Exhibit 10.1


 


UAL CORPORATION


 


2006 MANAGEMENT EQUITY
INCENTIVE PLAN


 


1.             Purpose


 


The purposes of the UAL Corporation 2006 Management Equity Incentive
Plan (the “MEIP”) are to attract and retain outstanding individuals as officers
and key employees of UAL Corporation (the “Company”) and its subsidiaries in
connection with the Company’s emergence from bankruptcy, to further align their
interests with those of the Company’s shareholders through compensation that is
based on shares of the Company’s common stock, par
value $.01 per share (“Common Stock”), and to furnish incentives to such
persons by providing them opportunities to acquire shares of Common Stock on
advantageous terms as herein provided.


 


2.             Definitions


 


The following capitalized terms have the meanings set forth in this
Section:


 


(a)           Affiliate:  All persons with whom the Company would be
considered a single employer under Section 414(b) or 414(c) of
the Code.


 


(b)           Award:  An Incentive Stock Option, Nonqualified Stock
Option, Stock Appreciation Right, Restricted Share, or Other Share-Based Award
granted pursuant to the MEIP.


 


(c)           Board:  The Board of Directors of the Company.


 


(d)           Broker
Exercise Notice: A written notice pursuant to which a Participant, upon
exercise of an Option, irrevocably instructs a broker or dealer to sell a
sufficient number of shares or loan a sufficient amount of money to pay all or
a portion of the exercise price of the Option and/or any related withholding
tax obligations and remit such sums to the Company and directs the Company to
deliver stock certificates (by electronic means or otherwise) to be issued upon
such exercise directly to such broker or dealer or their nominee.


 


(e)           Cause:
One or more of:  (i) dishonesty,
fraud, misrepresentation, embezzlement or deliberate injury or attempted
injury, in each case related to the Company or any Subsidiary, (ii) any
unlawful or criminal activity of a serious nature, (iii) any intentional
and deliberate breach of a duty or duties that, individually or in the
aggregate, are material in relation to the Participant’s overall duties, or (iv) any
material breach of any confidentiality or noncompete agreement entered into
with the Company or any Subsidiary.


 


(f)            Change
in Control:  An event described in Section 13(a),
provided such event is a “change of control”, as such term is defined in Section 409A
of the Code.


 


(g)           Code:  The U.S. Internal Revenue Code of 1986, as
amended, or any successor law (including, when the context requires, all
regulations, interpretations and rulings issued thereunder).


 


(h)           Committee:  A committee of the Board, provided that, so
long as the Company has a class of its equity securities registered under Section 12
of the Exchange Act, such committee will consist solely of two or more members
of the Board who are “non-employee directors” within the meaning of Rule 16b-3
under the Exchange Act.  As of the
Effective Date, the Committee shall be the Human Resources Subcommittee of the
Board.


 


(i)            Common
Stock:  The Company’s common stock,
par value $.01 per share, issued on or after the Effective Date.


 

















 


(j)            Company:   UAL Corporation, a Delaware corporation.


 


(k)           Continuity
Director:  An individual described in
Section 13(a).


 


(l)            Disability:
Disability of the Participant such as would entitle the Participant to receive
disability income benefits pursuant to the long-term disability plan of the
Company or Subsidiary then covering the Participant or, if no such plan exists
or is applicable to the Participant, the permanent and total disability of the
Participant within the meaning of Section 22(e)(3) of the Code;
provided, however, if distribution of an Award subject to Section 409A of
the Code is triggered by a Participant’s Disability, such term will mean that
the Participant is “disabled” as defined by Section 409A of the Code.


 


(m)          Effective
Date:  The date specified in Section 5.


 


(n)           Exchange
Act:  The U.S. Securities Exchange
Act of 1934, as amended, or any successor law.


 


(o)           Exercise
Price:  The purchase price per share
of Common Stock under the terms of an Incentive Stock Option, a Nonqualified
Stock Option, or a Stock Appreciation Right as determined pursuant to Section 6,
7 or 9, respectively.


 


(p)           Fair
Market Value:  Unless otherwise
determined by the Committee, the fair market value of the Company’s shares of
Common Stock as of any date shall be: (i) the mean between the lowest and
highest reported sale prices of the Common Stock on that date with respect to
the Common Stock, if the Common Stock is listed, admitted to unlisted trading
privileges, or reported on any national securities exchange or on the Nasdaq
Stock Market on such date (or, if no shares were traded on such day, as of the
next preceding day on which there was such a trade); or (ii) if the Common
Stock is not so listed, admitted to unlisted trading privileges, or reported on
any national exchange or on the Nasdaq National Market, the mean between the
lowest and highest reported sale prices as of such date, as reported by the
Nasdaq SmallCap Market, OTC Bulletin Board, the Bulletin Board Exchange (BBX)
or the National Quotation Bureaus, Inc., or other comparable service; or (iii) if
the Common Stock is not so listed or reported, such price as the Committee
determines in good faith in the exercise of its reasonable discretion.


