Exhibit 10.1


 


GREAT LAKES DREDGE & DOCK CORPORATION


2007 LONG-TERM INCENTIVE PLAN


Great Lakes Dredge &
Dock Corporation (the “Corporation”) has established this Great Lakes Dredge
& Dock Corporation 2007 Long-Term Incentive Plan to provide an additional
inducement for Eligible Individuals to provide services to the Corporation or
an Affiliate as an employee, consultant, non-employee director, or independent
contractor, to reward such Eligible Individuals by providing an opportunity to
acquire incentive awards, and to provide a means through which the Corporation
may attract able persons to enter the employment of or engagement with the
Corporation or one of its Affiliates. 
Awards may, in the discretion of the Board or Committee, and subject to
such restrictions as the Board or Committee may determine or as provided
herein, consist of Incentive Stock Options, Non-Qualified Stock Options,
Restricted Stock, Restricted Stock Units, Performance Units, Stock Appreciation
Rights, or any combination of the foregoing.


ARTICLE
1


DEFINITIONS


Whenever used in the Plan, the following terms have
the meanings set forth below, and when the meaning is intended, the initial
letter of the word is capitalized:


“Affiliate” means any corporation that is a parent
or subsidiary corporation (as Code Sections 424(e) and (f) define those terms)
with respect to the Corporation.


“Award” means an Incentive Stock Option,
Non-Qualified Stock Option, Restricted Stock Award, Stock Appreciation Rights,
Performance Units or Restricted Stock Units granted under the Plan.


“Award
Agreement” means
an agreement entered into between the Corporation and the applicable
Participant, setting forth the terms and provisions applicable to the Award
then being granted under the Plan, as further described in Section 2.4 of the
Plan.


“Award
Date” means, with
respect to any Award, the date of the grant or award specified by the Committee
in a resolution or other writing, duly adopted, and as set forth in the Award
Agreement, provided that such Award Date will not be earlier than the date of
the Committee action.


“Board” means the Board of Directors of the
Corporation.


“Cause”  will have the meaning
set forth in any employment, consulting, or other written agreement between the
Participant and the Corporation.  If there
is no employment, consulting, or other written agreement between the
Corporation or an Affiliate and the Participant or if such agreement does not
define “Cause,” then “Cause” will have the meaning specified in the Award
Agreement; provided that, if the Award Agreement does not so specify, “Cause”
will mean, as determined by the Committee in its sole discretion, the Participant’s:  (i) willful and continued failure to
substantially perform his material duties as an executive of the Corporation
(other than any such failure resulting from incapacity due to physical or
mental illness) after a written demand for substantial performance is delivered
to the Participant by the Board, (ii) willful

















 


misconduct, which is demonstrably and materially
injurious to the Corporation, monetarily or otherwise, (iii) engaging in
egregious misconduct involving serious moral turpitude to the extent that his
creditability and reputation no longer conforms to the standard of senior
executive officers of the Corporation (iv) conviction of, or plea of guilty or nolo contendere to, a felony, (v) material breach of a
material written policy of the Corporation, (vi) failure to reasonably
cooperate with any audit or investigation involving the Corporation or its
business practices; or (vii) material breach of this Agreement.  The Board must give the Participant at least
thirty (30) days written notice of its intent to terminate him for Cause,
specifying the act(s) or omission(s) alleged to justify the for Cause
termination, and an opportunity to cure such act(s) or omission(s), where
feasible, within the thirty (30) day period. 
In addition, the Participant’s Service will be deemed to have terminated
for Cause if, after the Participant’s Service has terminated, facts and
circumstances are discovered that would have justified a termination for
Cause.  For purposes of this Plan, no act
or failure to act on the Participant’s part will be considered “knowing” or “willful”
unless it is done, or omitted to be done, by him or her in bad faith or without
reasonable belief that his or her action or omission was in the best interests
of the Corporation or an Affiliate.  Any
act, or failure to act, based upon authority given pursuant to a resolution
duly of the Board or based upon the advice of counsel for the Corporation will
be conclusively presumed to be done, or omitted to be done, in good faith and
in the best interests of the Corporation or an Affiliate.  In no event will a termination be deemed to
occur for “Cause” unless such termination occurs within 90 days after the Board
becomes aware of the circumstance or event giving rise thereto.


“Change
in Control” means
the first to occur of the following:


(a)                                  The “beneficial ownership” (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of
securities representing more than 331/3% of the combined
voting power of the then outstanding voting securities of the Corporation
entitled to vote generally in the election of directors (the “Corporation
Voting Securities”) is accumulated, held or acquired by a Person (as defined in
Section 3(a)(9) of the Exchange Act, as modified, and used in Sections 13(d)
and 14(d) thereof) (other than the Corporation, any trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation, holders
of capital stock of the Corporation as of the date hereof or an affiliate
thereof, any corporation owned, directly or indirectly, by the Corporation’s
stockholders in substantially the same proportions as their ownership of stock
of the Corporation); provided, however that any acquisition from the
Corporation or any acquisition pursuant to a transaction that complies with
clauses (i), (ii) and (iii) of subparagraph (c) of this paragraph will not be a
Change in Control under this subparagraph (a), and provided further, that
immediately prior to such accumulation, holding or acquisition, such Person was
not a direct or indirect beneficial owner of twenty-five percent (25%) or more
of the Corporation Voting Securities; or


(b)                                 Individuals who, as of the date of the Agreement,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Corporation’s 


 


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stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board will be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board of Directors; or


