Company and shall be made
regardless of the number or type of successive events requiring such adjustments.



ARTICLE VI

OPTIONS




     6.1 Types of Options Granted. Within the limitations provided herein, Options may be
granted to one Employee at one or several times or to different Employees at the same time or at
different times, in either case under different terms and conditions, as long as the terms and
conditions of each Option are consistent with the provisions of the Plan. Without limitation of
the foregoing, Options may be granted subject to conditions based on the financial performance of
the Company or any other factor the Committee deems relevant.



     6.2 Option Grant and Agreement. Each Option granted or modified hereunder shall be evidenced
(a) by either minutes of a meeting or a written consent of the Committee, and (b) by a written
Option Agreement executed (or otherwise agreed to in form satisfactory to the Committee) by the
Company and the Optionee. The terms of the Option, including the Option’s duration, time or times
of exercise, exercise price, whether the Option is intended to be an ISO, and whether the Option is
transferable under paragraph 6.8(b), shall be stated in the Option Agreement. Separate Option
Agreements shall be used for Options intended to be ISO’s and those not so intended, but any
failure to use such separate Agreements shall not invalidate, or otherwise adversely affect
the Optionee’s rights under and interest in, the Options evidenced thereby.



     6.3 Optionee Limitations. The Committee shall not grant an ISO to any person who, at the time
the ISO would be granted:




     (a) is not an Employee; or




     (b) owns or is considered to own stock possessing more than 10% of the total
combined voting power of all classes of stock of the Employer, or any Parent or Subsidiary
of the



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Employer; provided, however, that this limitation shall not apply if at the time an
ISO is granted the Option Price is at least 110% of the Fair Market Value of the Stock
subject to such Option and such Option by its terms would not be exercisable after the
expiration of five years from the date on which the Option is granted. For the purpose of
this paragraph (b), a person shall be considered to own (i) the stock owned, directly or
indirectly, by or for his brothers and sisters (whether by the whole or half blood), spouse,
ancestors and lineal descendants, (ii) the stock owned, directly or indirectly, by or for a
corporation, partnership, estate, or trust in proportion to such person’s stock interest,
partnership interest or beneficial interest therein, and (iii) the stock which such person
may purchase under any outstanding options of the Employer or of any Parent or Subsidiary of
the Employer.



     6.4 Certain Limitations




     (a) Limitation on Number of Shares. No Optionee shall be granted, during any calendar
year, Options to purchase in excess of 50,000 shares of stock.




     (b) $100,000 Limitation on ISO’s. Except as provided below, the Committee shall not
grant an ISO to, or modify the exercise provisions of outstanding ISO’s held by, any person
who, at the time the ISO is granted (or modified), would thereby receive or hold any
incentive stock options (as described in Code section 422)
of the Employer and any Parent or Subsidiary of the Employer, such that the aggregate
Fair Market Value (determined as of the respective dates of grant or modification of each
option) of the stock with respect to which such incentive stock options are exercisable for
the first time during any calendar year is in excess of $100,000; provided, that the
foregoing restriction on modification of outstanding ISO’s shall not preclude the Committee
from modifying an outstanding ISO if, as a result of such modification and with the consent
of the Optionee, such Option no longer constitutes an ISO; and provided that, if the
$100,000 limitation described in this Section 6.4 is exceeded, an Option that otherwise
qualifies as an ISO shall be treated as an ISO up to the limitation and the excess shall be
treated as an Option not qualifying as an ISO. The preceding sentence shall be applied by
taking options intended to be ISO’s into account in the order in which they were granted.



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     6.5 Option Price. The Option Price under each Option shall be determined by the Committee.
However, the Option Price shall not be less than the Fair Market Value of the Stock on the date
that the Option is granted (or, in the case of an ISO that is subsequently modified, on the date of
such modification).



     6.6 Exercise Period. The period for the exercise of each Option granted hereunder
shall be determined by the Committee, but the Option Agreement with respect to each Option intended
to be an ISO shall provide that such Option shall not be exercisable after a date not more than ten
years from the date of grant (or modification) of the Option. In addition, no Option granted to an
Employee who is also an Officer or Director shall be exercisable prior to the expiration of six
months from the date such Option is granted, other than in the case of the death or disability of
such Employee.