 


(q)           Incentive
Stock Option:  A stock option granted
pursuant to Section 6.  To the
extent that any Incentive Stock Option granted under the MEIP ceases for any
reason to qualify as an “incentive stock option” for purposes of Section 422
of the Code, such Incentive Stock Option will continue to be outstanding for
purposes of the MEIP but will thereafter be deemed to be a Nonqualified Stock
Option.


 


(r)            MEIP:  The UAL Corporation 2006 Management Equity
Incentive Plan, as may be amended from time to time.


 


(s)           Nonqualified
Stock Option:  A stock option granted
pursuant to Section 7.


 


(t)            Option:  An Incentive Stock Option or a Nonqualified
Stock Option.


 


(u)           Other
Share-Based Awards:  Awards granted
pursuant to Section 11.


 


(v)           Participant:  Officers and other employees of the Company
and its Subsidiaries as the Committee in its sole discretion may designate from
time to time to participate hereunder.


 


(w)          Previously
Acquired Shares:  Shares of Common
Stock that are already owned by the Participant or, with respect to any Award,
that are to be issued upon the grant, exercise or vesting of such Award.


 


2

















 


(x)            Restricted
Share: A restricted share of Common Stock granted pursuant to Section 10.


 


(y)           Retirement:  Termination of Employment at or after
attaining age 55 and completing ten (10) years of service with the Company
or an Affiliate, or Termination of Employment after attaining age 65.  With respect to a Participant who was in the
employ of a corporation or other organization whose business was acquired by
the Company or any Affiliate, if (and only to the extent) specifically provided
by the Committee, service will include the period of service such Participant
was in the employ of such corporation or other organization prior to such
acquisition).


 


(z)            Stock
Appreciation Right.  A stock
appreciation right granted pursuant to Section 9.


 


(aa)         Shareholder
Approval Date:  The date, if any, on
which the MEIP is approved by the Company’s stockholders, or is otherwise
treated as approved by the Company’s stockholders for purposes of Section 422
of the Code.


 


(bb)         Subsidiary:  United Air Lines, Inc., any other
corporation all of the outstanding voting stock of which is owned, directly or
indirectly, by the Company, and any other such entity, corporate or otherwise,
as the Company in its sole discretion from time to time determines to be a
Subsidiary.


 


(cc)         Termination
of Employment.  A complete severance
of an employee’s relationship with the Company and all Affiliates, for any
reason.  For any Award subject to Section 409A
of the Code, a Participant will be treated as having a Termination of
Employment only if such termination constitutes a “separation from service”
within the meaning of Section 409A of the Code.


 


3.             Shares Subject to the MEIP


 


(a)           Subject
to adjustment as provided in Section 19, the maximum number of shares of
Common Stock that will be available for issuance under the MEIP will be
9,825,000 shares of Common Stock.  The
shares available for issuance under the MEIP may, at the election of the
Committee, be either treasury shares or shares authorized but unissued, and, if
treasury shares are used, all references in the MEIP to the issuance of shares
will, for corporate law purposes, be deemed to mean the transfer of shares from
treasury.


 


(b)           Shares
of Common Stock that are issued under the MEIP or that are subject to
outstanding Awards will be applied to reduce the maximum number of shares of
Common Stock remaining available for issuance under the MEIP; provided,
however, that shares subject to an Award that lapses, expires, is forfeited
(including issued shares forfeited under a Restricted Stock Award) or for any
reason is terminated unexercised or unvested or is settled or paid in cash or
any form other than shares of Common Stock will automatically again become
available for issuance under the MEIP. 
To the extent that the exercise price of any Option and/or associated
tax withholding obligations are paid by tender or attestation as to ownership
of Previously Acquired Shares, or to the extent that such tax withholding
obligations are satisfied by withholding of shares otherwise issuable upon
exercise of the Option, only the number of shares of Common Stock issued net of
the number of shares tendered, attested to or withheld will be applied to
reduce the maximum number of shares of Common Stock remaining available for
issuance under the MEIP.


