exv10w2






Exhibit 10.2




XSTREAM SYSTEMS, INC.




2009 LONG-TERM INCENTIVE COMPENSATION PLAN




 









 





XSTREAM SYSTEMS, INC.




2009 LONG-TERM INCENTIVE COMPENSATION PLAN




	 	 	 	 	 
	1. Purpose
	 	 	1	 
	2. Definitions
	 	 	1	 
	3. Administration
	 	 	7	 
	4. Shares Subject to Plan
	 	 	8	 
	5. Eligibility
	 	 	9	 
	6. Specific Terms of Awards
	 	 	9	 
	7. Certain Provisions Applicable to Awards
	 	 	15	 
	8. Code Section 162(m) Provisions
	 	 	18	 
	9. Change in Control
	 	 	19	 
	10. General Provisions
	 	 	22	 






 









 





XSTREAM SYSTEMS, INC.

2009 LONG-TERM INCENTIVE COMPENSATION PLAN




     1. Purpose . The purpose of this 2009 LONG-TERM INCENTIVE COMPENSATION PLAN (the “Plan”) is to assist
XStream Systems, Inc., a Delaware corporation (the “Company”) and its Related Entities (as
hereinafter defined) in attracting, motivating, retaining and rewarding high-quality executives and
other employees, officers, directors, consultants and other persons who provide services to the
Company or its Related Entities by enabling such persons to acquire or increase a proprietary
interest in the Company in order to strengthen the mutuality of interests between such persons and
the Company’s shareholders, and providing such persons with annual and long term performance
incentives to expend their maximum efforts in the creation of shareholder value.



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



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




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




          (c) “Beneficiary” means the person, persons, trust or trusts that have been designated by a
Participant in his or her most recent written beneficiary designation filed with the Committee to
receive the benefits specified under the Plan upon such Participant’s death or to which Awards or
other rights are transferred if and to the extent permitted under Section 10(b) hereof. If, upon a
Participant’s death, there is no designated Beneficiary or surviving designated Beneficiary, then
the term Beneficiary means the person, persons, trust or trusts entitled by will or the laws of
descent and distribution to receive such benefits.




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




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




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



 









 






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




          (g) “Change in Control” means a Change in Control as defined in Section 9(b) of the Plan.




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




          (i) “Committee” means a committee designated by the Board to administer the Plan; provided,
however, that if the Board fails to designate a committee or if there are no longer any members on
the committee so designated by the Board, or for any other reason determined by the Board, then the
Board shall serve as the Committee. In the event that the Company becomes a Publicly Held
Corporation (as hereinafter defined), then the Committee shall consist of at least two directors,
each of whom shall be (i) a “non-employee director” within the meaning of Rule 16b-3 (or any
successor rule) under the Exchange Act, unless administration of the Plan by “non-employee
directors” is not then required in order for exemptions under Rule 16b-3 to apply to transactions
under the Plan, (ii) an “outside director” within the meaning of Section 162(m) of the Code, and
(iii) “Independent”, the failure of the Committee to be so comprised shall not invalidate any Award
that otherwise satisfies the terms of the Plan.




          (j) “Consultant” means any Person (other than an Employee or a Director, solely with respect
to rendering services in such Person’s capacity as a director) who is engaged by the Company or any
Related Entity to render consulting or advisory services to the Company or such Related Entity.




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




          (l) “Covered Employee” means the Person who, as of the end of the taxable year, either is the
principal executive officer of the Company or is serving as the acting principal executive officer
of the Company, and each other Person whose compensation is required to be disclosed in the
Company’s filings with the Securities and Exchange Commission by reason of



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that person being among the three highest compensated officers of the Company as of the end of
a taxable year, or such other person as shall be considered a “covered employee” for purposes of
Section 162(m) of the Code.




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




          (n) “Deferred Stock Award” means an Award of Deferred Stock granted to a Participant under
Section 6(e) hereof.




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




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




          (q) INTENTIONALLY DELETED




          (r) INTENTIONALLY DELETED




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




          (t) “Effective Date” means the effective date of the Plan, which shall be the date of approval
by the Board.




          (u) “Eligible Person” means each officer, Director, Employee, Consultant and other person who
provides services to the Company or any Related Entity. The foregoing notwithstanding, only
Employees of the Company, or any parent corporation or subsidiary corporation of the Company (as
those terms are defined in Sections 424(e) and (f) of the Code, respectively), shall be Eligible
Persons for purposes of receiving any Incentive Stock Options. An Employee on leave of absence
may, in the discretion of the Committee, be considered as still in the employ of the Company or a
Related Entity for purposes of eligibility for participation in the Plan. Notwithstanding the
definition of Eligible Person contained herein, an Eligible Person is permitted to transfer an
Award granted under the Plan to certain permitted transferees as provided in Section 10 hereof.




          (v) “Employee” means any person, including an officer or Director, who is an employee of the
Company or any Related Entity. The payment of a director’s fee by the Company or a Related Entity
shall not be sufficient to constitute “employment” by the Company.




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




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          (x) “Fair Market Value” means the fair market value of Shares, Awards or other property as
determined by the Committee, or under procedures established by the Committee. Unless otherwise
determined by the Committee, the Fair Market Value of a Share as of any given date shall be the
closing sale price per Share reported on a consolidated basis for stock listed on the principal
stock exchange or market on which Shares are traded immediately preceding the date as of which such
value is being determined (or as of such later measurement date as determined by the Committee on
the date the Award is authorized by the Committee), or, if there is no sale on that date, then on
the last previous day on which a sale was reported.




          (y) “Good Reason” shall, with respect to any Participant, have the meaning specified in the
Award Agreement. In the absence of any definition in the Award Agreement, “Good Reason” shall have
the equivalent meaning or the same meaning as “good reason” or “for good reason” set forth in any
employment, consulting or other agreement for the performance of services between the Participant
and the Company or a Related Entity or, in the absence of any such agreement or any such definition
in such agreement, such term shall mean (i) the assignment to the Participant of any duties
inconsistent in any material respect with the Participant’s duties or responsibilities as assigned
by the Company or a Related Entity, or any other action by the Company or a Related Entity which
results in a material diminution in such duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and action which is remedied
by the Company or a Related Entity promptly after receipt of notice thereof given by the
Participant; (ii) any material failure by the Company or a Related Entity to comply with its
obligations to the Participant as agreed upon, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and a failure which is remedied by the Company or a
Related Entity promptly after receipt of notice thereof given by the Participant; or (iii) the
Company’s or Related Entity’s requiring the Participant to be based at any office or location
outside of fifty miles from the location of employment or service as of the date of Award, except
for travel reasonably required in the performance of the Participant’s responsibilities.