(c)                                  Consummation by the Corporation of a reorganization,
merger or consolidation, or sale or other disposition of all or substantially
all of the assets of the Corporation or the acquisition of assets or stock of
another entity (a “Business Combination”), in each case, unless immediately
following such Business Combination:  (i)
more than 50.1% of the combined voting power of then outstanding voting
securities entitled to vote generally in the election of directors of (x) the
corporation resulting from such Business Combination (the “Surviving
Corporation”), or (y) if applicable, a corporation that as a result of such
transaction owns the Corporation or all or substantially all of the Corporation’s
assets either directly or through one or more subsidiaries (the “Parent
Corporation”), is represented, directly or indirectly by Corporation Voting
Securities outstanding immediately prior to such Business Combination (or, if
applicable, is represented by shares into which such Corporation Voting
Securities were converted pursuant to such Business Combination), and such
voting power among the holders thereof is in substantially the same proportions
as their ownership, immediately prior to such Business Combination, of the
Corporation Voting Securities, (ii) no Person (excluding any employee benefit
plan (or related trust) of the Corporation or such corporation resulting from
such Business Combination) beneficially owns, directly or indirectly, 331/3%
or more of the combined voting power of the then outstanding voting securities
eligible to elect directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) except to the extent that such
ownership of the Corporation existed prior to the Business Combination and
(iii) at least a majority of the members of the board of directors of the
Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) were members of the Incumbent Board at the time of the execution
of the initial agreement, or of the action of the Board, providing for such
Business Combination; or


(d)                                 Approval by the Corporation’s stockholders of a
complete liquidation or dissolution of the Corporation.


“Code” means the Internal Revenue Code of 1986,
as amended.  A reference to any provision
of the Code will include reference to any successor provision of the Code.


“Committee” means the Compensation Committee, if
any, or such similar or successor committee appointed by the Board.  If the Board has not appointed a Committee,
the Board will function in place of the Committee.


 


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“Consultant” means an individual who is not an
Employee or Director of the Corporation or an Affiliate, but who is providing
services to the Corporation or an Affiliate as an independent contractor.


“Corporation” means Great Lakes Dredge & Dock
Corporation.


“Director” means any individual who is a member of
the Board.


“Disabled
Participant”
means the Participant becoming unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death or that has lasted or can be expect to
last for a continuous period of not less than 12 months, within the meaning of
Code Section 422(c)(6).


“Dividend
Equivalent” means
a right to receive on the payment date for any dividend on the shares of Stock
underlying an Award, cash compensation from the Corporation equal to the
dividend that would have been paid on such shares of Stock (or the Fair Market
Value of such dividend, if such dividend would not have been paid in cash), if
such shares had been issued and outstanding, fully vested and held by the
Participant on the record date for payment of such dividend.  Notwithstanding the foregoing, if such
dividend would not have been paid in cash, the Dividend Equivalent with respect
thereto will not be paid unless and until certificates evidencing the shares of
Stock with respect to which it is paid are issued to the Participant.  Dividend Equivalents may be provided, in the
Committee’s discretion, in connection with any Award under the Plan, subject to
Section 2.6.


“Eligible
Individual” means
any Employee, Consultant, or non-employee Director.


“Employee” means any common law employee of the
Corporation or one of its Affiliates.


“Exchange
Act” means the
Securities Exchange Act of 1934, as amended.


“Fair
Market Value” will
mean (a) if the Common Stock is readily tradeable on a national securities
exchange or other market system, the closing sales price of the Common Stock on
the Award Date, time of exercise, or other date of calculation (or on the last
preceding trading date if Common Stock was not traded on such date), or (b) if
the Common Stock is not readily tradeable on a national securities exchange or
other market system, the fair market value as determined in good faith by the
Board or the Committee, by the reasonable application of a reasonable valuation
method consistent with the Code, or Treasury Regulations thereunder, as the
Board or the Committee will in its discretion select and apply at the time of
the Award Date, time of exercise, or other date of calculation.


“Freestanding SAR” means a Stock Appreciation Right that is granted
independently of any Options, as described in Article 6.


“Incentive
Stock Option” or “ISO” means an option that is intended to
qualify as an “Incentive Stock Option” within the meaning of Code Section
422.  Any Option that does not qualify
under Code Section 422 will be treated as a Non-Qualified Stock Option.


“Non-Qualified
Stock Option”
means an Option that is not an Incentive Stock Option.


 


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“Option” means an option to purchase Stock at an
Exercise Price determined on the Award Date, subject to the applicable
provisions of Article 3, awarded in accordance with the terms of the Plan, and
which may be an Incentive Stock Option or a Non-Qualified Stock Option.


“Participant” means an Eligible Individual who the
Committee has selected to participate in the Plan in accordance with Section
2.2 of the Plan.


“Performance
Unit” means a
performance unit subject to the requirements of Article 4 and awarded in
accordance with the terms of the Plan.


“Performance
Goals” will mean
performance goals established by the Committee prior to the grant of an Award
based on the attainment of one or any combination of the following, in each
case of the Corporation, an Affiliate, or business unit by or within which the
Participant is primarily employed or a combination thereof, and that are
intended to qualify under Section 162(m): 
(a) net earnings; (b) operating earnings or income; (c) earnings growth;
(d) net income; (e) net income applicable to shares; (f) gross revenue or
revenue by pre-defined business; (g) revenue backlog; (h) margins realized on
delivered services; (i) cash flow, including operating cash flow, free cash
flow, discounted cash flow return on investment, and cash flow in excess of
cost of capital; (j) earnings per share; (k) return on stockholders’ equity;
(l) stock price; (m) return on common stockholders’ equity; (n) return on
capital; (o) return on assets; (p) economic value added (income in excess of
cost of capital); (q) customer satisfaction; (r) cost control or expense
reduction; and (s) ratio of operating expenses to operating revenues, in each
case, absolute or relative to peer-group comparative.


The Committee also may
base Performance Goals upon attaining specified levels of Corporation
performance under one or more of the measures described above relative to the
performance of other corporations.  The
Committee will set such Performance Goals within the time prescribed by Section
162(m).  The Committee will have the
discretion to adjust targets set for preestablished performance
objectives.  If the Committee determines
it is advisable to grant Awards that will not qualify for the performance-based
exception of Section 162(m), the Committee may grant Awards that do not so
qualify.


“Plan” means the Great Lakes Dredge & Dock
Corporation 2007 Long-Term Incentive Plan, as set forth herein, as the same may
be amended, administered or interpreted from time to time.