 


4.             Administration


 


(a)           All
Awards granted under the MEIP shall be granted by the Committee.  The MEIP shall be administered by the Committee,
including for all grants with respect to any “officer” as that term is defined
in Rule 16a-1(f) under the Exchange Act.  The Committee is authorized to interpret the
provisions of the MEIP and any Award agreement, to determine the terms and
conditions of Awards to be granted under the MEIP and to make all other
determinations necessary or advisable for the administration of the MEIP, but
only to the extent not contrary to or inconsistent with the 


 


3

















 


express provisions of the
MEIP.  Determinations, decisions and
actions of the Committee in connection with the construction, interpretation,
administration or application of the MEIP will be final, conclusive and binding
upon any Participant and any person claiming under or through the
Participant.  No member of the Committee
will be liable for any determination, decision or action made in good faith
with respect to the MEIP or any Awards granted under the MEIP.  To the extent consistent with Delaware corporate
law, the Committee may delegate to any officers of the Company the duties,
power and authority of the Committee under the MEIP pursuant to such conditions
or limitations as the Committee may establish; provided, however, that only the
Committee may exercise such duties, power and authority with respect to
Participants who are subject to Section 16 of the Exchange Act.  The MEIP is not intended to modify or limit
the powers, duties or responsibilities of either the Board or the Committee as
set forth under the UAL Corporation Restated Certificate of Incorporation.


 


(b)           Notwithstanding
any other provision of the MEIP other than Section 19, the Committee may
not, without prior approval of the Company’s stockholders, seek to effect any
re-pricing of any previously granted, “underwater” Option by:  (i) amending or modifying the terms of
the Option to lower the exercise price; (ii) canceling the underwater
Option and granting either (A) replacement Options having a lower exercise
price or (B) Restricted Shares; or (iii) repurchasing the underwater
Options and granting new Awards under the MEIP. 
For purposes of this Section 4(b), an Option will be deemed to be “underwater”
at any time when the Fair Market Value of the Common Stock is less than the
exercise price of the Option.


 


(c)           In
addition to the authority of the Committee under Section 4(a) and
notwithstanding any other provision of the MEIP, the Committee may, in its sole
discretion, amend the terms of the MEIP or Awards with respect to Participants
resident outside of the United States or employed by a non-U.S. Subsidiary in
order to comply with local legal requirements, to otherwise protect the Company’s
or Subsidiary’s interests, or to meet objectives of the MEIP, and may, where
appropriate, establish one or more sub-plans (including the adoption of any
required rules and regulations) for the purposes of qualifying for
preferred tax treatment under foreign tax laws. 
The Committee shall have no authority, however, to take action pursuant
to this Section 4(c): (i) to reserve shares or grant Awards in excess
of the limitations provided in Section 3; (ii) to effect any
re-pricing in violation of Section 4(b); (iii) to grant Options
having an exercise price less than 100% of the Fair Market Value of one share of
Common Stock on the date of grant in violation of Sections 6(a) and 7(a);
or (iv) for which stockholder approval would then be required pursuant to Section 422
of the Code or the rules of any applicable national exchange or market on
which the Common Stock is listed or quoted.


 


(d)           Notwithstanding
anything in this Plan to the contrary, the Committee will determine whether an
Award is subject to the requirements of Section 409A of the Code and, if
determined to be subject to Section 409A of the Code, the Committee will
make such Award subject to such written terms and conditions determined
necessary or desirable to cause such Award to comply in form and operations
with the requirements of Section 409A of the Code.  It is intended that the Plan and all Awards
determined to be subject to the requirements of Section 409A of the Code
comply in form and operation with the requirements of Section 409A of the
Code.  In the event that any provision in
this MEIP shall be subject to more than one interpretation, such provision
shall be interpreted so as to comply with the requirements of Section 409A
of the Code.  In the event that it is not
possible to grant a particular Award that would comply with Section 409A,
it is intended that the Committee shall make an alternative Award that would
comply with Section 409A of the Code.


 


(e)           The
Company makes no warranties regarding the tax treatment to any person of any
Awards made pursuant to the Plan and each Participant will hold the Committee,
the Company, and its officers, directors, employees, agents, and advisors free
from any liability resulting from any tax position taken in good faith in
connection with the Plan.


 


4

















 


5.             Term of the MEIP


 


The MEIP shall be effective as of the effective date of the Company’s
confirmed plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code
(the “Effective Date”) and shall remain in effect as long as any Awards under
it remain outstanding.  No Award may be
granted under the MEIP after the tenth anniversary of the Effective Date, but
the term of any Award theretofore granted may extend beyond that date.


 


6.             Incentive Stock Options


 


Incentive Stock Options are intended to satisfy the requirements
applicable to “incentive stock options” described in Section 422(b) of
the Code or any successor provision. 
Incentive Stock Options may be granted under the MEIP only if the
Shareholder Approval Date is before the first anniversary of the Effective
Date.  Incentive Stock Options shall be
subject to the foregoing and the following terms and conditions and to such
other terms and conditions, not inconsistent therewith, as the Committee shall
determine:


 


(a)           The
Exercise Price shall not be less than the Fair Market Value of a share of
Common Stock on the date of grant of such Incentive Stock Option.  Options shall be exercisable at such time and
upon such terms and conditions, as may be determined by the Committee.