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




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




          (bb) “Incumbent Board” means the Incumbent Board as defined in Section 9(b)(ii) hereof.




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




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




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




          (ff) “Option Proceeds” means the cash actually received by the Company for the exercise price
in connection with the exercise of Options or options granted under the Prior Plan that are
exercised after the Shareholder Approval Date, plus the maximum tax benefit that could be realized
by the Company as a result of the exercise of such Options, or options granted under the Prior
Plan, which tax benefit shall be determined by multiplying (i) the amount that is deductible for
Federal income tax purposes as a result of any such option exercise (currently, equal to the amount
upon which the Participant’s withholding tax obligation is calculated), times (ii) the maximum
Federal corporate income tax rate for the year of exercise. With respect to Options or options
granted under the Prior Plan, to the extent that a Participant pays the exercise price and/or
withholding taxes with Shares, Option Proceeds shall not be calculated with respect to the amounts
so paid in Shares.




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




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




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




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




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




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




          (mm) “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange
Act and used in Sections 13(d) and 14(d) thereof, and shall include a “group” as defined in Section
13(d) thereof.




          (nn) “Prior Plan” means the Amended and Restated 2004 Stock Option Plan.




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          (oo) “Publicly Held Corporation” shall mean a publicly held corporation as that term is used
under Section 162(m)(2) of the Code.




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




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




          (rr) “Restricted Stock” means any Share issued with the restriction that the holder may not
sell, transfer, pledge or assign such Share and with such risks of forfeiture and other
restrictions as the Committee, in its sole discretion, may impose (including any restriction on the
right to vote such Share and the right to receive any dividends), which restrictions may lapse
separately or in combination at such time or times, in installments or otherwise, as the Committee
may deem appropriate.




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




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




          (uu) “Shareholder Approval Date” means the date on which this Plan is approved by shareholders
of the Company eligible to vote in the election of directors, by a vote sufficient to meet the
requirements Sections 162(m) and 422 of the Code, Rule 16b-3 under the Exchange Act applicable
requirements under the rules of the Listing Market.




          (vv) “Shares” means the shares of common stock of the Company, par value $.0001 per share, and
such other securities as may be substituted (or resubstituted) for Shares pursuant to Section 10(c)
hereof.




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




          (xx) “Subsidiary” means any corporation or other entity in which the Company has a direct or
indirect ownership interest of 50% or more of the total combined voting power of the then
outstanding securities or interests of such corporation or other entity entitled to vote generally
in the election of directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or dissolution.




          (yy) “Substitute Awards” means Awards granted or Shares issued by the Company in assumption
of, or in substitution or exchange for, Awards previously granted, or the right or obligation to
make future Awards, by a company (i) acquired by the Company or any



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Related Entity, (ii) which becomes a Related Entity after the date hereof, or (iii) with which
the Company or any Related Entity combines.




     3. Administration.



          (a) Authority of the Committee. The Plan shall be administered by the Committee except to the extent (and subject to the
limitations imposed by Section 3(b) hereof) the Board elects to administer the Plan, in which case
the Plan shall be administered by only those members of the Board who are Independent members of
the Board, in which case references herein to the “Committee” shall be deemed to include references
to the Independent members of the Board. The Committee shall have full and final authority,
subject to and consistent with the provisions of the Plan, to select Eligible Persons to become
Participants, grant Awards, determine the type, number and other terms and conditions of, and all
other matters relating to, Awards, prescribe Award Agreements (which need not be identical for each
Participant) and rules and regulations for the administration of the Plan, construe and interpret
the Plan and Award Agreements and correct defects, supply omissions or reconcile inconsistencies
therein, and to make all other decisions and determinations as the Committee may deem necessary or
advisable for the administration of the Plan. In exercising any discretion granted to the
Committee under the Plan or pursuant to any Award, the Committee shall not be required to follow
past practices, act in a manner consistent with past practices, or treat any Eligible Person or
Participant in a manner consistent with the treatment of any other Eligible Persons or
Participants.




          (b) Manner of Exercise of Committee Authority.
In the event that the Company becomes a Publicly Held Corporation, the Committee, and not the
Board, shall exercise sole and exclusive discretion (i) on any matter relating to a Participant
then subject to Section 16 of the Exchange Act with respect to the Company to the extent necessary
in order that transactions by such Participant shall be exempt under Rule 16b-3 under the Exchange
Act, (ii) with respect to any Award that is intended to qualify as “performance-based compensation”
under Section 162(m), to the extent necessary in order for such Award to so qualify; and (iii) with
respect to any Award to an Independent Director. Any action of the Committee shall be final,
conclusive and binding on all persons, including the Company, its Related Entities, Eligible
Persons, Participants, Beneficiaries, transferees under Section 10(b) hereof or other persons
claiming rights from or through a Participant, and shareholders. The express grant of any specific
power to the Committee, and the taking of any action by the Committee, shall not be construed as
limiting any power or authority of the Committee. The Committee may delegate to officers or
managers of the Company or any Related Entity, or committees thereof, the authority, subject to
such terms and limitations as the Committee shall determine, to perform such functions, including
administrative functions as the Committee may determine to the extent that such delegation will not
result in the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to Participants
subject to Section 16 of the Exchange Act in respect of the Company and will not cause Awards
intended to qualify as “performance-based compensation” under Code Section 162(m) to fail to so
qualify. The Committee may appoint agents to assist it in administering the Plan. Any such
delegations shall be set forth in a written instrument that specifies the persons authorized to act
thereunder and the terms and limitations of such authority,



7









 






which writing shall be delivered to the Company’s Chief Financial Officer before any authority may
be exercised.




          (c) Limitation of Liability. The Committee and the Board, and each member thereof, shall be entitled to, in good faith,
rely or act upon any report or other information furnished to him or her by any officer or
Employee, the Company’s independent auditors, Consultants or any other agents assisting in the
administration of the Plan. Members of the Committee and the Board, and any officer or Employee
acting at the direction or on behalf of the Committee or the Board, shall not be personally liable
for any action or determination taken or made in good faith with respect to the Plan, and shall, to
the extent permitted by law, be fully indemnified and protected by the Company with respect to any
such action or determination.