“Public Offering” means any sale of the Corporation’s common stock
pursuant to an effective registration statement under the Securities Act of
1933, as amended from time to time, or any successor act thereto, filed with
the Securities and Exchange Commission on Form S-1 (or any successor form
adopted by the Securities and Exchange Commission); provided that the following
will not be considered a public offering: (i) any issuance of common equity
securities by the Corporation as consideration for a merger or acquisition,
(ii) any issuance of common securities to employees, directors or consultants
of any of the Corporation or any of its Affiliates as part of an incentive or
compensation plan, (iii) any issuance of common equity securities as part of a
unit with debt or preferred stock or any similar structure in which the common
equity securities are being offered primarily as a means of enhancing the
Corporation’s ability to sell the debt or preferred stock and (iv) the issuance
of common stock by the Corporation upon conversion of any preferred stock of
the Corporation.


 


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“Restricted
Stock” means an
award of shares of Stock delivered under the Plan subject to the requirements
of Article 5 and such other restrictions as the Committee deems appropriate or
desirable, including restrictions on transferability, a risk of forfeiture, and
certain other terms and conditions under the Plan or specified by the
Committee.  The restrictions on, and risk
of forfeiture of, Restricted Stock generally will expire on a specified date,
upon the occurrence of an event or achievement of Performance Goals, or on an
accelerated basis under certain circumstances specified in the Plan or the
Award Agreement.


“Restricted Stock Unit” or “RSU”
means a notional account established pursuant to an Award granted to a
Participant, as described in Article 5, that is (a) valued solely by reference
to shares of Stock, (b) subject to restrictions specified in the Award
Agreement, and (c) payable only in Stock. 
The RSUs awarded to the Participant will vest according to the
time-based or performance-based criteria specified in the Award Agreement.


“Section 162(m)” will mean Code Section 162(m), as
amended, and the Treasury Regulations thereunder.


“Service” means the provision of personal services
to the Corporation or its Affiliates in the capacity of (i) an Employee, (ii) a
Director, or (iii) a Consultant.


“Stock” means the Common Stock of the
Corporation.


“Stock
Appreciation Right”
or “SAR” means the award of the
contingent right to receive Stock or cash, as specified in the Award Agreement,
in the future, based on the value or the appreciation in the value of Stock,
pursuant to the terms of Article 6.  The
Committee may grant SARs alone or in connection with a related Option.  Stock Appreciation Rights may be either
Freestanding SARs or Tandem SARs.


“Tandem SAR” means a SAR that is granted in connection with a
related Option pursuant to Article 6, the exercise of which requires forfeiture
of the right to purchase a share of Stock under the related Option (and when a
share of Stock is purchased under the Option, the Tandem SAR similarly will be
canceled).


“Termination” means a cessation of the
employee-employer relationship between a Participant and the Corporation and
its Affiliates (other than by reason of transfer of the Employee among the
Corporation and its Affiliates), a cessation of an individual’s Director or
Consultant relationship with the Corporation, or the consummation of a
transaction whereby a Participant’s employer (other than the Corporation)
ceases to be an Affiliate of the Corporation.


ARTICLE 2


PLAN ADMINISTRATION


Section
2.1            Administration. 
The Committee will administer the Plan. 
The Committee will interpret the Plan and prescribe such rules,
regulations, and procedures in connection with the operation of the Plan, as it
will deem to be necessary and advisable for the administration of the Plan
consistent with the purposes of the Plan. 
Without limiting the foregoing, the Committee will have the authority
and complete discretion to:


 


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(a)                                  Prescribe, amend, and rescind rules and
regulations relating to the Plan;


(b)                                 Select Eligible Individuals to receive
Awards under the Plan as provided in Section 2.2 of the Plan;


(c)                                  Determine the form and terms of Awards;


(d)                                 Determine the number of shares of Stock
or other consideration subject to Awards under the Plan as provided in Articles
3 through 6 of the Plan;


(e)                                  Determine whether Awards will be granted
singly, in combination or in tandem with, in replacement of, or as alternatives
to, other Awards under the Plan or grants or awards under any other incentive
or compensation plan of the Corporation;


(f)                                    Construe and interpret the Plan, any
Award Agreement in connection with an Award and any other agreement or document
executed pursuant to the Plan;


(g)                                 Correct any defect or omission, or
reconcile any inconsistency in the Plan, any Award, or any Award Agreement;


(h)                                 Accelerate or, with the consent of the
Participant, defer the vesting of any Award or the exercise date of any Award,
subject to the limitations of Code Section 409A;


(i)                                     Authorize any person to execute on behalf
of the Corporation any instrument required to effectuate the grant of an Award
and delegate to officers of the Corporation the authority to perform
administrative functions under the Plan subject to any legal requirements that
the Committee as a whole take action with respect to such function, other than
any such delegation that would cause Awards or other transactions under the
Plan to cease to (i) be exempt from Section 16(b) of the Exchange Act, (ii)
satisfy the “independent director” requirements of the Nasdaq Global Market, or
(iii) qualify as “performance-based compensation” under Section 162(m);


(j)                                     Modify the terms of any Award, and
authorize the exchange or replacement of Awards; provided, however, that (i) no
such modification, exchange or substitution will be to the detriment of a
Participant with respect to any Award previously granted without the affected
Participant’s written consent, (ii) in no event will the Committee be permitted
to reduce the Exercise Price of any outstanding Option or to exchange or
replace an outstanding Option with a new Option with a lower Exercise Price,
except pursuant to Section 2.5, and (iii) the Committee shall use reasonable
efforts to ensure that any such modification, exchange or substitution will not
violate Code Section 409A;


(k)                                  Determine whether a Participant has
engaged in the operation or management of a business that is in competition
with the Corporation or any of its Affiliates, or whether a Participant has
violated the restrictive covenants of Section 10.13; and


 


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(l)                                     Make all other determinations deemed
necessary or advisable for the administration of the Plan.


