Exhibit 10.4


 


MYR Group Inc. 2006 Stock Option
Plan


 


As Adopted Effective April 30,
2006


 


1.                             Purpose


 


The purpose of the MYR Group
Inc. 2006 Stock Option Plan (the “Plan”) is to assist MYR Group Inc. (the “Company”)
and its Affiliated Companies in attracting and retaining individuals of
outstanding ability to serve as employees in positions of responsibility, and
to provide them with incentives that will motivate and reward their efforts and
contributions towards the success of the Company and its Affiliated Companies.


 


2.                             Definitions


 


As used herein, the
following terms shall have the following meanings:


 


“Affiliated Companies” shall mean each
direct or indirect subsidiary of the Company.


 


“Board of Directors” shall mean the
Board of Directors of the Company.


 


“Cause” shall mean, in
the event of an existing employment agreement between and Eligible Employee and
the Company or any of its Affiliated Companies “Cause” as defined in such
employment agreement, and in the absence of any employment agreement between an
Eligible Employee and the Company or any of its Affiliated Companies otherwise
defining such term, (i) the Eligible Employee’s failure or refusal, in any
material respect, to perform his or her duties or responsibilities to the
Company or any of its Affiliated Companies, or is materially negligent in the
performance of those duties, as determined in good faith by three-fifths of the
members of Board of Directors (after notice to the Eligible Employee and
providing the Eligible Employee an opportunity to meet with the Board of
Directors), (ii) the Eligible Employee’s conviction of or indicted (or its
procedural equivalent) for, or entering a guilty plea or a plea of no contest
with respect to, a felony, the equivalent thereof, or any other crime with respect
to which imprisonment is a possible punishment, or (iii) the Eligible
Employee’s material breach of any provision of any employment agreement between
the Eligible Employee and the Company or any of its Affiliated Companies.


 


“Change in Control” shall mean the
occurrence of any one of the following events:


 

















 


(i)                            there is
consummated a merger or consolidation of the Company with any other corporation
or other entity, other than (A) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving or parent entity) more than
50% of the combined voting power of the voting securities of the Company or
such surviving or parent entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) as a result of which
no Person, directly or indirectly, will acquire 50% or more of the combined
voting power of the Company’s then outstanding securities; or


 


(ii)                         the
stockholders of the Company approve a plan of complete liquidation 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 (or any transaction
having a similar effect), other than a sale or disposition by the Company of
all or substantially all of the Company’s assets to an entity, at least 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.


 


For purposes of (i) above,
the term “Person” shall mean a Person as defined in Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended, as modified and used in
Sections 13(d) and 14(d)(2) thereof, except that such term shall not
include (i) any shareholder of the Company or parent of such shareholder, (ii) the
Company or any of its Affiliated Companies, (iii) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
any of its Affiliated Companies, (iv) an underwriter temporarily holding
securities pursuant to an offering of such securities or (v) a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Shares of  the Company.


 


“Closing Date” shall mean March 10,
2006.


 


“Code” shall mean the Internal
Revenue Code of 1986, as amended.


 


“Date of
Grant” shall mean, with respect to any Option, the date on which the
Board of Directors approves the grant of such Option, or such later date as may be
specified as the date of grant in the instrument evidencing the grant of  such Option.


 


“Eligible Employee” shall mean any
employee of the Company or any of its Affiliated Companies who, in the sole judgment
of the Board of Directors, has made or is expected to make significant
contributions to the success of the Company and its Affiliated Companies. An
individual employed with any entity other than the Company shall be treated as
an Eligible Employee only if such entity is a member of a group of corporations
or other entities that includes the Company which is treated as a single “service
recipient” for purposes of proposed Treasury regulation §1.409A-1(b)(5)(iii)(A) and
(D) or in any comparable provisions contained in the final Treasury
regulations issued under section 409A of the Code. For such purposes, the
language “at least 50%” 


 


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shall be used instead of “at
least 80%” each place it appears in section 1563(a)(1), (2) and (3) of
the Code and in Treas. Reg.§1.414(c)-2.


 


“Fair Market Value” shall mean the
value of a Share as determined by the Board of Directors (i) using a valuation
method that satisfies the valuation requirements set forth in IRS Notice
2005-1, Q & A-4(d)(ii), for purposes of determining the exercise price
of any Option granted prior to January 1, 2007, and (ii) using a
valuation method that satisfies the valuation requirements set forth in
proposed Treasury regulation §1.409A-1(b)(5)(iv) or in any comparable
provisions contained in the final Treasury regulations issued under section 409A
of the Code, for purposes of all other valuations of a Share required to be
made under the Plan.