 


(b)           The
term of each Option shall be fixed by the Committee; in no event, however,
shall the period for exercising an Incentive Stock Option extend more than 10
years from the date of grant.


 


(c)           The
aggregate Fair Market Value (determined on the date of grant) of the shares of
Common Stock for which Incentive Stock Options are exercisable for the first
time in any calendar year (under all options plans of the Company and its
parent and Subsidiary corporations) for any Participant shall not exceed
$100,000.


 


(d)           Incentive
Stock Options shall not be transferable by a Participant other than by will or
the laws of descent and distribution and shall be exercisable, during the
Participant’s lifetime, only by the Participant.


 


(e)           Notwithstanding
clauses (a) and (b) above, the Exercise Price of Incentive Stock
Options granted to any individual who at the time of such grant owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or its parent or Subsidiary corporations (within the
meaning of Section 422(b) of the Code) shall not be less than 110% of
the Fair Market Value of the Common Stock on the date of grant and the term of
any Incentive Stock Option granted to such individual shall not exceed five
years from the date of grant.


 


7.             Nonqualified Stock Options


 


Nonqualified Stock Options are not intended to satisfy the requirements
applicable to “incentive stock options” described in Section 422(b) of
the Code or any successor provision, and shall be subject to the foregoing and
the following terms and conditions and to such other terms and conditions, not
inconsistent therewith, as the Committee shall determine:


 


(a)           The
Exercise Price shall not be less than the Fair Market Value of a share of
Common Stock on the date of grant of such Nonqualified Stock Option.  Nonqualified Stock Options shall be
exercisable at such time and upon such terms and conditions, as may be
determined by the Committee.


 


(b)           The
term of each Nonqualified Stock Option shall be fixed by the Committee; in no
event, however, shall the period for exercising a Nonqualified Stock Option
extend more than 10 years from the date of grant.


 


5

















 


8.             Option Exercise and Payment Terms


 


(a)           The
total purchase price of the shares to be purchased upon exercise of an Option
will be paid entirely in cash (including check, bank draft, wire transfer or
money order); provided, however, that the Committee, in its sole discretion and
upon terms and conditions established by the Committee, may allow such payments
to be made, in whole or in part, by tender of a Broker Exercise Notice, by
tender, or attestation as to ownership, of Previously Acquired Shares that have
been held for the period of time necessary to avoid a charge to the Company’s
earnings for financial reporting purposes and that are otherwise acceptable to
the Committee, or by a combination of such methods. For purposes of such
payment, Previously Acquired Shares tendered or covered by an attestation will
be valued at their Fair Market Value on the exercise date.


 


(b)           An
Option may be exercised by a Participant in whole or in part from time to time,
subject to the conditions contained in the MEIP and in the agreement, notice or
schedule evidencing such Option, by delivery in person, by facsimile or
electronic transmission or through the mail of written notice of exercise to
the Company at its principal executive office and by paying in full the total
exercise price for the shares of Common Stock to be purchased in accordance
with clause (a) above.


 


9.             Stock Appreciation Rights


 


The Committee may, in its
discretion grant a Stock Appreciation Right to the holder of any Nonqualified
Stock Option granted hereunder.  In
addition, a Stock Appreciation Right may be granted independently of and
without relation to any Nonqualified Stock Option.  Stock Appreciation Rights shall be subject to
such terms and conditions consistent with the MEIP as the Committee shall
impose from time to time including the following:


 


(a)           A
Stock Appreciation Right may be granted with respect to a Nonqualified Stock
Option at the time of its grant or at any time thereafter.


 


(b)           Each
Stock Appreciation Right will entitle the Participant to elect to receive in
cash up to 100% of the appreciation in Fair Market Value of the shares of
Common Stock subject thereto up to the date the Stock Appreciation Right is
exercised.  In the case of a Stock
Appreciation Right issued in relation to a Nonqualified Stock Option, such
appreciation will be measured from the Nonqualified Stock Option’s Exercise
Price.  In the case of a Stock Appreciation
Right issued independently of any Nonqualified Stock Option, the appreciation
shall be measured from not less than the Fair Market Value of a share of Common
Stock on the date the Stock Appreciation Right is granted.


 


(c)           The
Committee shall have the discretion to satisfy a Participant’s right to receive
the amount of cash as determined in Section 9(b), in whole or in part, by
the delivery of shares of Common Stock valued as of the date of the Participant’s
exercise.