The Committee will keep
records of action taken at its meetings. 
A majority of the Committee will constitute a quorum at any meeting, and
the acts of a majority of the members present at any meeting at which a quorum
is present, or acts approved in writing by a majority of the Committee, will be
the acts of the Committee.


Section
2.2                                   Eligibility.  Those Eligible Individuals, who share the
responsibility for the management, growth or protection of the business of the
Corporation or any Affiliate or who, in the opinion of the Committee, provide
services yielding significant benefits to the Corporation or any Affiliate will
be eligible to receive Awards as described herein.  Subject to the provisions of the Plan, the
Committee will have full and final authority, in its discretion, to grant
Awards as described herein and to determine the Eligible Individuals to whom
Awards will be granted.


Section
2.3                                   Shares Available Under
the Plan.  Subject to adjustment as set forth in
Section 2.5, the maximum number of shares of Stock that may be issued or
delivered and as to which Awards may be granted under the Plan will be equal to
the sum of: (i) 5,800,000 shares of Stock; and (ii) shares of Stock delivered
(either actually or by attestation) to or withheld by the Corporation in
connection with the exercise of an Option awarded under the Plan, or in payment
of any required income tax withholding for the exercise of an Option or the
vesting of Restricted Stock awarded under the Plan.


Notwithstanding anything
to the contrary in this Section 2.3, (i) in no event will more than 1,000,000
shares of Stock be cumulatively available for Awards of Incentive Stock Options
under the Plan, and (ii) in no event will more than 3,000,000 shares of Stock
be cumulatively available for Awards other than Options or Stock Appreciation
Rights.  Subject to adjustment as set
forth in Section 2.5, the maximum number of shares of Stock with respect to
which Awards may be granted in any calendar year to any Participant under the
Plan will be 580,000 shares.


If any Award granted
under the Plan is canceled by mutual consent or terminates or expires for any
reason without having been exercised in full, or, if and to the extent that an
award of Performance Units, or RSUs is paid in cash rather than the issuance of
shares of Stock, the number of shares subject to such Award (or in the case of
Performance Units or RSUs, the number of shares of Stock for which payment was
made in cash) will again be available for purposes of the Plan, except that, to
the extent that Stock Appreciation Rights granted in conjunction with an Option
under the Plan are exercised and the related Option surrendered, the number of
shares available for purposes of the Plan will be reduced by the number of
shares, if any, of Stock issued or delivered upon exercise of such Stock
Appreciation Rights.


The shares that may be
issued or delivered under the Plan may be either authorized but unissued
shares, repurchased shares, or partly each.


If, in connection with an
acquisition of another company or all or part of the assets of another company
by the Corporation or an Affiliate, or in connection with a merger or other
combination of another company with the Corporation or an Affiliate, the
Corporation either (A) assumes stock options or other stock incentive
obligations of such other company, or (B) grants stock options or other stock
incentives in substitution for stock options or other stock incentive 


 


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obligations of such other
company, then none of the shares of Stock that are issuable or transferable
pursuant to such stock options or other stock incentives that are assumed or
granted in substitution by the Corporation will be charged against the
limitations set forth in this Section.


Section
2.4                                   Award Agreement.  Each Award granted under the Plan will be evidenced by
a written Award Agreement, in a form approved by the Committee.  Such Award Agreement will be subject to and
incorporate the express terms and conditions, if any, required under the Plan
or as required by the Committee for the form of Award granted and such other
terms and conditions as the Committee may specify, and will be executed by the
Chief Executive Officer, the President (if other than the Chief Executive
Officer), or any person designated as an executive officer by the Board for
Section 16 purposes, on behalf of the Corporation, and by the Participant to
whom such Award is granted.  With the
consent of the Participant to whom such Award is granted, the Board may at any
time and from time to time amend an outstanding Award Agreement in a manner
consistent with the Plan.  Without
consent of the Participant, the Board of Directors may at any time and from
time to time modify or amend Award Agreements with respect to Options intended
as of the Award Date to be Incentive Stock Options in such respects as it deems
necessary in order that Incentive Stock Options granted under the Plan will
comply with the appropriate provisions of the Code and regulations thereunder
which are in effect from time to time with respect to Incentive Stock Options.


Section
2.5                                   Adjustment and
Substitution of Shares. 
If a
dividend or other distribution will be declared upon the Stock, payable in
shares of Stock, the number of shares of Stock then subject to any outstanding
Award or by reference to which the amount of any other Award is determined and
the number of shares that may be issued or delivered under the Plan will be
adjusted by adding thereto the number of shares that would have been
distributable thereon if such shares had been outstanding on the date fixed for
determining the stockholders entitled to receive such stock dividend or
distribution.  An increase in the number
of shares subject to an Award will not occur when the Committee has awarded
Dividend Equivalent with respect to such Award.


If the outstanding shares
of Stock will be changed into or exchangeable for a different number or kind of
shares of Stock or other securities of the Corporation or another corporation,
whether through reorganization, reclassification, recapitalization, stock
split-up, combination of shares, merger or consolidation, then the Committee
will substitute for each share of Stock subject to any then outstanding Award
and for each share of Stock, which may be issued or delivered under the Plan
but is not then subject to an outstanding Award, the number and kind of shares
of Stock or other securities into which each outstanding share of Stock is so
changed or for which each such share is exchangeable; provided, that, in the
event of a merger, acquisition or other business combination of the Corporation
with or into another entity, any adjustment provided for in the applicable
agreement and plan of merger (or similar document) will be conclusively deemed
to be appropriate for purposes of this Section 2.5.


In the case of any
adjustment or substitution as provided for in this Section 2.5, the aggregate
Exercise Price for all shares subject to each then outstanding Option prior to
such adjustment or substitution will be the aggregate Exercise Price for all
shares of Stock or other securities (including any fraction) to which such
shares will have been adjusted or which will have been substituted for such
shares.  Any new Exercise Price per share
will be carried to at least three decimal places with the last decimal place
rounded upwards to the nearest whole number. 
No 


 


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adjustment or
substitution provided for in this Section 2.5 will require the Corporation to
issue or sell a fraction of a share or other security.