     4. Shares Subject to Plan.



          (a) Limitation on Overall Number of Shares Available for Delivery Under Plan. Subject to adjustment as provided in Section 10(c) hereof, the total number of Shares
reserved and available for delivery under the Plan shall be 5.0 million, plus any Shares remaining
available for delivery under the Prior Plan on the Shareholder Approval Date. Any Shares delivered
under the Plan may consist, in whole or in part, of authorized and unissued shares or treasury
shares.




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




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




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



               (ii) In the event that any Option or other Award granted hereunder is exercised through the
tendering of Shares (either actually or by attestation) or by the withholding of Shares by the
Company, or withholding tax liabilities arising from such option or other award are satisfied by
the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the
Company, then only the number of Shares issued net of the Shares tendered or



8









 







withheld shall be counted for purposes of determining the maximum number of Shares available
for grant under the Plan.



               (iii) Shares reacquired by the Company on the open market using Option Proceeds shall be
available for Awards under the Plan. The increase in Shares available pursuant to the repurchase
of Shares with Option Proceeds shall not be greater than the amount of such proceeds divided by the
Fair Market Value of a Share on the date of exercise of the Option giving rise to such Option
Proceeds.



               (iv) Substitute Awards shall not reduce the Shares authorized for delivery under the Plan or
authorized for delivery to a Participant in any period. Additionally, in the event that a company
acquired by the Company or any Related Entity or with which the Company or any Related Entity
combines has shares available under a pre-existing plan approved by its shareholders, the shares
available for delivery pursuant to the terms of such pre-existing plan (as adjusted, to the extent
appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in
such acquisition or combination to determine the consideration payable to the holders of common
stock of the entities party to such acquisition or combination) may be used for Awards under the
Plan and shall not reduce the Shares authorized for delivery under the Plan; if and to the extent
that the use of such Shares would not require approval of the Company’s shareholders under the
rules of the Listing Market.



               (v) Any Share that again becomes available for delivery pursuant to this Section 4(c) shall be
added back as one (1) Share if such Share was subject to an Award granted under the Plan.



               (vi) Notwithstanding anything in this Section 4(c) to the contrary but subject to adjustment
as provided in Section 10(c) hereof, the maximum aggregate number of Shares that may be delivered
under the Plan as a result of the exercise of the Incentive Stock Options shall be 2.5 million
Shares.



          (d) No Further Awards Under Prior Plan. In light of the adoption of this Plan, no further awards shall be made under the Prior Plan
after the Shareholder Approval Date.




     5. Eligibility. Awards may be granted under the Plan only to Eligible Persons, subject to
provisions hereof allowing certain permitted transfers.



     6. Specific Terms of Awards.



          (a) General. Awards may be granted on the terms and conditions set forth in this Section 6. In
addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or
thereafter (subject to Section 10(e)), such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture
of Awards in the event of termination of the Participant’s Continuous Service and terms permitting
a Participant to make elections relating to his or her Award. Except as otherwise expressly
provided herein, the Committee shall retain full power and discretion to accelerate, waive or
modify, at any time, any term or condition of an Award that is not



9









 






mandatory under the Plan. Except in cases in which the Committee is authorized to require
other forms of consideration under the Plan, or to the extent other forms of consideration must be
paid to satisfy the requirements of Delaware law, no consideration other than services may be
required for the grant (as opposed to the exercise) of any Award.




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




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



               (ii) Time and Method of Exercise. The Committee shall determine the time or times at which or
the circumstances under which an Option may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements), the time or times at which
Options shall cease to be or become exercisable following termination of Continuous Service or upon
other conditions, the methods by which the exercise price may be paid or deemed to be paid
(including in the discretion of the Committee a cashless exercise procedure), the form of such
payment, including, without limitation, cash, Shares (including without limitation the withholding
of Shares otherwise deliverable pursuant to the Award), other Awards or awards granted under other
plans of the Company or a Related Entity, or other property and the methods by or forms in which
Shares will be delivered or deemed to be delivered to Participants.



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



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the Code, Options granted as Incentive Stock Options shall be subject to the following special
terms and conditions:



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



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



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




               (i) Right to Payment. A Stock Appreciation Right shall confer on the Participant to whom it
is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of
one Share on the date of exercise over (B) the grant price of the Stock Appreciation Right as
determined by the Committee. The grant price of a Stock Appreciation Right shall not be less than
100% of the Fair Market Value of a Share on the date of grant, in the case of a Freestanding Stock
Appreciation Right, or less than the associated Option exercise price, in the case of a Tandem
Stock Appreciation Right. Other than pursuant to Section 10(c)(i) and (ii), the Committee shall
not be permitted to (A) lower the grant price per Share of a Stock Appreciation Right after it is
granted, (B) cancel a Stock Appreciation Right when the grant price per Share exceeds the Fair
Market Value of the underlying Shares in exchange for another Award (other than in connection with
Substitute Awards), or (C) take any other action with respect to a Stock Appreciation Right that
may be treated as a repricing pursuant to the applicable rules of the Listing Market, without
shareholder approval.



               (ii) Other Terms. The Committee shall determine at the date of grant or thereafter, the time
or times at which and the circumstances under which a Stock Appreciation Right may be exercised in
whole or in part (including based on achievement of performance goals and/or future service
requirements), the time or times at which Stock Appreciation Rights shall cease to be or become
exercisable following termination of Continuous Service or upon



11









 







other conditions, the method of exercise, method of settlement, form of consideration payable
in settlement, method by or forms in which Shares will be delivered or deemed to be delivered to
Participants, whether or not a Stock Appreciation Right shall be in tandem or in combination with
any other Award, and any other terms and conditions of any Stock Appreciation Right.



               (iii) Tandem Stock Appreciation Rights. Any Tandem Stock Appreciation Right may be granted at
the same time as the related Option is granted or, for Options that are not Incentive Stock
Options, at any time thereafter before exercise or expiration of such Option. Any Tandem Stock
Appreciation Right related to an Option may be exercised only when the related Option would be
exercisable and the Fair Market Value of the Shares subject to the related Option exceeds the
exercise price at which Shares can be acquired pursuant to the Option. In addition, if a Tandem
Stock Appreciation Right exists with respect to less than the full number of Shares covered by a
related Option, then an exercise or termination of such Option shall not reduce the number of
Shares to which the Tandem Stock Appreciation Right applies until the number of Shares then
exercisable under such Option equals the number of Shares to which the Tandem Stock Appreciation
Right applies. Any Option related to a Tandem Stock Appreciation Right shall no longer be
exercisable to the extent the Tandem Stock Appreciation Right has been exercised, and any Tandem
Stock Appreciation Right shall no longer be exercisable to the extent the related Option has been
exercised.