 


(d)           In
the event of the exercise of a Stock Appreciation Right, the number of shares
of Common Stock reserved for issuance hereunder (and the shares of Common Stock
subject to the related Nonqualified Stock Option, if any) shall be reduced by
the number of shares of Common Stock with respect to which the Stock
Appreciation Right is exercised.


 


10.           Restricted Shares


 


The Committee is hereby authorized to grant Awards of Restricted Shares
to Participants with the following terms and conditions:


 


(a)           During
the Restricted Period (as defined in Section 10(b)), Participant shall not
sell, assign, 


 


6

















 


exchange, transfer, pledge,
hypothecate or otherwise dispose of or encumber any of the Restricted
Shares.  Upon grant of the Award of
Restricted Shares, however, Participant shall thereupon be a stockholder with
respect to all shares of Common Stock subject to the Restricted Share Award and
shall have all the rights of a stockholder with respect to such shares of
Common Stock, including the right to vote such shares and to receive all
dividends and other distributions.


 


(b)           The
term “Restricted Period” shall mean any period as set by the Committee, not to
exceed ten years, ending upon such conditions as the Committee may deem
appropriate, including, without limitation, achievement of certain goals and/or
that the Participant has remained continuously employed by the Company or its
Subsidiaries for a certain period.


 


(c)           To
enforce the restrictions referred to in this Section 10, the Committee may
place a legend on the stock certificates referring to such restrictions and may
require the Participant, until the restrictions have lapsed, to keep the stock
certificates, together with duly endorsed stock powers, in the custody of the
Company or its transfer agent, or to maintain evidence of stock ownership,
together with duly endorsed stock powers, in a certificateless book-entry stock
account with the Company’s transfer agent.


 


11.           Other Share-Based Awards


 


The Committee, in its sole discretion, may grant to Participants such
other Awards including, without limitation, dividends and dividend equivalents
and other Awards that are valued in whole or in part by reference to, or are
otherwise based on the Fair Market Value of, shares of Common Stock.  Such Other Share-Based Awards shall be in
such form, and dependent on such conditions, as the Committee shall determine,
including, without limitation, the right to receive one or more shares of
Common Stock (or the equivalent cash value of such shares of Common Stock) upon
the completion of a specified period of service, the occurrence of an event
and/or the attainment of performance objectives. Other Share-Based Awards may
be granted alone or in addition to any other Awards granted under the MEIP.
Subject to the provisions of the MEIP, the Committee shall determine: (i) to
whom and when Other Share-Based Awards will be made; (ii) the number of
shares of Common Stock to be awarded under (or otherwise related to) such Other
Share-Based Awards; (iii) whether such Other Share-Based Awards shall be
settled in cash, shares of Common Stock or a combination of cash and shares of
Common Stock; and (iv) all other terms and conditions of such Other
Share-Based Awards (including, without limitation, the vesting provisions
thereof and provisions ensuring that all shares of Common Stock so awarded and
issued shall be fully paid and nonassessable).


 


12.           Effect of Termination of Employment 


 


(a)           Termination
of Employment Due to Death or Disability. 
In the event of a Participant’s Termination of Employment by reason of
death or Disability:


 


(i)            All
outstanding Options and Stock Appreciation Rights then held by the Participant
will become immediately exercisable in full and will remain exercisable for a
period of twelve (12) months after such termination (but in no event after the
expiration date of any such Option or Stock Appreciation Right);


 


(ii)           All
Restricted Shares then held by the Participant will become fully vested; and


 


(iii)          Any
conditions with respect to the issuance of shares of Common Stock pursuant to
Other Share-Based Awards which are based on a performance period will lapse
with respect to that portion of such shares equal to the ratio of the full
months of the Participant’s service within the performance period to the total
months of the performance period.  Unless
otherwise provided by the Committee, all other Other Share-Based Stock Awards
held by the Participant will terminate and be forfeited.


 


7

















 


(b)           Termination
of Employment Due to Retirement.  In
the event of a Participant’s Termination of Employment by reason of Retirement:


 


(i)            All
outstanding Options and Stock Appreciation Rights then held by the Participant
will become immediately exercisable in full and will remain exercisable in full
until the expiration date of any such Option or Stock Appreciation Right;


 


(ii)           All
Restricted Shares then held by the Participant that have not vested as of such
Termination of Employment will become fully vested; and


 


(iii)          Any
conditions with respect to the issuance of shares of Common Stock pursuant to
Other Share-Based Awards which are based on a performance period will lapse
with respect to that portion of such shares equal to the ratio of the full
months of the Participant’s service within the performance period to the total
months of the performance period.  Unless
otherwise provided by the Committee, all other Other Share-Based Stock Awards
held by the Participant will terminate and be forfeited.