If any such adjustment or
substitution provided for in this Section 2.5 requires the approval of
stockholders in order to enable the Corporation to grant Incentive Stock
Options, then no such adjustment or substitution of ISOs will be made without
prior stockholder approval.  If the
effect of any adjustment or substitution would be to cause an Option to fail to
continue to qualify as an ISO or to cause a modification, extension or renewal
of such Option within the meaning of Code Sections 409A or 424, the Committee
may elect that such adjustment or substitution not be made but rather will use
reasonable efforts to effect such other adjustment of each then outstanding
Option as the Committee in its sole discretion will deem equitable and which
will not result in any disqualification, modification, extension or renewal
(within the meaning of Code Sections 409A or 424) of such Incentive Stock
Option.


Section
2.6                                   Corporation’s Obligation
to Deliver Stock.  The obligation of the Corporation to issue or
deliver shares of Stock under the Plan will be subject to (i) the effectiveness
of a registration statement under the Securities Act of 1933, as amended, with
respect to such shares, if deemed necessary or appropriate by counsel for the
Corporation; (ii) the condition that the shares will have been listed (or
authorized for listing upon official notice of issuance) upon each stock
exchange on which such shares may then be listed; and (iii) all other
applicable laws, regulations, rules and orders which may then be in effect.


ARTICLE 3


STOCK OPTIONS


Section
3.1                                   Grant of Stock Options.  The Committee will have authority, in its discretion,
to grant Incentive Stock Options, Non-Qualified Stock Options or both types of
Options.  Notwithstanding the above, the
Committee may grant Incentive Stock Options to Employees only.  Subject to adjustment as set forth in Section
2.5, no Participant will be granted an Option or Options under the Plan
(disregarding canceled, terminated, or expired stock options) for an aggregate
number of shares in excess of 1,160,000.


Section
3.2                                   Terms and Conditions of
Options.  Options granted under the Plan will be
subject to the following terms and conditions:


(a)                                  The purchase price at which each Option
may be exercised (the “Exercise Price”) will be such price as the Committee, in
its discretion, will determine, except that, the Exercise Price will not be
less than one hundred percent (100%) of the Fair Market Value per share of
Stock covered by the Option as determined on the Award Date.


(b)                                 The Exercise Price will be payable in
full in any one or more of the following ways, as will be determined by the
Committee to be applicable to any such Award:


(i)                                     in cash; or


 


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(ii)                                  in shares of Stock (which are owned by
the Participant free and clear of all liens and other encumbrances and which
are not subject to the restrictions set forth in Article 5) having an aggregate
Fair Market Value on the date of exercise of the Option equal to the Exercise
Price for the shares being purchased; or


(iii)                               by requesting that the Corporation withhold such
number of shares of Stock then issuable upon exercise of the Option as will
have an aggregate Fair Market Value equal to the Exercise Price for the shares
being acquired upon exercise of the Option (and any applicable withholding
taxes); or


(iv)                              by waiver of compensation due or accrued
to the Participant for services rendered; or


(v)                                 provided that a public market for the
Corporation’s stock exists, and to the extent permitted by the Sarbanes-Oxley
Act of 2002:


(A)                              through a “same day sale” commitment from
the Participant and a broker-dealer that is a member of the National
Association of Securities Dealers (an “NASD Dealer”) whereby the Participant
irrevocably elects to exercise the Option and to sell a portion of the shares
so purchased to pay the purchase price (or a larger number of the shares so
purchased), and whereby the NASD Dealer irrevocably commits upon receipt of
such shares to forward the purchase price directly to the Corporation (and any
excess to the Participant); or


(B)                                through a “margin” commitment from the
Participant and an NASD Dealer whereby the Participant irrevocably elects to
exercise the Option and to pledge the shares so purchased to the NASD Dealer in
a margin account as security for a loan from the NASD Dealer in the amount of
the purchase price, and whereby the NASD Dealer irrevocably commits upon
receipt of such shares to forward the purchase price directly to the
Corporation; or


(vi)                              to the extent permitted by the
Sarbanes-Oxley Act of 2002, by promissory note executed by the Participant,
evidencing his or her obligation to make future cash payment thereof, secured
by an applicable number of shares of Stock or such other security as may be
determined by the Committee; provided, however, that in no event may the
Committee accept a promissory note for an amount in excess of the difference
between the aggregate Exercise Price and the par value of the shares; or


(vii)                           by any combination of the foregoing.


If the Exercise Price is paid in whole or in part in shares of Stock,
any portion of the Exercise Price representing a fraction of a share must be
paid in cash.  The date of exercise of an
Option will be determined under procedures established by 


 


11

















 


the Committee, and the Exercise Price will be payable at such time or
times as the Committee, in its discretion, will determine.  No shares will be issued or delivered upon
exercise of an Option until full payment of the Exercise Price has been made,
provided that, for this purpose, if permitted by the Committee, tender of a
promissory note will constitute full payment of the principal amount of such
promissory note.  When full payment of
the Exercise Price has been made, the Participant will be considered for all
purposes to be the owner of the shares with respect to which payment has been
made, subject to the restrictions set forth in Article 7.


(c)                                  An Option may be exercised (i) at such
time as the Option vests; or (ii) if and to the extent set forth in the
applicable Award Agreement, prior to the date on which the Option vests
provided that such Stock obtained will be subject to the same requirements that
are applicable to grants of Restricted Stock set forth in Article 5.  No Non-Qualified Stock Option will be
exercisable after the expiration of ten years from the Award Date, provided
that if an exercise would violate applicable securities laws, the Non-Qualified
Stock Option will be exercisable no more than 30 days after the exercise of the
Option first would no longer violate applicable securities laws.  Subject to this Section 3.2(c), and Sections
3.3(e), and 2.6, Options may be exercised at such times, in such amounts and
subject to such restrictions as will be determined by the Committee, in its
discretion.