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




               (i) Grant and Restrictions. Restricted Stock Awards shall be subject to such restrictions on
transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, or
as otherwise provided in this Plan during the Restriction Period. The terms of any Restricted
Stock Award granted under the Plan shall be set forth in a written Award Agreement which shall
contain provisions determined by the Committee and not inconsistent with the Plan. The
restrictions may lapse separately or in combination at such times, under such circumstances
(including based on achievement of performance goals and/or future service requirements), in such
installments or otherwise, as the Committee may determine at the date of grant or thereafter.
Except to the extent restricted under the terms of the Plan and any Award Agreement relating to a
Restricted Stock Award, a Participant granted Restricted Stock shall have all of the rights of a
shareholder, including the right to vote the Restricted Stock and the right to receive dividends
thereon (subject to any mandatory reinvestment or other requirement imposed by the Committee).
During the period that the Restriction Stock Award is subject to a risk of forfeiture, subject to
Section 10(b) below and except as otherwise provided in the Award Agreement, the Restricted Stock
may not be sold, transferred, pledged, hypothecated, margined or otherwise encumbered by the
Participant.



               (ii) Forfeiture. Except as otherwise determined by the Committee, upon termination of a
Participant’s Continuous Service during the applicable Restriction Period, the Participant’s
Restricted Stock that is at that time subject to a risk of forfeiture that has not lapsed or
otherwise been satisfied shall be forfeited and reacquired by the Company; provided that, subject
to the limitations set forth in Section 6(j)(ii) hereof, the Committee may provide, by rule or
regulation or in any Award Agreement, or may determine in any individual case, that



12









 







forfeiture conditions relating to Restricted Stock Awards shall be waived in whole or in part
in the event of terminations resulting from specified causes, and the Committee may in other cases
waive in whole or in part the forfeiture of Restricted Stock.



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



               (iv) Dividends and Splits. As a condition to the grant of a Restricted Stock Award, the
Committee may require or permit a Participant to elect that any cash dividends paid on a Share of
Restricted Stock be automatically reinvested in additional Shares of Restricted Stock or applied to
the purchase of additional Awards under the Plan. Unless otherwise determined by the Committee,
Shares distributed in connection with a stock split or stock dividend, and other property
distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same
extent as the Restricted Stock with respect to which such Shares or other property have been
distributed.



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




               (i) Award and Restrictions. Satisfaction of a Deferred Stock Award shall occur upon
expiration of the deferral period specified for such Deferred Stock Award by the Committee (or, if
permitted by the Committee, as elected by the Participant). In addition, a Deferred Stock Award
shall be subject to such restrictions (which may include a risk of forfeiture) as the Committee may
impose, if any, which restrictions may lapse at the expiration of the deferral period or at earlier
specified times (including based on achievement of performance goals and/or future service
requirements), separately or in combination, in installments or otherwise, as the Committee may
determine. A Deferred Stock Award may be satisfied by delivery of Shares, cash equal to the Fair
Market Value of the specified number of Shares covered by the Deferred Stock, or a combination
thereof, as determined by the Committee at the date of grant or thereafter. Prior to satisfaction
of a Deferred Stock Award, a Deferred Stock Award carries no voting or dividend or other rights
associated with Share ownership.



               (ii) Forfeiture. Except as otherwise determined by the Committee, upon termination of a
Participant’s Continuous Service during the applicable deferral period or portion thereof to which
forfeiture conditions apply (as provided in the Award Agreement evidencing the Deferred Stock
Award), the Participant’s Deferred Stock Award that is at that time subject to a risk of forfeiture
that has not lapsed or otherwise been satisfied shall be forfeited; provided that, subject to the
limitations set forth in Section 6(j)(ii) hereof, the Committee may provide, by rule or regulation
or in any Award Agreement, or may determine in any individual case, that forfeiture conditions
relating to a Deferred Stock Award shall be waived in whole or in part in the event of terminations
resulting from specified causes, and the



13









 







Committee may in other cases waive in whole or in part the forfeiture of any Deferred Stock
Award.



               (iii) Dividend Equivalents. Unless otherwise determined by the Committee at the date of
grant, any Dividend Equivalents that are granted with respect to any Deferred Stock Award shall be
either (A) paid with respect to such Deferred Stock Award at the dividend payment date in cash or
in Shares of unrestricted stock having a Fair Market Value equal to the amount of such dividends,
or (B) deferred with respect to such Deferred Stock Award and the amount or value thereof
automatically deemed reinvested in additional Deferred Stock, other Awards or other investment
vehicles, as the Committee shall determine or permit the Participant to elect. The applicable
Award Agreement shall specify whether any Dividend Equivalents shall be paid at the dividend
payment date, deferred or deferred at the election of the Participant. If the Participant may
elect to defer the Dividend Equivalents, such election shall be made within 30 days after the grant
date of the Deferred Stock Award, but in no event later than 12 months before the first date on
which any portion of such Deferred Stock Award vests.



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




          (g) Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents in connection with another Award
granted to any Eligible Person entitling the Eligible Person to receive cash, Shares, other Awards,
or other property equal in value to the dividends paid with respect to a specified number of
Shares, or other periodic payments. Dividend Equivalents may be awarded on a free-standing basis
or in connection with another Award. The Committee may provide that Dividend Equivalents shall be
paid or distributed when accrued or shall be deemed to have been reinvested in additional Shares,
Awards, or other investment vehicles, and subject to such restrictions on transferability and risks
of forfeiture, as the Committee may specify. Any such determination by the Committee shall be made
at the grant date of the applicable Award.




          (h) Performance Awards. The Committee is authorized to grant Performance Awards to any Eligible Person payable in
cash, Shares, or other Awards, on terms and conditions established by the Committee, subject to the
provisions of Section 8 if and to the extent that the Committee shall, in its sole discretion,
determine that an Award shall be subject to those provisions. The performance criteria to be
achieved during any Performance Period and the length of the Performance Period shall be determined
by the Committee upon the grant of each Performance Award; provided, however, that a Performance
Period shall not be shorter than 12 months nor longer than five years. Except as provided in
Section 9 or as may be provided in an Award Agreement, Performance Awards will be distributed only
after the end of the relevant Performance Period. The performance goals to be achieved for each
Performance Period shall



14









 






be conclusively determined by the Committee and may be based upon the criteria set forth in
Section 8(b), or in the case of an Award that the Committee determines shall not be subject to
Section 8 hereof, any other criteria that the Committee, in its sole discretion, shall determine
should be used for that purpose. The amount of the Award to be distributed shall be conclusively
determined by the Committee. Performance Awards may be paid in a lump sum or in installments
following the close of the Performance Period or, in accordance with procedures established by the
Committee, on a deferred basis.