 


“Internal Rate of Return” shall mean, as
of any date of calculation, the internal rate of return realized by the
Purchaser on its equity investment in the Company, expressed as the per annum
discount rate at which the sum of the following cash flows is equal to zero
(assuming discounting on the basis of a year of 365 days and actual days
elapsed): (i) the aggregate amount of (A) the purchase price paid by
the Purchaser for the Shares acquired by it from FirstEnergy Corp. on the
Closing Date, and (B) all amounts paid by the Purchaser to the Company
after the Closing Date for the issuance of additional Shares to the Purchaser
or as capital contributions to the Company (with each of the amounts referred
to in (A) and (B) treated as a negative amount for purposes of any
calculation hereunder),  and (ii) the
aggregate amount of (C) the proceeds realized by the Purchaser upon each
sale of Shares held by it to one or more third parties unaffiliated with the
Purchaser, and (D) all dividends and other distributions (including any
distributions in liquidation or partial liquidation of the Company or
distributions by the Company of  proceeds
realized by it on the sale of any of its assets) paid by the Company to the
Purchaser with respect to the Shares held by it. The Internal Rate of Return
shall be calculated using the “XIRR” function in Microsoft Excel 2005 or an
equivalent function in any other software package approved by the Purchaser.


 


“Option” shall mean an
option to purchase Shares granted under the Plan to an Eligible Employee.


 


“Option Holder” shall mean any
person who, under the provisions of this Plan, holds one or more Options granted
to an Eligible Employee under the Plan.


 


“Performance Requirement” shall mean (a) in
the case of any Tranche of any Option granted during 2006, the Performance
Requirement applicable to such Tranche under Section 5(e)(ii); and (b) in
the case of any Option, or Tranche of any Option, granted after December 31,
2006, any requirement based on the Purchaser’s realization of a specified
Internal Rate of Return that must be satisfied in order for such Option, or
Tranche, to become vested and exercisable.


 


“Purchaser” shall mean MYR Group
Holdings, LLC.


 


“Shares” shall mean
shares of the common stock of the Company.


 


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“Termination of Employment” shall mean,
with respect to any Eligible Employee, his or her ceasing to be employed by the
Company or any of its Affiliated Companies.


 


“Tranche” shall mean a
portion of an Option,  covering a
specified percentage of the total number of Shares that may be purchased under
the Option, that is subject to requirements for vesting and exercisability that
differ in any respect from the requirements for vesting and exercisability of
the Option with respect to Shares covered under any other portion of the
Option.


 


3.                             Shares
Available for the Grant of Options


 


Shares delivered upon the
exercise of Options granted under the Plan may be authorized but unissued
Shares, or previously issued Shares reacquired by the Company  by private purchase or redemption or by purchase
on the open market. The number of Shares available for issuance in respect of
Options granted under the Plan shall be subject to the following limitations:


 


(a)                         The aggregate
number of Shares that may be issued in respect of Options granted under
the Plan, as determined as of any date, shall not exceed 11,111 Shares.


 


(b)                        Upon the grant
of any Option hereunder, the aggregate number of Shares available for further
grants of Options under the Plan shall be reduced by the number of Shares
subject to the Option so granted.


 


(c)                         There shall be
added back to the aggregate number of Shares available for further grants of
Options under the Plan, as determined under (a) and (b) above, any
Shares as to which an Option granted hereunder has not been exercised at the
time of its expiration, cancellation or forfeiture.


 


(d)                        The limitations
provided in this Section 4 shall be subject to adjustment as provided in Section 8.


 


4.                             Grant
of Options


 


Subject to the limitations
set forth in Section 3, Options may be granted under the Plan at such
times, to such Eligible Employees, for the purchase of such number of Shares,
upon such terms and conditions not inconsistent with the provisions of the
Plan, as the Board of Directors in its sole discretion may determine.