     6.7 Option Exercise.




     (a) Unless otherwise provided in the Option Agreement, an Option may be exercised at
any time or from time to time during the term of the Option as to any or all whole shares
that have become Purchasable under the provisions of the Option, but not at any time as to
less than 100 shares unless the remaining shares that have become so Purchasable are less
than 100 shares. The Committee shall have the authority to
prescribe in any Option Agreement that the Option may be exercised only in accordance
with a vesting schedule during the term of the Option.




     (b) An Option shall be exercised by (i) delivery to the Treasurer of the Company at its
principal office of written notice of exercise with respect to a specified number of shares
of Stock, and (ii) payment to the Company at that office of the full amount of the Option
Price for such number of shares.




     (c) The Option Price shall be paid in full upon the exercise of the Option. The
Committee may provide in an Option Agreement that, in lieu of cash, all or any portion of
the Option Price may be paid by (i) tendering to the Company shares of Stock duly endorsed
for transfer and owned by the Optionee, or (ii) delivering to the Company an attestation of
the Optionee’s then-current ownership of a number of shares equal to the number thereby
authorized to be withheld by the



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Company from the shares otherwise deliverable upon exercise
of the Option, in each case to be credited against the Option Price at the Fair Market Value
of such shares on the date of exercise (however, no fractional shares may be so transferred,
and the Company shall not be obligated to make any cash payments in consideration of any
excess of the aggregate Fair Market Value of shares transferred over the aggregate Option
Price).




     (d) In addition to and at the time of payment of the Option Price, the Optionee shall
pay to the Company in cash the full amount of any federal, state and local income,
employment or other taxes required to be withheld from the income of such Optionee as a
result of such exercise. However, in the discretion of the Committee any Option Agreement
may provide that all or any portion of such tax obligations, together with additional taxes
not exceeding the actual additional taxes to be owed by the Optionee as a result of such
exercise, may, upon the irrevocable election of the Optionee, be paid by (i) tendering to
the Company whole shares of Stock duly endorsed for transfer and owned by the Optionee, (ii)
delivering to the Company an attestation of the Optionee’s then-current ownership of a
number of shares equal to the number thereby authorized to be withheld by the Company from
the shares otherwise deliverable upon exercise of the Option, or (iii) authorizing the
Company to withhold shares of Stock otherwise issuable upon exercise of the Option, in
either case in that number of shares having a Fair Market Value on the date of exercise
equal to the amount of such taxes thereby being paid, in all cases subject to such
restrictions as the Committee may from time to time determine, including any such
restrictions as may be necessary or appropriate to satisfy the conditions of the exemption
set forth in Rule 16b-3 under the 1934 Act.




     (e) The holder of an Option shall not have any of the rights of a shareholder with
respect to the shares of Stock subject to the Option until such shares have been issued upon
exercise of the Option.



     6.8 Nontransferability of Option.




     (a) Except as provided in paragraph 6.8(b), no Option or any rights therein shall be
transferable by an Optionee other than by will or the laws of descent and distribution.
During



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the lifetime of an Optionee, an Option granted to that Optionee shall be exercisable
only by such Optionee, by such Optionee’s guardian or other legal representative, should one
be appointed, or by such Optionee’s transferee permitted under paragraph 6.8(b).




     (b) The Committee may, in its discretion, provide that all or a portion of an Option
(other than an ISO) may be transferred by the Optionee to (i) the spouse, children or
grandchildren of the Optionee (“Immediate Family Member”), (ii) a trust or trusts for the
exclusive benefit of such Immediate Family Members, or (iii) a partnership in which the
Optionee and or such Immediate Family Members are the only partners. Following transfer,
any such Option shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, including those terms and conditions governing
transfer and the effect on such Option of the termination of employment of the Optionee.
The Company shall have no obligation to any transferee to provide notice of any termination
of an Option as a result of termination of the Optionee’s employment. The Committee may
specify as a condition of any such transfer the manner in which the Optionee shall remain
responsible for the payment of taxes required to be withheld as a result of the exercise of
such transferred Option.