          (i) Other Stock-Based Awards. The Committee is authorized, subject to limitations under applicable law, to grant to any
Eligible Person such other Awards that may be denominated or payable in, valued in whole or in part
by reference to, or otherwise based on, or related to, Shares, as deemed by the Committee to be
consistent with the purposes of the Plan. Other Stock-Based Awards may be granted to Participants
either alone or in addition to other Awards granted under the Plan, and such Other Stock-Based
Awards shall also be available as a form of payment in the settlement of other Awards granted under
the Plan. The Committee shall determine the terms and conditions of such Awards. Shares delivered
pursuant to an Award in the nature of a purchase right granted under this Section 6(i) shall be
purchased for such consideration, paid for at such times, by such methods, and in such forms,
including, without limitation, cash, Shares, other Awards or other property, as the Committee shall
determine.




          (j) Certain Vesting Requirements and Limitations on Waiver of Forfeiture Restrictions. Except
for certain limited situations (including death, disability, retirement, a Change in Control
referred to in Section 9, grants to new hires to replace forfeited compensation, grants
representing payment of earned Performance Awards or other incentive compensation, Substitute
Awards or grants to Directors):




               (i) Restricted Stock Awards, Deferred Stock Awards, Performance Share Awards and Other
Stock-Based Awards (A) that are not subject to performance-based vesting requirements shall vest
over a period of not less than three years from date of grant (but permitting pro-rata vesting over
such time); (B) that are subject to performance-based vesting requirements shall vest over a period
of not less than one year; and



               (ii) The Committee shall not waive the vesting requirements set forth in the foregoing clause
(i).



          The limitations set forth in this Section 6(j) shall not apply with respect to up to 500,000
Shares (subject to adjustment as provided in Section 10(c) hereof) with respect to which Awards
have been made by Independent Directors.




     7. Certain Provisions Applicable to Awards.



          (a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under the Plan may, in the discretion of the Committee, be granted either
alone or in addition to, in tandem with, or in substitution or exchange for, any other Award or any
award granted under another plan of the Company, any Related Entity, or any business entity to be
acquired by the Company or a Related Entity, or any other right of a Participant to receive



15









 






payment from the Company or any Related Entity. Such additional, tandem, and substitute or
exchange Awards may be granted at any time. If an Award is granted in substitution or exchange for
another Award or award, the Committee shall require the surrender of such other Award or award in
consideration for the grant of the new Award. In addition, Awards may be granted in lieu of cash
compensation, including in lieu of cash amounts payable under other plans of the Company or any
Related Entity, in which the value of Shares subject to the Award is equivalent in value to the
cash compensation (for example, Deferred Stock or Restricted Stock), or in which the exercise
price, grant price or purchase price of the Award in the nature of a right that may be exercised is
equal to the Fair Market Value of the underlying Shares minus the value of the cash compensation
surrendered (for example, Options or Stock Appreciation Right granted with an exercise price or
grant price “discounted” by the amount of the cash compensation surrendered), provided that any
such determination to grant an Award in lieu of cash compensation must be made in compliance with
Section 409A of the Code.




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




          (c) Form and Timing of Payment Under Awards; Deferrals. Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by
the Company or a Related Entity upon the exercise of an Option or other Award or settlement of an
Award may be made in such forms as the Committee shall determine, including, without limitation,
cash, Shares, other Awards or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis, provided that any determination to pay in installments or on
a deferred basis shall be made by the Committee at the date of grant. Any installment or deferral
provided for in the preceding sentence shall, however, be subject to the Company’s compliance with
applicable law and all applicable rules of the Listing Market, and in a manner intended to be
exempt from or otherwise satisfy the requirements of Section 409A of the Code. Subject to Section
7(e) hereof, the settlement of any Award may be accelerated, and cash paid in lieu of Shares in
connection with such settlement, in the sole discretion of the Committee or upon occurrence of one
or more specified events (in addition to a Change in Control). Any such settlement shall be at a
value determined by the Committee in its sole discretion, which, without limitation, may in the
case of an Option or Stock Appreciation Right be limited to the amount if any by which the Fair
Market Value of a Share on the settlement date exceeds the exercise or grant price. Installment or
deferred payments may be required by the Committee (subject to Section 7(e) of the Plan, including
the consent provisions thereof in the case of any deferral of an outstanding Award not provided for
in the original Award Agreement) or permitted at the election of the Participant on terms and
conditions established by the Committee. The Committee may, without limitation, make provision for
the payment or crediting of a reasonable interest rate on installment or deferred payments or the
grant or crediting of Dividend Equivalents or other amounts in respect of installment or deferred
payments denominated in Shares.




          (d) Exemptions from Section 16(b) Liability. If the Company becomes a Publicly Held Corporation, it is the intent of the Company that the grant
of any Awards to or



16









 






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




          (e) Code Section 409A.




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



               (ii) If any Award constitutes a “nonqualified deferred compensation plan” under Section 409A
of the Code (a “Section 409A Plan”), then the Award shall be subject to the following additional
requirements, if and to the extent required to comply with Section 409A of the Code:



                    (A) Payments under the Section 409A Plan may not be made earlier than the first to occur of
(u) the Participant’s “separation from service”, (v) the date the Participant becomes “disabled”,
(w) the Participant’s death, (x) a “specified time (or pursuant to a fixed schedule)” specified in
the Award Agreement at the date of the deferral of such compensation, (y) a “change in the
ownership or effective control of the corporation, or in the ownership of a substantial portion of
the assets” of the Company, or (z) the occurrence of an “unforeseeble emergency”;



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



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



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


For purposes of the foregoing, the terms in quotations shall have the same meanings as those terms
have for purposes of Section 409A of the Code, and the limitations set forth herein shall be


17









 






applied in such manner (and only to the extent) as shall be necessary to comply with any
requirements of Section 409A of the Code that are applicable to the Award. The Company does not
make any representation to the Participant that any Awards awarded under this Plan will be exempt
from, or satisfy, the requirements of Section 409A, and the Company shall have no liability or
other obligation to indemnify or hold harmless any Participant or Beneficiary for any tax,
additional tax, interest or penalties that any Participant or Beneficiary may incur in the event
that any provision of this Plan, any Award Agreement, or any amendment or modification thereof, or
any other action taken with respect thereto, is deemed to violate any of the requirements of
Section 409A.