(d)                                 Unless otherwise determined by the
Committee and set forth in the Award Agreement referred to in Section 2.4 or an
amendment thereto, following a Participant’s Termination for any reason, such
Participant must exercise any outstanding Option, if at all, within one year
from the date of Termination.


Section
3.3                                   Special Provisions
Applicable to ISOs. 
Notwithstanding any other provision of this Article 3, the following
special provisions will apply to any award of Incentive Stock Options:


(a)                                  The Committee will not award an Incentive
Stock Option under this Plan if it would cause the aggregate Fair Market Value
of Stock with respect to which Incentive Stock Options are exercisable by the
Participant for the first time during a calendar year (under all plans of the
Corporation and its Affiliates) to exceed $100,000.


(b)                                 If the Employee to whom the Incentive
Stock Option is granted is a Ten Percent Owner of the Corporation, then: (A)
the Exercise Price for each share subject to an Option will be at least one
hundred ten percent (110%) of the Fair Market Value of the Stock on the Award
Date; and (B) the Option will expire upon the earlier of (i) the time specified
by the Committee in the Award Agreement, or (ii) the fifth anniversary of the
Award Date.


(c)                                  No Option that is intended to be an
Incentive Stock Option may be granted under the Plan until the Corporation’s
stockholders approve the Plan.  If such
stockholder approval is not obtained within 12 months after the Board’s
adoption 


 


12

















 


of the Plan, then no Options may be granted under the Plan that are
intended to be Incentive Stock Options.


(d)                                 The maximum number of shares of Stock
with respect to which any one Participant may be granted Options that are
intended to be Incentive Stock Options in any one calendar year will be
100,000, subject to adjustment as set forth in Section 2.5.


(e)                                  An Incentive Stock Option must be
exercised, if at all, within three months after the Participant’s Termination
for a reason other than death or becoming a Disabled Participant, and within
twelve months after the Participant’s Termination for death or becoming a
Disabled Participant; provided that, an Option that is intended to be an
Incentive Stock Option may be exercised more than three months, but not more
than twelve months, after the Participant’s Termination for a reason other than
death or becoming a Disabled Participant, in which case the Option will be a
Nonqualified Stock Option.


(f)                                    For purposes of this Section, “Ten
Percent Owner” means an individual who, at the time an Option is granted under
this Plan, owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation or any
Affiliate.  For purposes of this Section
3.3(f), a Participant will be considered as owning (i) not only shares of the
Stock owned individually, but also all shares that are at the time owned,
directly or indirectly, by or for the spouse, ancestors, lineal descendants and
brothers and sisters (whether by the whole or half blood) of such individual
and (ii) proportionately any shares of Stock owned, directly or indirectly, by
or for any corporation, partnership, estate or trust in which such individual
will be a stockholder, partner or beneficiary.


ARTICLE 4


PERFORMANCE UNITS


Section
4.1                                   Performance Period and
Objectives.  The Committee will have authority, in its
discretion, to award Performance Units to Eligible Individuals.  The Committee will determine a performance
period (the “Performance Period”) of one or more years and will determine the Performance
Goals for grants of Performance Units. 
Performance Goals may vary from Participant to Participant.  Performance Periods may overlap and
Participants may participate simultaneously with respect to Performance Units
for which different Performance Periods are prescribed.


Section
4.2                                   Eligibility.  At the beginning of a Performance Period, the
Committee will determine for each Participant or group of Participants eligible
for Performance Units with respect to that Performance Period the range of dollar
values, if any, which may be fixed or may vary in accordance with such
performance or other criteria specified by the Committee, which will be paid to
a Participant as an Award if the relevant Performance Goals for the Performance
Period are met.


Section
4.3                                   Significant Event.  If during the course of a Performance Period there
will occur a significant event or events (a “Significant Event”) as determined
by the Committee, including, 


 


13

















 


but not limited to, a
reorganization of the Corporation or a Change in Control, which the Committee
expects to have a substantial effect on a Performance Goal during such period,
the Committee may revise such objective.


Section
4.4                                   Termination.  If a Participant terminates Service with the
Corporation or any of its Affiliates during a Performance Period because of
death or becoming a Disabled Participant, as determined by the Committee, that
Participant will be entitled to payment in settlement of each Performance Unit for
which the Performance Period was prescribed (i) based upon the Performance
Goals satisfied at the end of such period; and (ii) prorated for the portion of
the Performance Period during which the Participant was in Service with the
Corporation or any of its Affiliates; provided, however, the Committee may
provide for an earlier payment in settlement of such Performance Unit in such
amount or amounts and under such terms and conditions as the Committee deems
appropriate or desirable with the consent of the Participant.  If a Participant terminates Service with the
Corporation or any of its Affiliates during a Performance Period for any other
reason, the Participant will not be entitled to any payment with respect to that
Performance Period unless the Committee will otherwise determine.


Section
4.5                                   Award.  Each Performance Unit will be paid in cash either as a
lump sum payment or in annual installments, as the Committee will determine at
the time of grant of the Performance Unit or otherwise, commencing as soon as
practicable after the end of the relevant Performance Period.


Section
4.6                                   Section 409A. 
If required, Performance Units granted under this Article 4 will be
subject to and conform to the requirements of Code Section 409A.


ARTICLE 5


RESTRICTED STOCK AND RESTRICTED STOCK
UNITS


Section
5.1                                   Award.  Subject to the terms and provisions of the Plan, the
Committee may grant, at any time and from time to time, Restricted Stock or
Restricted Stock Units to any Eligible Individual in the number and form, and
subject to such restrictions on transferability and other restrictions as the
Committee may determine in its discretion, including without limitation the
achievement of Performance Goals. 
Restricted Stock also may be received by a Participant as the result of
an exercise of an Option, when such award has not vested.  Restricted Stock and RSUs will be subject to
a restriction period (after which restrictions will lapse), which means a
period commencing on the Award Date and ending on such date or upon the achievement
of such Performance Goals or other criteria as the Committee will determine
(the “Restriction Period”).  The
Committee may provide for the lapse of restrictions in installments where it
deems appropriate.