     6.9 Termination of Employment. The Committee shall have the power to specify, with respect
to the Options granted to any particular Optionee, the effect upon such Optionee’s right to
exercise an Option of the termination of such Optionee’s employment under various circumstances,
which effect may include (but is not limited to) immediate or deferred termination of such
Optionee’s rights under an Option, or acceleration of the date at which an Option may be exercised
in full. With respect to an ISO, such effects shall be consistent with applicable requirements for
treatment as an ISO.



     6.10 Employment Rights. Options granted under the Plan shall not be affected by any change
of employment so long as the Optionee continues to be an Employee. Nothing in the Plan or in any
Option Agreement shall confer on any person any right to continue in the employ of the Company or
any Subsidiary of the Company, or shall interfere in any way with the right of the Company or any
such Subsidiary to terminate such person’s employment at any time.



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     6.11 Certain Successor Options. To the extent not inconsistent with the terms,
limitations and conditions of Code section 422, and any regulations promulgated with respect
thereto, an Option issued in respect of an option held by an employee to acquire stock of any
entity acquired, by merger or otherwise, by the Company (or by any Subsidiary of the Company) may
contain terms that differ from those stated in this Article VI, but solely to the extent necessary
to preserve for any such employee the rights and benefits contained in such predecessor option, or
to satisfy the requirements of Code section 424(a).



     6.12 Conditions to Issuing Option Stock. The Company shall not be required to issue or
deliver any Stock upon the full or partial exercise of any Option prior to fulfillment of all of
the following conditions:




     (a) The admission of such shares to listing on all stock exchanges on which the Stock
is then listed;




     (b) The completion of any registration or other qualification of such shares that the
Company shall determine to be necessary or advisable under any federal or state law or under
the rulings or regulations of the Securities and Exchange Commission or any other
governmental regulatory body,
or the Company’s determination that an exemption is available from such registration or
qualification;




     (c) The obtaining of any approval or other clearance from any federal or state
governmental agency that the Company shall determine to be necessary or advisable; and




     (d) The lapse of such reasonable period of time following exercise as shall be
appropriate for reasons of administrative convenience.



     Unless the shares of Stock covered by the Plan shall be the subject of an effective
registration statement under the Securities Act of 1933, as amended, stock certificates issued and
delivered to Optionees shall bear such restrictive legends as the Company shall deem necessary or
advisable pursuant to applicable federal and state securities laws.



     6.13 Automatic Option Grants to Certain Directors.




     (a) Options for New Directors. Each person who is not an



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Employee, or an
employee of any Parent of the Company, shall automatically, and without any action of the
Board or the Committee, be granted, on the first day on which such person serves as a
Director, an Option for the purchase of 15,000 shares (subject to automatic proportionate
adjustment for stock splits or stock dividends, and otherwise to proportionate adjustment by
the Committee as provided in Section 5.2). Each such Option shall become exercisable as to
one-fifth of the subject shares on the date that is six months after the date of grant, and
as to an additional one-fifth of the subject shares on each of the first, second, third and
fourth anniversaries of such six-month date.




     b) Additional Options for Continuing Service. Each person who at that time is a member
of the Board but who is not an Employee, or an employee of any Parent of the Company, shall
automatically and without any action of the Board or the Committee, be granted, on each date
on which such person is elected to a new one-year term of service, an Option for the
purchase of 5,000 shares (subject to automatic proportionate adjustment for stock splits or
stock dividends, and otherwise to proportionate adjustment by the Committee as provided in
Section 5.2). Each such Option shall become exercisable on the date that is six months
after the date of grant.




     (c) Other Terms of Automatic Options. Each Option
automatically granted under this Section 6.13 shall not be an ISO, shall not include
the right to receive a Reload Option, and shall have an Option Price equal to the Fair
Market Value of the Stock on the date of grant. Each such Option shall become immediately
exercisable in the event a party other than the Company or any Parent or Subsidiary of the
Company purchases or otherwise acquires shares of Stock pursuant to a tender offer or
exchange offer for such shares, or any person or group becomes the beneficial owner (for the
purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of 50% or
more of the outstanding shares of the Stock. To the extent such an Option shall have become
exercisable, it shall be non-forfeitable and shall remain exercisable until the sixth
anniversary of its date of grant, but if the Grantee ceases to be a Director for any reason,
any portion of such Option that is not at that time exercisable shall immediately terminate
and shall not thereafter become exercisable. The Option Price for each such Option may be
paid in cash or in the manners specified in the second sentence of paragraph 6.7(c) hereof.
In addition, any taxes related to the exercise of each such Option may be paid in the manner
contemplated in the second sentence of paragraph 6.7(d) hereof.