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



     8. Code Section 162(m) Provisions.



          (a) Covered Employees. If the Company becomes a Publicly Held Corporation, then the provisions of this Section 8 shall be
applicable to any Performance Award granted to an Eligible Person who is, or is likely to be, as of
the end of the tax year in which the Company would claim a tax deduction in connection with such
Award, a Covered Employee.




          (b) Performance Criteria. If a Performance Award is subject to this Section 8, then the payment or distribution
thereof or the lapsing of restrictions thereon and the distribution of cash, Shares or other
property pursuant thereto, as applicable, shall be contingent upon achievement of one or more
objective performance goals. Performance goals shall be objective and shall otherwise meet the
requirements of Section 162(m) of the Code and regulations thereunder including the requirement
that the level or levels of performance targeted by the Committee result in the achievement of
performance goals being “substantially uncertain.” One or more of the following business criteria
for the Company, on a consolidated basis, and/or for Related Entities, or for business or
geographical units of the Company and/or a Related Entity (except with respect to the total
shareholder return and earnings per share criteria), shall be used by the Committee in establishing
performance goals for such Awards: (1) earnings per share; (2) revenues or margins; (3) cash flow;
(4) operating margin; (5) return on net assets, investment, capital, or equity; (6) economic value
added; (7) direct contribution; (8) net income; pretax earnings; earnings before interest and
taxes; earnings before interest, taxes, depreciation and amortization; earnings after interest
expense and before extraordinary or special items; operating income or income from operations;
income before interest income or expense, unusual items and income taxes, local, state or federal
and excluding budgeted and actual bonuses which might be paid under any ongoing bonus plans of the
Company; (9) working capital; (10) management of fixed costs or variable costs; (11) identification
or consummation of investment opportunities or completion of specified projects in accordance



18









 






with corporate business plans, including strategic mergers, acquisitions or divestitures; (12) total
shareholder return; (13) debt reduction; (14) market share; (15) entry into new markets, either
geographically or by business unit; (16) customer retention and satisfaction; (17) strategic plan
development and implementation, including turnaround plans; and/or (18) the Fair Market Value of a
Share. Any of the above goals may be determined on an absolute or relative basis or as compared to
the performance of a published or special index deemed applicable by the Committee including, but
not limited to, the Standard & Poor’s 500 Stock Index or a group of companies that are comparable
to the Company. In determining the achievement of the performance goals, the Committee shall
exclude the impact of any (i) restructurings, discontinued operations, extraordinary items, and
other unusual or non-recurring charges, (ii) event either not directly related to the operations of
the Company or not within the reasonable control of the Company’s management, or (iii) change in
accounting standards required by generally accepted accounting principles.




          (c) Performance Period; Timing For Establishing Performance Goals. Achievement of performance goals in respect of Performance Awards shall be measured over a
Performance Period no shorter than 12 months and no longer than five years, as specified by the
Committee. Performance goals shall be established not later than 90 days after the beginning of
any Performance Period applicable to such Performance Awards, or at such other date as may be
required or permitted for “performance-based compensation” under Section 162(m) of the Code.




          (d) Adjustments. The Committee may, in its discretion, reduce the amount of a settlement otherwise to be
made in connection with Awards subject to this Section 8, but may not exercise discretion to
increase any such amount payable to a Covered Employee in respect of an Award subject to this
Section 8. The Committee shall specify the circumstances in which such Awards shall be paid or
forfeited in the event of termination of Continuous Service by the Participant prior to the end of
a Performance Period or settlement of Awards.




          (e) Committee Certification. No Participant shall receive any payment under the Plan that is subject to this Section 8
unless the Committee has certified, by resolution or other appropriate action in writing, that the
performance criteria and any other material terms previously established by the Committee or set
forth in the Plan, have been satisfied to the extent necessary to qualify as “performance based
compensation” under Section 162(m) of the Code.




     9. Change in Control.



          (a) Effect of “Change in Control.” If and only to the extent provided in any employment or other agreement between the
Participant and the Company or any Related Entity, or in any Award Agreement, or to the extent
otherwise determined by the Committee in its sole discretion and without any requirement that each
Participant be treated consistently, upon the occurrence of a “Change in Control,” as defined in
Section 9(b):




               (i) Any Option or Stock Appreciation Right that was not previously vested and exercisable as
of the time of the Change in Control, shall become immediately vested and exercisable, subject to
applicable restrictions set forth in Section 10(a) hereof.



19









 





               (ii) Any restrictions, deferral of settlement, and forfeiture conditions applicable to a
Restricted Stock Award, Deferred Stock Award or an Other Stock-Based Award subject only to future
service requirements granted under the Plan shall lapse and such Awards shall be deemed fully
vested as of the time of the Change in Control, except to the extent of any waiver by the
Participant and subject to applicable restrictions set forth in Section 10(a) hereof.



               (iii) With respect to any outstanding Award subject to achievement of performance goals and
conditions under the Plan, the Committee may, in its discretion, deem such performance goals and
conditions as having been met as of the date of the Change in Control.



               (iv) Notwithstanding the foregoing or any provision in any Award Agreement to the contrary,
and unless the Committee otherwise determines in a specific instance, each outstanding Option,
Stock Appreciation Right, Restricted Stock Award, Deferred Stock Award or Other Stock-Based Award
shall not be accelerated as described in Sections 9(a)(i), (ii) and (iii), if either (A) the
Company is the surviving entity in the Change in Control and the Option, Stock Appreciation Right,
Restricted Stock Award, Deferred Stock Award or Other Stock-Based Award continues to be outstanding
after the Change in Control on the substantially same terms and conditions as were applicable
immediately prior to the Change in Control or (B) the successor company assumes or substitutes for
the applicable Award. For the purposes of this Section 9(a)(iv), an Option, Stock Appreciation
Right, Restricted Stock Award, Deferred Stock Award or Other Stock-Based Award shall be considered
assumed or substituted for if following the Change in Control the Award confers the right to
purchase or receive, for each Share subject to the Option, Stock Appreciation Right, Restricted
Stock Award, Deferred Stock Award or Other Stock-Based Award immediately prior to the Change in
Control, on substantially the same vesting and other terms and conditions as were applicable to the
Award immediately prior to the Change in Control, the consideration (whether stock, cash or other
securities or property) received in the transaction constituting a Change in Control by holders of
Shares for each Share held on the effective date of such transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a majority of the
outstanding shares); provided, however, that if such consideration received in the transaction
constituting a Change in Control is not solely common stock of the successor company or its parent
or subsidiary, the Committee may, with the consent of the successor company or its parent or
subsidiary, provide that the consideration to be received upon the exercise or vesting of an
Option, Stock Appreciation Right, Restricted Stock Award, Deferred Stock Award or Other Stock-Based
Award, for each Share subject thereto, will be solely common stock of the successor company or its
parent or subsidiary substantially equal in fair market value to the per share consideration
received by holders of Shares in the transaction constituting a Change in Control. The
determination of such substantial equality of value of consideration shall be made by the Committee
in its sole discretion and its determination shall be conclusive and binding. Notwithstanding the
foregoing, on such terms and conditions as may be set forth in an Award Agreement, in the event of
a termination of a Participant’s employment in such successor company (other than for Cause) within
24 months following such Change in Control, each Award held by such Participant at the time of the
Change in Control shall be accelerated as described in Sections 9(a)(i), (ii) and (iii) above.