 


(c)           Termination
of Employment for Reasons Other than Death, Disability or Retirement. In
the event of a Participant’s Termination of Employment for any reason other
than death, Disability or Retirement, or if a Participant is in the employ of
an Affiliate and the entity ceases to be an Affiliate of the Company (unless
the Participant continues in the employ of the Company or another Subsidiary
Affiliate):


 


(i)            All
outstanding Options and Stock Appreciation Rights then held by the Participant
will, to the extent exercisable as of such termination, remain exercisable in
full for a period of three (3) months after such termination (but in no
event after the expiration date of any such Option or Stock Appreciation
Right).  Options and Stock Appreciation
Rights not exercisable as of such termination will be forfeited and terminate;


 


(ii)           All
Restricted Shares then held by the Participant that have not vested as of such
Termination of Employment will be terminated and forfeited; and


 


(iii)          All
Other Share-Based Awards then held by the Participant will be terminated and
forfeited.


 


(d)           Modification
of Rights Upon Termination. 
Notwithstanding the other provisions of this Section 12, upon a
Participant’s Termination of Employment, the Committee may, in its sole
discretion (which may be exercised at any time on or after the date of grant,
including following such termination), cause Options and Stock Appreciation
Rights (or any part thereof) then held by such Participant to become or
continue to become exercisable and/or remain exercisable following such
Termination of Employment, and Restricted Shares and Other Share-Based Awards
then held by such Participant to vest and/or continue to vest or become free of
restrictions and conditions to issuance, as the case may be, following such
Termination of Employment, in each case in the manner determined by the
Committee; provided, however, that no Incentive Award may remain exercisable or
continue to vest for more than two years beyond the date such Incentive Award
would have terminated if not for the provisions of this Section 12(d) but
in no event beyond its expiration date. 
Modification of an Incentive Stock Option that is intended to qualify
under Section 422 of the Code will be limited to those modifications
permitted under Section 422 of the Code.


 


(e)           Effects
of Actions Constituting Cause. 
Notwithstanding anything in the MEIP to the contrary, in the event that
a Participant is determined by the Committee, acting in its sole discretion, to
have committed any action which would constitute Cause, irrespective of whether
such action or the Committee’s determination occurs before or after such
Participant’s Termination of Employment, all rights of the Participant under
the MEIP and any agreements evidencing an Incentive Award 


 


8

















 


then held by the Participant
shall terminate and be forfeited without notice of any kind.  The Company may defer the exercise of any
Option or Stock Appreciation Right, the vesting of any Restricted Shares or the
issuance of any shares of Common Stock pursuant to any Other Share-Based Award
for a period of up to forty-five (45) days in order for the Committee to make
any determination as to the existence of Cause.


 


(f)            Determination
of Termination of Employment.  Unless
the Committee otherwise determines in its sole discretion, a Participant’s
Termination of Employment will, for purposes of the MEIP, be deemed to have
occurred on the date recorded on the personnel or other records of the Company
or the Affiliate for which the
Participant provides employment, as determined by the Committee in its sole
discretion based upon such records.


 


13.           Change in Control


 


(a)           Change
in Control Defined.  A “Change in
Control” shall be deemed to have occurred if the event set forth in any one of
the following paragraphs shall have occurred:


 


(i)            any “person”
as such term is used in Sections 13(d) and 14(d) of the Exchange Act
(other than the Company, any trustee or other fiduciary holding securities
under any employee benefit plan of the Company, or any corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company), is or becomes
during the 12-month period ending on the date of the most recent acquisition, including
pursuant to a tender or exchange offer for shares of Common Stock pursuant to
which purchases are made, the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 35% or more of the combined voting
power of the Company’s then outstanding securities, other than in a transaction
arranged or approved by the Continuity Directors prior to its occurrence;
provided, however, that if any such person is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 50% or more
of the combined voting power of the Company’s then outstanding securities, a
Change in Control will be deemed to have occurred whether or not any or all of
such beneficial ownership is obtained in a transaction arranged or approved by
the Continuity Directors prior to its occurrence, and provided further that the
provisions of this subparagraph (i) shall not be applicable to a
transaction in which a corporation becomes the owner of all the Company’s
outstanding securities in a transaction which complies with the provisions of
subparagraph (iii) of this Section 13(a) (e.g., a reverse
triangular merger); or


 


(ii)           there is
consummated a merger or consolidation of the Company or any direct or indirect
Subsidiary of the Company with any other corporation that constitutes a “change
of control”  event under Section 409A
of the Code (other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior to such merger
or consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof) more than 50% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, and in which no “person” (as defined under
subparagraph (a) above) acquires 50% or more of the combined voting power
of the securities of the Company or such surviving entity or parent thereof
outstanding immediately after such merger or consolidation); or


 


(iii)          the
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than a sale or disposition by the Company of all or substantially all of
the Company’s assets to an 


 


9

















 


entity, more than 50% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in substantially
the same proportions as their ownership of the Company immediately prior to
such sale; or


 


(iv)          during any
12-month period the Continuity Directors cease
for any reason to constitute at least a majority of the Board.