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ARTICLE VII

RESTRICTED STOCK




     7.1 Awards of Restricted Stock. The Committee may grant Awards of Restricted Stock upon
determination by the Committee, acting pursuant to the delegation hereby of the Board’s authority
to make such determinations, that the value or other benefit to the Company of the services of a
Grantee theretofore performed or to be performed as a condition of the lapse of restrictions
applicable to such Restricted Stock, or the benefit to the Company of the incentives created by the
issuance thereof, is adequate consideration for the issuance of such shares. Each such Award shall
be governed by a Restriction Agreement between the Company and the Grantee. Each Restriction
Agreement shall contain such restrictions, terms and conditions as the Committee shall, in its
discretion, determine, and may require that an appropriate legend be placed on the certificates
evidencing the subject Restricted Stock.



     Shares of Restricted Stock granted pursuant to an Award hereunder shall be issued in
the name of the Grantee as soon as reasonably practicable after the Award is granted, provided that
the Grantee has executed the Restriction Agreement governing the
Award, the appropriate blank stock powers and, in the discretion of the Committee, an escrow
agreement and any other documents which the Committee may require as a condition to the issuance of
such shares. If a Grantee shall fail to execute the foregoing documents, within any time period
prescribed by the Committee, the Award shall be null and void. At the discretion of the Committee,
shares of Restricted Stock issued in connection with an Award shall be held by the Company or
deposited together with the stock powers with an escrow agent designated by the Committee. Unless
the Committee determines otherwise and as set forth in the Restriction Agreement, upon issuance of
such shares, the Grantee shall have all of the rights of a shareholder with respect to such shares,
including the right to vote the shares and to receive all dividends or other distributions paid or
made with respect to them.



     7.2 Non-Transferability. Until any restrictions upon Restricted Stock awarded to a Grantee
shall have lapsed in a manner set forth in Section 7.3, such shares of Restricted Stock shall not
be transferable other than by will or the laws of descent and distribution, or pursuant to a
Qualified Domestic Relations Order, nor shall they be delivered to the Grantee.



     7.3 Lapse of Restrictions. Restrictions upon Restricted



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Stock awarded hereunder shall lapse
at such time or times (but, with respect to any award to an Employee who is also a Director or
Officer, not less than six months after the date of the Award) and on such terms and conditions as
the Committee shall, in its discretion, determine at the time the Award is granted or thereafter.



     7.4 Termination of Employment. The Committee shall have the power to specify, with respect
to each Award granted to any particular Employee, the effect upon such Grantee’s rights with
respect to such Restricted Stock of the termination of such Grantee’s employment under various
circumstances, which effect may include (but is not limited to) immediate or deferred forfeiture of
such Restricted Stock or acceleration of the date at which any then-remaining restrictions shall
lapse.



     7.5 Treatment of Dividends. At the time an Award of Restricted Stock is made the
Committee may, in its discretion, determine that the payment to the Grantee of any dividends, or a
specified portion thereof, declared or paid on such Restricted Stock shall be (i) deferred until
the lapsing of the relevant restrictions, and (ii) held by the Company
for the account of the Grantee until such time. In the event of such deferral, there shall be
credited at the end of each year (or portion thereof) interest on the amount of the account at the
beginning of the year at a rate per annum determined by the Committee. Payment of deferred
dividends, together with interest thereon, shall be made upon the lapsing of restrictions imposed
on such Restricted Stock, and any dividends deferred (together with any interest thereon) in
respect of Restricted Stock shall be forfeited upon any forfeiture of such Restricted Stock.