 


Each grant of an Option hereunder shall be evidenced by a written
instrument in
such form as the Board of Directors shall prescribe, setting forth the
terms and conditions applicable to such Option. Except as otherwise provided
under the Plan, an Option may be granted to any individual Eligible
Employee or group of Eligible Employees on terms and conditions that differ
from the terms and conditions upon which Options are granted to any other
individual Eligible Employee or group of Eligible Employees. The instrument
evidencing the grant of any Option shall specify that the Option shall be 


 


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subject to all of the terms and provisions of the
Plan as in effect from time to time subject, however, to the limitation on
amendments set forth in Section 12.


 


5.                             Terms
and Conditions for Options


 


Options under the Plan shall
be granted subject to the terms and conditions  set forth below.


 


(a)                         Type of Options. The terms of
each Option shall provide that it will not be treated as an “incentive stock
option” within the meaning of section 422(b) of the Code.


 


(b)                        Tranches. Each Option
granted under the Plan during 2006 shall  be divided into three Tranches. The first  Tranche of such Option shall be designated as
Tranche I, and shall cover 25% of the total number of Shares subject to the
Option. The second and third Tranches of such Option shall be designated,
respectively, as Tranche II and Tranche III, and shall each cover 37.5% of the
total number of Shares subject to such Option. Options granted under the Plan
after December 31, 2006 may be divided into such number of Tranches
(if any), covering such percentages of the total number of Shares subject to
such Options, as the Board of Directors may determine in its sole discretion.


 


(c)                         Term of Options. The term
during which an Option may be exercised shall be such period of time as
determined by the Board of Directors at the time of grant of the Option, but in
no event may the term of any Option exceed ten years from the Option’s
Date of Grant. Notwithstanding any other provision in the Plan to the contrary,
no Option may be exercised after its expiration.


 


(d)                        Vesting and
Exercise of Options. Each Option granted under the Plan shall vest and
become exercisable, in whole or in part, at such time or times during its term,
and subject to the satisfaction of such requirements, (i) as provided in (e) below,
in the case of  any Option granted during
2006, and (ii) as determined by the Board of Directors in its sole discretion
and as specified in the instrument evidencing the grant of the Option, in the
case of any Option granted after December 31, 2006. To the extent that an
Option  has become exercisable pursuant
to the preceding sentence, it  may be
exercised thereafter at any time or from time to time during its term, as to
any or all Shares as to which the Option has become and remains exercisable,
subject to the provisions of (f) below.


 


(e)                         Vesting
Requirements for Options Granted in 2006. Each Option granted under
the Plan during 2006 shall become vested and exercisable in accordance with the
provisions set forth below.


 


(i)                    Each Tranche of such Option
shall become vested and exercisable (A) with respect to 1/3rd of the total
number of Shares covered by such Tranche , on the first anniversary of the
Option’s Date of Grant or, if later, on the first date as of which the
Performance Requirement applicable to such Tranche has been satisfied; (B) with
respect to an additional 1/3rd of the total number of Shares covered by such
Tranche, on the second anniversary of the Option’s Date of Grant 


 


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or, if later, on the first date as of which the Performance Requirement
applicable to such Tranche has been satisfied; and (C) with respect to the
remaining 1/3rd of the total number of Shares covered by such Tranche, on the
third anniversary of the Option’s Date of Grant or, if later, on the first date
as of which the Performance Requirement applicable to such Tranche has been
satisfied.


 


(ii)                 The Performance Requirement applicable
to each Tranche of such Option shall be treated as having been satisfied (A) in
the case of Tranche I of such Option, once the Internal Rate of Return realized
by the Purchaser is equal to or exceeds 0%; (B), in the case of Tranche II of
such Option, once the Internal Rate of Return realized by the Purchaser  is equal to or exceeds 8%; and (C) in the
case of Tranche III of such Option, once the Internal Rate of Return realized
by the Purchaser is equal to or exceeds 15%.


 


(iii)                  For purposes of (ii) above,
the Internal Rate of Return realized by the Purchaser on its initial equity
investment in the Company shall be calculated from the Closing Date, and the
Internal Rate of Return realized by the Purchaser on any additional investments
in the Company made by the Purchaser after the Closing Date shall be calculated
from the date or dates on which the Purchaser made such additional equity
investments.