 


For Purposes of this Section 13,
“Continuity Director” means any individual who was a member of the Board on the
Effective Date, while he or she is a member of the Board, and any individual
who subsequently becomes a member of the Board whose election or nomination for
election by the Company’s stockholders was approved by a vote of at least a
majority of the directors who are Continuity Directors (either by a specific
vote or by approval of the proxy statement of the Company in which such
individual is named as a nominee for director without objection to such
nomination).  For example, assuming that
twelve individuals comprise the entire Board as of the Effective Date, if a
majority of such individuals approved a proxy statement in which two different
individuals were nominated to replace two of the individuals who were members
of the Board as of the Effective Date, these two newly elected directors would
join the remaining ten directors who were members of the Board as of the
Effective Date as Continuity Directors. 
Similarly, if subsequently a majority of these directors approved a
proxy statement in which three different individuals were nominated to replace
three other directors who were members of the Board as of the Effective Date,
these three newly elected directors would also become, along with the other
nine directors, Continuity Directors. 
Individuals subsequently joining the Board could become Continuity
Directors under the principles reflected in this example.


 


(b)           Acceleration
of Vesting.  Without limiting the
authority of the Committee under Sections 4 and 19, if a Change in Control of
the Company occurs, then: (i) all Options and Stock Appreciation Rights
will become immediately exercisable in full and will remain exercisable in
accordance with their terms; (ii) all Restricted Shares will become
immediately fully vested and non-forfeitable; and (iii) any conditions to the
issuance of shares of Common Stock pursuant to Other Share-Based Awards will
lapse.


 


(c)           Cash
Payment.  If a Change in Control of
the Company occurs, then the Committee, if approved by the Committee in its
sole discretion either in an agreement evidencing an Award at the time of grant
or at any time after the grant of an Award, and without the consent of any
Participant affected thereby, may determine that: (i) some or all
Participants holding outstanding Options and/or Stock Appreciation Rights will
receive, with respect to some or all of the shares of Common Stock subject to
such Options or Stock Appreciation Rights, as of the effective date of any such
Change in Control of the Company, cash in an amount equal to the excess of the
Fair Market Value of such shares immediately prior to the effective date of
such Change in Control of the Company over the exercise price per share of such
Options or Stock Appreciation Rights (or, in the event that there is no excess,
that such Options or Stock Appreciation Rights will be terminated); and (ii) some
or all Participants holding Other Share-Based Awards will receive, with respect
to some or all of the shares of Common Stock subject to such Other Share-Based
Awards, as of the effective date of any such Change in Control of the Company,
cash in an amount equal the Fair Market Value of such shares immediately prior
to the effective date of such Change in Control.


 


14.           Nontransferability of Awards


 


(a)           Except
as otherwise provided by the Committee, each Award granted under this MEIP
shall not be transferable other than by will or the laws of descent and
distribution, and shall be exercisable, during the Participant’s lifetime, only
by the Participant.


 


(b)           Upon
a Participant’s request, the Committee may, in its sole discretion, permit a
transfer of all or a portion of a Nonqualified Stock Option, other than for
value, to such Participant’s child, stepchild, 


 


10

















 


grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
any person sharing such Participant’s household (other than a tenant or
employee), a trust in which any of the foregoing have more than fifty percent
of the beneficial interests, a foundation in which any of the foregoing (or the
Participant) control the management of assets, and any other entity in which
these persons (or the Participant) own more than fifty percent of the voting interests.  Any permitted transferee will remain subject
to all the terms and conditions applicable to the Participant prior to the
transfer.  A permitted transfer may be
conditioned upon such requirements as the Committee may, in its sole
discretion, determine, including, but not limited to execution and/or delivery
of appropriate acknowledgements, opinion of counsel, or other documents by the
transferee.


 


15.           Other Provisions


 


The grant of any Award under the MEIP may also be subject to other
provisions (whether or not applicable to the grant of an Award to any other
Participant) as the Committee determines appropriate, including, without
limitation,


 


(a)           provisions
requiring that grants of Awards under the MEIP be evidenced by a written
agreement, notice or schedule (in form and substance as deemed appropriate
by the Committee);


 


(b)           provisions
concerning vesting;


 


(c)           restrictions
on resale or other disposition of shares of Common Stock delivered in
connection with such Awards;


 


(d)           such
provisions or, as determined by the Committee, modifications to outstanding
Awards as may be appropriate to comply with federal or state securities laws
and stock exchange requirements;


 


(e)           understandings
or conditions as to the Participant’s employment in addition to those specifically
provided for under the MEIP; and


 


(f)            other
provisions and terms not inconsistent with the MEIP.