Section
5.2                                   Restriction Period.  Except as otherwise provided in this Article 5, no
shares of Restricted Stock received by a Participant will be sold, exchanged,
transferred, pledged, hypothecated, or otherwise disposed of during the
Restriction Period.  Except as otherwise
provided in the Award Agreement, the Restriction Period for any recipient of
Restricted Stock or RSUs will expire and all restrictions on shares of
Restricted Stock will lapse upon a Participant’s Death or becoming a Disabled
Participant.


 


14
















 


Section
5.3                                   Termination.  Except as otherwise provided in Section 5.2 above, if
a Participant’s Termination occurs before the expiration of the Restriction
Period, all shares of Restricted Stock still subject to restriction, will be
forfeited by the recipient, unless the Committee otherwise determines, and will
be reacquired by the Corporation.  In the
case of Restricted Stock purchased through the exercise of an Option, the
Corporation will refund the Exercise Price paid on the exercise of the
Option.  Such forfeited shares of
Restricted Stock will again become available for award under the Plan.


Section
5.4                                   Exchange of Shares.  Nothing in this Article 5 will preclude a recipient of
Restricted Stock from exchanging any shares of Restricted Stock subject to the
restrictions contained herein for any other shares of Stock that are similarly
restricted.


Section
5.5                                   Dividend Equivalents. 
Any Award of Restricted Stock under the Plan may earn, in the discretion
of the Committee and if the shares are unissued, Dividend Equivalents.  In respect of any such Award that is
outstanding on a dividend record date for Stock, the Participant may be
credited with an amount equal to the cash or stock dividends or other
distributions that would have been paid on the shares of Stock covered by such
Award had such covered shares been issued and outstanding on such dividend
record date.  The Committee will
establish such rules and procedures governing the crediting of Dividend
Equivalents, including the timing, form of payment and payment contingencies of
such Dividend Equivalents, as it deems are appropriate or necessary.


Section
5.6                                   Deferral of Restricted
Stock.  If the applicable Award Agreement so
provides, a Participant may elect, in accordance with such procedures as the
Committee may specify from time to time, to defer the delivery of such
Restricted Stock and, if the deferral election so specifies, of the Dividend
Equivalents with respect thereto, until the date or dates specified in such
election.  Any deferral under this Section
must comply with the provisions of Code Section 409A.  Deferred Restricted Stock will not be issued
until the date or dates that it is to be delivered to the Participant in
accordance with his or her deferral election, at which time certificates evidencing
Stock will be delivered to the Participant (unless such Deferred Restricted
Stock has previously been forfeited pursuant to Section 5.3).  From the Award Date of Deferred Restricted
Stock through the earlier of (i) the date such Deferred Restricted Stock is
forfeited, and (ii) the date certificates evidencing such Deferred Restricted
Stock are delivered to the Participant, the Participant will be entitled to
receive Dividend Equivalents with respect thereto, but will have none of the
rights of a stockholder with respect to such shares; provided, that if the
deferral election made with respect to such Deferred Restricted Stock specifies
that the Dividend Equivalents will be deferred, the Dividend Equivalents will
not be paid until the date or dates specified in such deferral election.


ARTICLE 6


STOCK APPRECIATION RIGHTS


Section 6.1                                   Grant of Stock
Appreciation Rights. 
The
Committee will have the authority, in its discretion, to grant Stock
Appreciation Rights to Participants at any time and from time to time.  Within the limits of Article 2 and this
Article 6, the Committee will have sole discretion to determine the number of
SARs granted to each Participant and, consistent with the provisions of the
Plan, to determine the terms and conditions pertaining to SARs.  The Committee may grant 


 


15

















 


Freestanding SARs, Tandem SARs or any combination of
the two, as specified in the Award Agreement. 
Stock Appreciation Rights granted in conjunction with a Non-Qualified
Stock Option may be granted either at the time such Non-Qualified Stock Option
is granted or at any time thereafter during the term of such Non-Qualified
Stock Option.  Stock Appreciation Rights
granted in conjunction with an Incentive Stock Option may only be granted at
the time such Incentive Stock Option is granted.


The Exercise Price of a Freestanding SAR will equal
the Fair Market Value of a share of Stock on the Award Date of the SAR.  If a Tandem SAR is granted after the grant of
the related Option, or if an Option is granted after the grant of the Tandem
SAR, the later granted Award will have the same Exercise Price as the earlier
granted Award, but the Exercise Price for the later granted Award may be less
than the Fair Market Value of the Stock at the time of such grant.  SARs may be subject to Code Section 409A.


Section 6.2                                   Exercise of Tandem SARs. 
Tandem SARs may be exercised for all or part of the shares subject to
the related Option, upon the surrender of the right to exercise the equivalent
portion of the related Option.  A Tandem
SAR may be exercised only with respect to the shares for which its related
Option is then exercisable.


Section 6.3                                   Exercise of Freestanding
SARs.  Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes,
and sets forth in the Award Agreement.


Section 6.4                                   Term of SARs. 
The Committee will determine the term of an SAR, in its sole discretion,
which it will set forth in the Award Agreement. 
The term of an SAR may not exceed ten years.


Section 6.5                                   Payment of SAR Amount. 
Upon exercise of an SAR, a Participant will be entitled to receive
payment from the Corporation in an amount determined by multiplying:


(a)                                  the excess (or some portion of the excess
as determined at the time of the grant by the Committee) if any, of the Fair
Market Value of a share on the date of exercise of the SAR over the Exercise
Price specified in the Award Agreement; by


(b)                                 the number of shares of Stock as to which
the SAR is exercised.


The Committee will set forth in the Award Agreement
whether the payment upon SAR exercise will be made in cash, in shares of Stock
of equivalent Fair Market Value or in some combination of the two.