 


(f)                          Termination of
Employment. If an Eligible Employee’s Termination of
Employment occurs by reason of his or her death, permanent and total disability
(as defined in section 22(e)(3) of the Code), Retirement (as defined
below), or termination by the Company for any reason other than for Cause, the
portion of any outstanding Option held by such Eligible Employee (or by any
person to whom such Option was transferred by the Eligible Employee pursuant to
Section 6) on the date of such Eligible Employee’s Termination of Employment
that had become vested and exercisable but which had not been exercised prior
to such date, shall remain exercisable for a period of 90 days after such date,
or for such longer period after such date as the Board of Directors may determine
in its sole discretion pursuant to Section 10(b), but in no event shall
such post-termination period of exercise extend beyond the date of expiration
of the term of the Option . For purposes of the foregoing, the term “Retirement”
shall mean an Eligible Employee’s voluntary Termination of Employment at any
date (i) after he or she has (A) attained age 60 and (B) the sum
of his or her age and the number of his or her years of employment with the
Company and any of its Affiliated Companies equals or exceeds 75, or (ii) after
he or she has attained such earlier age and/or completed such fewer number of
years of employment with the Company and any of its Affiliated Companies (A) as
may be specified in the instrument or instruments evidencing the grant of
the Option or Options in question, or (B) as the Board of Directors in its
sole discretion may determine pursuant to Section 10(b).


 


Except as provided in the
preceding paragraph, the portion of any outstanding Option held by an Eligible
Employee (or by any person to whom such Option was transferred by the Eligible
Employee pursuant to Section 6)  on
the date of the Eligible Employee’s Termination of Employment that had not
become vested and exercisable 


 


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prior to such date, and the
portion of such Option that had become vested and exercisable but which had not
been exercised prior to such date, shall be forfeited on such date.


 


(g)                        Exercise Price. The price at
which Shares may be purchased upon any exercise of an Option shall be the
price per share determined by the Board of Directors and specified in the
instrument evidencing the grant of such Option, but in no event shall the
exercise price per share be less than 
the Fair Market Value of a Share determined as of the Date of Grant of
the Option.


 


(h)                        Other Option
Provisions. The instrument evidencing the grant of any Option
hereunder may contain such other terms and conditions, not inconsistent
with the provisions of the Plan or any applicable law, as the Board of
Directors may determine.


 


(i)                            Method of
Exercise and Payment. An Option shall be exercised by delivering a
written notice of exercise, in such form as the Board of Directors shall
have approved, to the Company at its principal business office and addressed to
the attention of the Company’s Secretary or such other person as the Secretary may have
designated to receive such notice. The notice shall specify the number of Shares
with respect to which the Option is to be exercised, and shall be accompanied by
the full exercise price for the Shares to be purchased.


 


An Option may not be
exercised at any one time as to less than 100 Shares, or less than the number
of Shares to which the Option is then exercisable if that number is less than
100 Shares. No fractional Share may be purchase upon the exercise of any
Option.


 


Payment of the exercise
price for Shares shall be made by one, or by a combination of any, of the
following methods: (i) in immediately available funds, by certified or
bank cashier’s check; (ii) if permitted by the Board of Directors and
subject to any terms and conditions it may impose on the use of such
methods, by (A) the delivery of other Shares owned by the Option Holder,
or (B) the withholding by the Company of Shares that otherwise would have
been delivered to the Option Holder upon exercise of the Option; or (iii) by
any other method of payment as the Board of Directors may from time to
time approve.


 


Shares delivered to the
Company or withheld by it in payment of part or all of the exercise price upon
exercise of an Option shall be valued at their Fair Market Value as of the
close of business on the date preceding the date on which the Option is
exercised.


 


(j)                            Additional
Conditions for Option Exercise. An Option Holder’s
exercise of any Option granted hereunder shall be subject to the following
additional conditions:


 


(i)                    No Shares shall be delivered
to an Option Holder pursuant to his or her exercise of an Option unless and
until the Option Holder has executed a written instrument, in such form as
the Board of Directors shall require, pursuant to which the Option Holder
becomes a party to, and agrees to be bound by all of the terms and conditions
of, the Management Stockholders Agreement  between the Company and the employees who,
pursuant to the terms of such agreement, will become stockholders of the Company.


 


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(ii)                 If the Company in its sole discretion
determines that it is necessary or appropriate for it to do so, it may require
an Option Holder, as a condition of  his
or her right to purchase any Shares pursuant to an exercise of any Option, to
deliver to the Company a written representation that the Shares to be acquired
upon such exercise are intended to be acquired by the Option Holder for
investment and not for resale or with a view to the distribution thereof. If certificates
are delivered to an Option Holder for any Shares with respect to which such an
investment representation has been delivered to the Company, the Company may cause
a legend to be placed upon each such certificate delivered to the Option Holder
upon his or her exercise of the Option to make appropriate reference to such
representation, and to restrict the transfer of the Shares evidenced by such
certificate in the absence of compliance with applicable federal or state
securities laws.