 


16.           Tax Withholding


 


The Company is entitled to withhold the amount of taxes which the
Company in its discretion deems necessary to satisfy any applicable federal,
state and local tax withholding obligations arising from Awards granted under
the MEIP, or to make other appropriate arrangements with Participants to
satisfy such obligations.  The Committee
may, in its sole discretion and upon terms and conditions established by the
Committee, permit or require a Participant to satisfy, in whole or in part, any
withholding or employment-related tax obligation described in this Section by
electing to tender, or by attestation as to ownership of, Previously Acquired
Shares that have been held for the period of time necessary to avoid a charge
to the Company’s earnings for financial reporting purposes and that are
otherwise acceptable to the Committee, by delivery of a Broker Exercise Notice
or a combination of such methods.  For
purposes of satisfying a Participant’s withholding or employment-related tax
obligation, Previously Acquired Shares tendered or covered by an attestation
will be valued at their Fair Market Value.


 


17.           Limitation of Implied Rights


 


(a)           Neither
a Participant nor any other person shall, by reason of participation in the
MEIP or the grant of any Award hereunder, acquire any right in or title to any
assets, funds or property of the Company or any Subsidiary whatsoever,
including, without limitation, any specific funds, assets or other property
which the Company or any Subsidiary, in its sole discretion, may set aside in
anticipation of a liability under the MEIP. 
A Participant shall have only a contractual right to the 


 


11

















 


shares of Common Stock or
amounts, if any, payable under the MEIP, unsecured by any assets of the Company
or any Subsidiary, and nothing contained in the MEIP shall constitute a
guarantee that the assets of the Company or any Subsidiary shall be sufficient
to pay any amounts to any person.


 


(b)           The
MEIP does not constitute a contract of employment, and selection as a
Participant will not give such Participant the right to be so retained in the
employ of the Company or any Subsidiary, nor any right or claim to any benefit
under the MEIP, unless such right or claim has specifically accrued under the
terms of the MEIP.  Except as otherwise
provided in the MEIP, no Award granted under the MEIP shall confer upon any
Participant any rights as shareholder of the Company prior to the date on which
the Participant fulfills all conditions for receipt of such rights.


 


18.           Successors and Assigns


 


The MEIP and any Award granted thereafter shall be binding on all
successors and assigns of the Company and a Participant, including, without
limitation, the estate of such Participant and the executor, administrator or
trustee of such estate, or any receiver or trustee in bankruptcy or
representative of the Participant’s creditors.


 


19.           Adjustment Provisions


 


In the event of a corporate transaction involving the Company
(including, without limitation, any Common Stock dividend, Common Stock split,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination or exchange of shares), the
Committee may adjust Awards without enlargement or diminution to preserve the
benefits or potential benefits of the Awards intended to be made available
under the MEIP.  Action by the Committee
may include:  (i) adjustment of the
number and kind of shares which may be delivered under the MEIP; (ii) adjustment
of the number and kind of shares subject to outstanding Awards; (iii) adjustment
of the Exercise Price of outstanding Incentive Stock Options, Nonqualified
Stock Options and Stock Appreciation Rights; (iv) cancellation or
termination of outstanding Awards in exchange for a payment (in cash or
property) to the Participant of an amount determined by the Committee prior to
such provision to be equitable; (v) substitution of other awards or rights
in place of outstanding Awards on terms and conditions determined by the
Committee prior to such provision to be equitable; and (vi) any other
adjustments that the Committee determines prior to such provision to be equitable
or appropriate.


 


20.           Amendment or Termination


 


The Board may amend the MEIP from time to time or terminate the MEIP at
any time, but no such action, without the Participant’s consent, shall
adversely affect the rights of a Participant under any Award granted, and no
such amendments to the MEIP will be effective without approval of the Company’s
stockholders if: (i) stockholder approval of the amendment is then
required pursuant to Section 422 of the Code or the rules of any
national securities exchange or the Nasdaq Stock Market if the Common Stock is
listed or quoted thereon; or (ii) such amendment seeks to modify Section 4(b) or
13(b) hereof.


 


21.           Choice of Law


 


The validity, construction, interpretation, administration and effect
of the MEIP and any rules, regulations and actions relating to the MEIP will be
governed by and construed exclusively in accordance with the internal,
substantive laws of the State of Delaware, notwithstanding the conflicts of
laws principles of any jurisdictions.  
In the event of any conflict or inconsistency between the MEIP and any
agreement or notice evidencing an Award, the MEIP shall prevail.


 


12