20









 





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




               (i) The acquisition by any Person of Beneficial Ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than fifty percent (50%) of either (A) the value of
then outstanding equity securities of the Company (the “Outstanding Company Stock”) or (B) the
combined voting power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting Securities) (the foregoing
Beneficial Ownership hereinafter being referred to as a “Controlling Interest”); provided, however,
that for purposes of this Section 9(b), the following acquisitions shall not constitute or result
in a Change in Control: (v) any acquisition directly from the Company; (w) any acquisition by the
Company; (x) any acquisition by any Person that as of the Effective Date owns Beneficial Ownership
of a Controlling Interest; (y) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Related Entity; or (z) any acquisition by any entity
pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) below;
or



               (ii) INTENTIONALLY OMITTED.



               (iii) Consummation of a reorganization, merger, statutory share exchange or consolidation or
similar transaction involving the Company or any of its Related Entities, a sale or other
disposition of all or substantially all of the assets of the Company, or the acquisition of assets
or equity of another entity by the Company or any of its Related Entities (each a “Business
Combination”), in each case, unless, following such Business Combination, (A) all or substantially
all of the individuals and entities who were the Beneficial Owners, respectively, of the
Outstanding Company Stock and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the
value of the then outstanding equity securities and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of members of the board of
directors (or comparable governing body of an entity that does not have such a board), as the case
may be, of the entity resulting from such Business Combination (including, without limitation, an
entity which as a result of such transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination of the Outstanding
Company Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding any employee benefit plan (or related trust) of the Company or such entity resulting
from such Business Combination or any Person that as of the Effective Date owns Beneficial
Ownership of a Controlling Interest) beneficially owns, directly or indirectly, fifty percent (50%)
or more of the value of the then outstanding equity securities of the entity resulting from such
Business Combination or the combined voting power of the then outstanding voting securities of such
entity except to the extent that such ownership existed prior to the Business Combination and (C)
at least a majority of the members of the Board of Directors or other governing body of the entity
resulting from such Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for such Business
Combination; or



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



     10. General Provisions.



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




          (b) Limits on Transferability; Beneficiaries. No Award or other right or interest granted under the Plan shall be pledged, hypothecated
or otherwise encumbered or subject to any lien, obligation or liability of such Participant to any
party, or assigned or transferred by such Participant otherwise than by will or the laws of descent
and distribution or to a Beneficiary upon the death of a Participant, and such Awards or rights
that may be exercisable shall be exercised during the lifetime of the Participant only by the
Participant or his or her guardian or legal representative, except that Awards and other rights
(other than Incentive Stock Options and Stock Appreciation Rights in tandem therewith) may be
transferred to one or more Beneficiaries or other transferees during the lifetime of the
Participant, and may be exercised by such transferees in accordance with the terms of such Award,
but only if and to the extent such transfers are permitted by the Committee pursuant to the express
terms of an Award Agreement (subject to any terms and conditions which the Committee may impose
thereon). A Beneficiary, transferee, or other person claiming any rights under the Plan from or
through any Participant shall be subject to all terms and conditions of the Plan and any Award
Agreement applicable to such Participant, except as otherwise determined by the Committee, and to
any additional terms and conditions deemed necessary or appropriate by the Committee.




          (c) Adjustments.




               (i) Adjustments to Awards. In the event that any extraordinary dividend or other distribution
(whether in the form of cash, Shares, or other property), recapitalization, forward or reverse
split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange,
liquidation, dissolution or other similar corporate transaction or event affects the Shares and/or
such other securities of the Company or any other issuer such that a substitution, exchange, or
adjustment is determined by the Committee to be appropriate, then the Committee shall, in such
manner as it may deem equitable, substitute, exchange or adjust any or all of (A) the number and
kind of Shares which may be delivered in connection with Awards granted thereafter, (B) the number
and kind of Shares by which annual per-person Award limitations are measured under Section 4
hereof, (C) the number and kind of Shares subject to or deliverable in respect of outstanding
Awards, (D) the exercise price, grant



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price or purchase price relating to any Award and/or make provision for payment of cash or
other property in respect of any outstanding Award, and (E) any other aspect of any Award that the
Committee determines to be appropriate.



               (ii) Adjustments in Case of Certain Transactions. In the event of any merger, consolidation
or other reorganization in which the Company does not survive, or in the event of any Change in
Control, any outstanding Awards may be dealt with in accordance with any of the following
approaches, without the requirement of obtaining any consent or agreement of a Participant as such,
as determined by the agreement effectuating the transaction or, if and to the extent not so
determined, as determined by the Committee: (a) the continuation of the outstanding Awards by the
Company, if the Company is a surviving entity, (b) the assumption or substitution for, as those
terms are defined in Section 9(a)(iv) hereof, the outstanding Awards by the surviving entity or its
parent or subsidiary, (c) full exercisability or vesting and accelerated expiration of the
outstanding Awards, or (d) settlement of the value of the outstanding Awards in cash or cash
equivalents or other property followed by cancellation of such Awards (which value, in the case of
Options or Stock Appreciation Rights, shall be measured by the amount, if any, by which the Fair
Market Value of a Share exceeds the exercise or grant price of the Option or Stock Appreciation
Right as of the effective date of the transaction). The Committee shall give written notice of any
proposed transaction referred to in this Section 10(c)(ii) at a reasonable period of time prior to
the closing date for such transaction (which notice may be given either before or after the
approval of such transaction), in order that Participants may have a reasonable period of time
prior to the closing date of such transaction within which to exercise any Awards that are then
exercisable (including any Awards that may become exercisable upon the closing date of such
transaction). A Participant may condition his exercise of any Awards upon the consummation of the
transaction.