 


(iii)              If at any time the Company determines, in its sole discretion,
that the listing, registration or qualification of  Shares subject to an Option upon any securities
exchange or under any federal or state law or approval of any regulatory body
is necessary or desirable, the Company may postpone the exercise of such
Option or the issuance or delivery of Shares upon any exercise of such Option
until such listing, registration, qualification, or approval has been completed
or obtained free of any conditions not acceptable to the Company.


 


6.                            Transferability of Options


 


(a)                         Except as
provided below, Options shall not be transferable by the Option Holder otherwise
than by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined in the Code, and shall be exercisable
during an Option Holder’s lifetime only by such Option Holder.


 


(b)                        Notwithstanding
the above, if the instrument evidencing the grant of an Option so provides and
subject to such limitations, terms and conditions as may be specified
therein,  an Eligible Employee who holds any
Option may, at any time prior to his or her death, transfer or assign all or
any portion of such Option to: (i) his or her spouse or lineal descendants
or the spouse or spouses of his or her lineal descendants; (ii) the
trustee of a trust established for the benefit of his or her spouse or lineal
descendants or the spouse or spouses of his or her lineal descendants; or (iii) a
partnership whose only partners are the spouse and/or lineal descendants and/or
the spouse or spouses of the lineal descendants of the Option Holder.


 


7.                             Taxes


 


Notwithstanding any other
provision of the Plan, the Company or any of its Affiliated Companies may make
such provisions and take such steps as it may deem necessary or
appropriate for the withholding of all federal, state and local taxes required
by law to be withheld with respect to the exercise of any Option, including but
not limited to (i) deducting the amount of taxes so required to be
withheld from any other compensation or other amounts then or thereafter
payable to the Eligible Employee to 


 


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whom such Option was granted,
and/or (ii) if the  Board of
Directors so permits and subject to such terms and conditions as it may require,
(A) by the delivery of  Shares
previously owned by the Option Holder, or (B) by the withholding of a  portion of the Shares that otherwise would be
delivered or paid to the Option Holder with respect to his or her exercise of
the Option, or (iii) by a combination of payments in cash and Shares. Any  Shares that are delivered or withheld to
satisfy tax withholding requirements shall be valued at their Fair Market Value
as of the date of settlement of payment of the exercise price under the Option.
Notwithstanding the foregoing,  the
aggregate Fair Market Value of the Shares that may be used to satisfy tax
withholding requirements with respect to the exercise of an Option may not
exceed the minimum statutory amounts of tax required to be withheld with
respect to such exercise of the Option.


 


8.                          Certain Adjustments to Shares


 


In the event of any change
in the Company’s Shares by reason of any stock dividend, stock split,
recapitalization, reorganization, merger, consolidation, split-up, combination
or exchange of shares, or any rights offering to purchase Shares at a price
substantially below fair market value, or any similar change affecting the
Company’s Shares , (i) the aggregate number and kind of shares specified
herein as available for the grant of Options under the Plan, (ii)  the
number and kind of shares that may be issued and delivered to Participants
upon the exercise of any Options outstanding at the time of such change, and (iii) 
the exercise price per share of any Options outstanding at the time of such
change, shall be appropriately adjusted consistent with such change in such
manner as the Board of Directors, in its sole discretion, may deem
equitable to prevent substantial dilution or enlargement of the rights granted
to, or available for, Option Holders hereunder.


 


Any such adjustment shall be made in a manner that
will not result in the adjustment being treated as a “modification” of any
outstanding Option under the applicable provisions of proposed Treasury
regulation §1.409A-1(b)(5)(v) or any comparable provisions contained in
the final regulations issued under section 409A of the Code.


 


Each Option Holder shall be
given written notice of any adjustment made pursuant to this Section and,
upon such notice, such adjustment shall be effective and binding for all
purposes.


 


9.                             Change
in Control


 


Notwithstanding any other provision of the Plan to the contrary, upon the
occurrence of a Change in Control the following provisions shall apply


 


(a)                         Each
outstanding Option or Tranche thereof that is subject to a Performance
Requirement that has not been satisfied or waived by the Board of Directors
pursuant to Section 10(b) by the time when such Change in Control
becomes effective 


 


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(the “Effective Time”) shall
be cancelled and forfeited at the Effective Time, and the holder thereof shall
not be entitled to any payment hereunder with respect thereto.