     7.6 Delivery of Shares. Within a reasonable period of time following the lapse of the
restrictions on shares of Restricted Stock, the Committee shall cause a stock certificate or
certificates to be delivered to the Grantee with respect to such shares. Such shares shall be free
of all restrictions hereunder, except that if the shares of stock covered by the Plan shall not be
the subject of an effective registration statement under the Securities Act of 1933, as amended,
such stock certificates shall bear such restrictive legends as the Company shall deem necessary or
advisable pursuant to applicable federal and state securities laws.



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     7.7 Payment of Withholding Taxes.




     (a) The Restriction Agreement may authorize the Company to withhold from compensation
otherwise due to the Grantee the full amount of any federal, state and local income,
employment or other taxes required to be withheld from the income of such Grantee as a
result of the lapse of the restrictions on shares of Restricted Stock, or otherwise as a
result of the recognition of taxable income with respect to an Award. At the time of and as
a condition to the delivery of a stock certificate or certificates pursuant to Section 7.6,
the Grantee shall pay to the Company in cash any balance owed with respect to such
withholding requirements.




     (b) In the discretion of the Committee, any Restriction Agreement may provide
that all or any portion of the tax obligations otherwise payable in the manner set forth in
paragraph 7.7(a), together with additional taxes not exceeding the actual additional taxes
to be owed by the Grantee with respect to the Award, may, upon the irrevocable election of
the Grantee, be paid by tendering to the Company whole shares of Stock duly endorsed for
transfer and owned by the Grantee, or by authorizing the Company to withhold and cancel shares of Stock otherwise deliverable pursuant to Section 7.6, in either case in that number
of shares having a Fair Market Value on the date that taxable income is recognized equal to
the amount of such taxes thereby being paid, in all cases subject to such restrictions as
the Committee may from time to time determine.



ARTICLE VIII

TERMINATION, AMENDMENT AND MODIFICATION OF PLAN




     The Board may at any time, (i) cause the Committee to cease granting Options and Awards, (ii)
terminate the Plan, or (iii) in any respect amend or modify the Plan. However, the Board (unless
its actions are approved or ratified by the shareholders of the Company within twelve months of the
date the Board amends the Plan) may not amend the Plan to materially increase the number of shares
of Stock available under the Plan.



     No termination, amendment or modification of the Plan shall affect adversely a Grantee’s
rights under an Option Agreement or Restriction Agreement without the consent of the Grantee or his
or her legal representative.



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     From and after the first date on which an Option is automatically granted pursuant to Section
6.13, the provisions of such Section 6.13 may not be amended in any manner more frequently than
once every six months, other than to comport with changes in the Code, the Employee Retirement
Income Security Act of 1974, as amended, or the rules and regulations promulgated under the Code or
such Act.



ARTICLE IX

MISCELLANEOUS




     9.1 Replacement or Amended Grants. At the sole discretion of the Committee, and
subject to the terms of the Plan, the Committee may modify outstanding Options or Awards or accept
the surrender of outstanding Options or Awards on terms specified by the Committee, which terms may
include the grant of new Options or Awards in substitution for them. However, no modification of
an Option or Award shall adversely affect a Grantee’s rights under an Option Agreement or
Restriction Agreement without the consent of the Grantee or his or her legal representative, and no
modification of an existing Option, or grant of a new Option in substitution for the surrender of
an existing Option, shall be at an Option Price lower than that of the existing Option at the time
it was first granted (as thereafter adjusted pursuant to Section 5.2).



     9.2 Forfeiture for Competition. If a Grantee provides services to a competitor of the
Company or any of its Subsidiaries, whether as an employee, officer, director, independent
contractor, consultant, agent or otherwise, such services being of a nature that can reasonably be
expected to involve the skills and experience used or developed by the Grantee while a Director or
an Employee, then that Grantee’s rights under any Options outstanding hereunder shall be forfeited
and terminated, and any shares of Restricted Stock held by such Grantee subject to remaining
restrictions shall be forfeited, subject in each case to a determination to the contrary by the
Committee.



     9.3 Plan Binding on Successors. The Plan shall be binding upon the successors of the
Company.



     9.4 Headings Not a Part of Plan. Headings of Articles and Sections hereof are inserted for
convenience and reference, and do not constitute a part of the Plan.




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