               (iii) Other Adjustments. The Committee (and the Board if and only to the extent such
authority is not required to be exercised by the Committee to comply with Section 162(m) of the
Code) is authorized to make adjustments in the terms and conditions of, and the criteria included
in, Awards (including Performance Awards, or performance goals and conditions relating thereto) in
recognition of unusual or nonrecurring events (including, without limitation, acquisitions and
dispositions of businesses and assets) affecting the Company, any Related Entity or any business
unit, or the financial statements of the Company or any Related Entity, or in response to changes
in applicable laws, regulations, accounting principles, tax rates and regulations or business
conditions or in view of the Committee’s assessment of the business strategy of the Company, any
Related Entity or business unit thereof, performance of comparable organizations, economic and
business conditions, personal performance of a Participant, and any other circumstances deemed
relevant; provided that no such adjustment shall be authorized or made if and to the extent that
such authority or the making of such adjustment would cause Options, Stock Appreciation Rights,
Performance Awards granted pursuant to Section 8(b) hereof to Participants designated by the
Committee as Covered Employees and intended to qualify as “performance-based compensation” under
Code Section 162(m) and the regulations thereunder to otherwise fail to qualify as
“performance-based compensation” under Code Section 162(m) and regulations thereunder. Adjustments
permitted hereby may include, without limitation, increasing the exercise price of Options and
Stock Appreciation Rights, increasing performance goals, or other adjustments that may be adverse
to the Participant.



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          (d) Taxes. The Company and any Related Entity are authorized to withhold from any Award granted, any
payment relating to an Award under the Plan, including from a distribution of Shares, or any
payroll or other payment to a Participant, amounts of withholding and other taxes due or
potentially payable in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company or any Related Entity and
Participants to satisfy obligations for the payment of withholding taxes and other tax obligations
relating to any Award. This authority shall include authority to withhold or receive Shares or
other property and to make cash payments in respect thereof in satisfaction of a Participant’s tax
obligations, either on a mandatory or elective basis in the discretion of the Committee.




          (e) Changes to the Plan and Awards. The Board may amend, alter, suspend, discontinue or terminate the Plan, or the Committee’s
authority to grant Awards under the Plan, without the consent of shareholders or Participants
(including in a manner adverse to the rights of a Participant under an outstanding Award), except
that any amendment or alteration to the Plan shall be subject to the approval of the Company’s
shareholders not later than the annual meeting next following such Board action if such shareholder
approval is required by any federal or state law or regulation (including, without limitation, Rule
16b-3 or Code Section 162(m)) or the rules of the Listing Market, and the Board may otherwise, in
its discretion, determine to submit other such changes to the Plan to shareholders for approval;
provided that, except as otherwise permitted by the Plan or Award Agreement, without the consent of
an affected Participant, no such Board action may materially and adversely affect the rights of
such Participant under the terms of any previously granted and outstanding Award. The Committee
may waive any conditions or rights under, or amend, alter, suspend, discontinue or terminate any
Award theretofore granted and any Award Agreement relating thereto, except as otherwise provided in
the Plan; provided that, except as otherwise permitted by the Plan or Award Agreement, without the
consent of an affected Participant, no such Committee or the Board action may materially and
adversely affect the rights of such Participant under terms of such Award. Notwithstanding
anything to the contrary, the Committee shall be authorized to amend any outstanding Option and/or
Stock Appreciation Right to reduce the exercise price or grant price without the prior approval of
the shareholders of the Company. In addition, the Committee shall be authorized to cancel
outstanding Options and/or Stock Appreciation Rights replaced with Awards having a lower exercise
price without the prior approval of the shareholders of the Company.




          (f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any action taken hereunder or under any Award shall be construed as
(i) giving any Eligible Person or Participant the right to continue as an Eligible Person or
Participant or in the employ or service of the Company or a Related Entity; (ii) interfering in any
way with the right of the Company or a Related Entity to terminate any Eligible Person’s or
Participant’s Continuous Service at any time, (iii) giving an Eligible Person or Participant any
claim to be granted any Award under the Plan or to be treated uniformly with other Participants and
Employees, or (iv) conferring on a Participant any of the rights of a shareholder of the Company
including, without limitation, any right to receive dividends or distributions, any right to vote
or act by written consent, any right to attend meetings of shareholders or any right to receive any
information concerning the Company’s business, financial condition, results of operation or




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prospects, unless and until such time as the Participant is duly issued Shares on the stock books of the Company
in accordance with the terms of an Award. None of the Company, its officers or its directors shall
have any fiduciary obligation to the Participant with respect to any Awards unless and until the
Participant is duly issued Shares pursuant to the Award on the stock books of the Company in
accordance with the terms of an Award. Neither the Company nor any of the Company’s officers,
directors, representatives or agents is granting any rights under the Plan to the Participant
whatsoever, oral or written, express or implied, other than those rights expressly set forth in
this Plan or the Award Agreement.




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




          (h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its submission to the shareholders of the
Company for approval shall be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements as it may deem desirable including
incentive arrangements and awards which do not qualify under Section 162(m) of the Code.




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




          (j) Governing Law. The validity, construction and effect of the Plan, any rules and regulations under the
Plan, and any Award Agreement shall be determined in accordance with the laws of the State of
Florida without giving effect to principles of conflict of laws, and applicable federal law.




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




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          (l) Plan Effective Date and Shareholder Approval; Termination of Plan. The Plan shall become effective on the Effective Date, subject to subsequent approval,
within 12 months of its adoption by the Board, by shareholders of the Company eligible to vote in
the election of directors, by a vote sufficient to meet the requirements of Code Sections 162(m)
(if applicable) and 422, Rule 16b-3 under the Exchange Act (if applicable), applicable
requirements under the rules of any stock exchange or automated quotation system on which the
Shares may be listed or quoted, and other laws, regulations, and obligations of the Company
applicable to the Plan, and the subsequent approval by any other securityholders of the Company
which may be required to approve the Plan. Awards may be granted subject to shareholder approval,
but may not be exercised or otherwise settled in the event the shareholder approval is not
obtained. The Plan shall terminate at the earliest of (a) such time as no Shares remain available
for issuance under the Plan, (b) termination of this Plan by the Board, or (c) the tenth
anniversary of the Shareholder Approval Date. Awards outstanding upon expiration of the Plan shall
remain in effect until they have been exercised or terminated, or have expired.





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