 


(b)                        Each
outstanding Option or Tranche thereof that is subject to a Performance
Requirement that has been or will be satisfied or waived by the Board of
Directors pursuant to Section 10(b) by the Effective Time, and any
outstanding Option or Tranche thereof that is not subject to a Performance
Requirement, to the extent such Option or Tranche has not previously become
vested and exercisable, shall become immediately and fully exercisable upon the
occurrence of the Change in Control, and the holder thereof shall be provided
with an opportunity to exercise such Option or Tranche at such time prior to
the Effective Time, and in accordance with such procedures, as the Board of
Directors shall determine.


 


(c)                         Except as
provided in  (d) below, the portion
of any Option, or Tranche of any Option, described in (b) above that
remains unexercised at the Effective Time shall be cancelled at such time, and
the holder thereof shall be entitled to receive with respect to such cancelled
Option or Tranche, as soon as practicable after the Effective Time, a single
lump sum cash payment in an amount determined by multiplying (1) the
number of Shares as to which such Option or Tranche remained unexercised at the
Effective Time, by (2) the excess of (A) the average per share amount
of consideration paid for Shares in connection with the Change in Control, over
(B) the per share exercise price of such Option or Tranche


 


(d)                        If the Board of
Directors so determines in its sole discretion, the portion of any Option, or
Tranche of any Option, described in (b) above that remains unexercised at
the Effective Time shall be cancelled at such time, and the holder thereof
shall be entitled to receive, in lieu of the cash payment provided for in (c) above,
an Equivalent Option, as defined in (e) below, in substitution for the
cancelled portion of such Option or Tranche.


 


(e)                         For purposes of
(d) above, an “Equivalent Option” shall mean  an option (“New Option”) issued by a
corporation whose acquisition of Shares, or acquisition of assets of the Company
and/or its Affiliated Companies, resulted in the Change in Control (the “Acquiror”),
 to the holder of an unexercised Option
or Tranche of an Option cancelled pursuant to (c) above ( the holder’s “Cancelled
Option”) in substitution for such Cancelled Option, that (i) permits the
holder to purchase shares of the Acquiror’s stock having an aggregate Fair
Market Value in excess of the aggregate option price for such shares
immediately after the issuance of the New Option to the holder, that is equal
to the excess of the aggregate Fair Market Value of the Shares that were
subject to the unexercised portion of the Cancelled Option over the aggregate
option exercise price for such Shares immediately before cancellation; (ii) permits
such shares to be purchased during a term expiring on the same date as the
expiration date of the term of the holder’s Cancelled Option and (iii) contains
such other terms and conditions as are necessary in order for the New Option
not to be treated as a “modification” of such Cancelled Option under the
applicable provisions of proposed Treasury regulation §1.409A-1(b)(5)(v) or
any comparable provisions contained in the final regulations issued under section 409A
of the Code.


 


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10.                      Administration


 


The Plan shall be
administered in accordance with the provisions set forth below.


 


(a)                         In General. The Plan
shall be administered by the Board of Directors. In addition to the
responsibilities and powers assigned to the Board of Directors elsewhere in the
Plan, the Board of Directors shall have the authority, in its sole discretion,
to establish from time to time guidelines or regulations for the administration
of the Plan, to interpret the Plan, and to make all determinations it considers
necessary or advisable for the administration of the Plan. All decisions,
actions or interpretations of the Board of Directors under the Plan shall, to
the extent permitted by law be final, conclusive and binding upon all Eligible
Employees and other Option Holders and all other parties.


 


(b)                        Modification of
Awards. To the extent not inconsistent with the terms of the Plan or any
provision of applicable law, the Board in its sole discretion may waive or
modify any of the terms and conditions set forth in the instrument evidencing
the grant of any Option hereunder, including without limitation, (i) to
permit such Option to become exercisable as to any portion of the Shares
subject to the Option at any time earlier than the time specified in such
instrument,  (ii) to extend the term
of such Option beyond the date specified in such instrument as the expiration
date for the term of the Option (but not beyond the day immediately preceding
the tenth anniversary of the Date of Grant of the Option), or (iii) to
permit such Option, to the extent it has become or becomes exercisable, to
remain exercisable for any period of time (including any period after the Eligible
Employee’s Termination of Employment) beyond the period of time specified in
such instrument but not beyond the date of expiration of the Option, including
any extension thereof permitted under clause (ii);


 


Notwithstanding the
foregoing, no waiver or modification may be authorized or directed by the
Board of Directors with respect to any outstanding Option pursuant to this Section 10(b) without
the consent of the Option Holder if it would adversely affect, to any material
extent, any of the rights of the Option Holder with respect to such Option, or
without the consent of the Eligible Employee to whom such Option was granted,
if it would constitute a “modification” of such Option under the applicable
provisions of proposed Treasury regulation §1.409A-1(b)(5)(v) or any
comparable provisions contained in the final regulations issued under section 409A
of the Code.


 


(c)                         Delegation. The Board of
Directors in its sole discretion may, by resolution duly adopted by it,
delegate to any committee of the Board of Directors  authority with respect to such matters
pertaining to the administration of the Plan 
as the Board of Directors may specify in such resolution. The Board
of Directors also may delegate any ministerial or nondiscretionary
function pertaining to the administration of the Plan to any one or more
officers or other employees of the Company or any of its Affiliated Companies.
Any authority so delegated may be revoked or modified by the Board of
Directors, in whole or in part, at any time.


 


(d)                        Indemnification. No member of
the Board of Directors, and no member of any committee of the Board of
Directors to which the Board of Directors has delegated 


 


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authority with respect to
the administration of the Plan, shall be personally liable by reason of any
contract or other instrument executed by such member or on his or her behalf in
his or her capacity as a member of the Board of Directors or such  committee nor for any mistake of judgment
made in good faith, and the Company shall indemnify and hold harmless each
member of the Board of Directors or such committee, and each employee or officer
of the Company or any of its Affiliated Companies to whom any duty or power
relating to the administration or interpretation of the Plan may be
delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of the Board
of Directors) arising out of any act or omission to act in connection with the
Plan unless arising out of such person’s own fraud or bad faith.


 


11.                      Designation and Change of Beneficiary


 


Each Option Holder shall
file with the Company’s Secretary, or with such employee of the Company as the
Company’s Secretary  may have designated
to receive same, a written designation of one or more persons as the
beneficiary who shall be entitled to exercise any rights with respect to any
Option, and to  receive any Shares or cash
amount otherwise issuable or payable to the Option Holder with respect to such
Option, upon or after the Option Holder’s death. An Option Holder may, from
time to time, revoke or change his or her beneficiary designation without the
consent of any previously designated beneficiary by filing a new designation
with the or its designee. The last such designation received by the Company’s
Secretary or his or her designee  shall be
controlling; provided, however, that no designation, or change or
revocation thereof, shall be effective unless received by the Company’s Secretary
or his or her designee prior to the Option Holder’s death, and in no event
shall it be effective as of a date prior to such receipt. If at the date of an
Option Holder’s death, there is no designation of a beneficiary in effect for
the Option Holder pursuant to the provisions of this Section 11, or if no
beneficiary designated by the Option Holder in accordance with the provisions
hereof survives to exercise any rights with respect to any Option or to receive
any Shares or cash amount payable under the Plan with respect to such
Option  after the Option Holder’s death,
the Option Holder’s estate shall be treated as the Option Holder’s beneficiary
for purposes of the Plan.


 


12.                      Amendment and Termination of Plan


 


The Board of Directors  may amend, suspend or terminate the Plan
at any time. However, no such amendment, suspension or termination shall
adversely affect the rights of any Option Holder with respect to any Option
previously granted hereunder without the Option Holder’s consent; and no such
amendment (other than an amendment reflecting any adjustment authorized by the Board
of Directors under Section 8) shall increase the maximum number of Shares
which may be purchased pursuant to the exercise of Options granted under
the Plan without the consent of the Company’s shareholders.


 


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11.                      Continued
Employment


 


Nothing contained in the
Plan or in any Option granted pursuant thereto shall confer upon any Eligible
Employee any right to continue to be employed by the Company or any of its
Affiliated Companies, or to interfere in any way with the right of the Company
or any of its Affiliated Companies to terminate such Option Holder’s employment
at any time.


 


12.                      Governing
Law


 


This Plan shall be governed
by and construed in accordance with the laws of the State of New York.


 


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