ARTICLE 7


CERTIFICATES FOR AWARDS OF STOCK


Section
7.1                                   Stock Certificates.  Except as otherwise provided in this Section 7.1, each
Participant entitled to receive shares of Stock under the Plan will be issued a
certificate for such shares.  Such
certificate will be registered in the name of the Participant and will bear an
appropriate legend reciting the terms, conditions and restrictions, if any,
applicable to the Stock and will be subject to appropriate stop-transfer
orders.  To the extent that the Plan
provides for issuance of stock certificates to reflect the issuance of shares
of Stock, the issuance may be 


 


16

















 


effected on a
non-certificated basis, to the extent not prohibited by applicable law or the
applicable rules of any stock exchange. 
If the issuance of shares under the Plan is effected on a
non-certificated basis, the issuance of shares to a Participant will be
reflected by crediting (by means of a book entry) the applicable number of
shares of Stock to an account maintained by the Corporation in the name of such
Participant, which account may be an account maintained by the Corporation for
such Participant under any dividend reinvestment program offered by the
Corporation.  The Committee may require,
under such terms and conditions as it deems appropriate or desirable, that the
certificates for Restricted Stock delivered under the Plan be held in custody
by a bank or other institution, or that the Corporation may itself hold such
shares in custody until the Restriction Period expires or until restrictions
thereon otherwise lapse, and may require, as a condition of any receipt of
Restricted Stock, that the recipient will have delivered a stock power endorsed
in blank relating to the Restricted Stock. 
Certificates for shares of unrestricted Stock may be delivered to the
Participant after, and only after, the Restricted Period will have expired
without forfeiture in respect of such shares of Restricted Stock.


Section
7.2                                   Compliance With Laws and
Regulations.  The Corporation will not be required to
issue or deliver any certificates for shares of Stock, or to effect the
issuance of any non-certificated shares as provided in Section 7.1, prior to
(a) the listing of such shares on any stock exchange or quotation system on
which the Stock may then be listed; and (b) the completion of any registration
or qualification of such shares under any Federal or state law, or any ruling
or regulation of any government body which the Corporation will, in its sole
discretion, determine to be necessary or advisable.


Section 7.3                                   Restrictions. 
All certificates for shares of Stock delivered under the Plan (and all
non-certificated shares credited to a Participant’s account as provided in
Section 7.1) also will be subject to such stop-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, any stock
exchange or quotation system upon which the Stock is then listed and any
applicable Federal or state securities laws; and the Committee may cause a
legend or legends to be placed on any such certificates to make appropriate
reference to such restrictions.  The
foregoing provisions of this Section 7.3 will not be effective if and to the
extent that the shares of Stock delivered under the Plan are covered by an
effective and current registration statement under the Securities Act of 1933,
or if and so long as the Committee determines that application of such
provisions is no longer required or desirable. 
In making such determination, the Committee may rely upon an opinion of
counsel for the Corporation.


Section
7.4                                   Rights of Stockholders.  Except for the restrictions on Restricted Stock under
Article 5, each Participant who receives an award of Stock will have all of the
rights of a stockholder with respect to such shares, including the right to
vote the shares and receive dividends and other distributions.  No Participant awarded an Option, a Stock
Appreciation Right, a Performance Unit or an RSU will have any right as a stockholder
with respect to any shares subject to such Award prior to the date of issuance
to him or her of a certificate or certificates for such shares, or if
applicable, the crediting of non-certificated shares to an account maintained
by the Corporation in the name of such Participant.


 


17

















 


ARTICLE 8


NORMAL OR EARLY RETIREMENT


At the time of any
Awards, the Committee, in its sole discretion, may add such provisions,
including, but not limited to, provisions for fully or partial vesting and
lapse of restrictions, to Participants’ Awards relating to an Employee’s normal
or early retirement, which the Committee shall define.


ARTICLE 9


CHANGE IN CONTROL


The Committee will have
the discretion to provide in applicable Award Agreements that, in the event of
a Change in Control or Significant Event, the following provisions will apply:


(a)                                  Each outstanding Option will immediately
become vested and exercisable in full;


(b)                                 The restrictions on each share of
Restricted Stock, RSU, or Performance Unit will lapse; and


(c)                                  Each outstanding SAR will immediately
become vested and exercisable in full;


provided that, full
vesting of all outstanding Awards will occur upon consummation of a Change in
Control unless the Corporation is the surviving entity and any adjustments
reasonably necessary to preserve the value of the Participant’s outstanding
Awards have been made, or the Corporation’s successor at the time of the Change
in Control irrevocably assumes the Corporation’s obligations under this Plan or
replaces each Participant’s outstanding Award with an award of equal or greater
value and having terms and conditions no less favorable to the Participant than
those applicable to the Participant’s Award immediately prior to the Change in
Control.


In the event of a Change
in Control or Significant Event, the Committee will have the discretion to
provide for (a) the termination of any or all outstanding Options and SARs as
of the effective date of such Change in Control or Significant Event and/or (b)
the settlement and termination of any or all outstanding Options and SARs for
consideration equal to the consideration paid to holders of Stock (in their
capacity as such) in such Change in Control or Significant Event over the
Exercise Price for such Option or SAR being settled and terminated (and, if the
Exercise Price exceeds such price per share, at no consideration); provided,
that, no Option or SAR will be terminated (without the consent of the
Participant) pursuant to clause (a) foregoing prior to the expiration of the
later of (x) twenty (20) days following the date on which the Participant
received written notice of the Change in Control or Significant Event and (y)
the date of consummation of such Change in Control or Significant Event.


ARTICLE 10


MISCELLANEOUS


Section
10.1                            Effect of the Plan on
the Rights of Employees and Employer.  Neither the
adoption of the Plan nor any action of the Board or the Committee pursuant to
the Plan will be deemed to give any Eligible Individual any right to be granted
an Award under the Plan and 


 


18

















 


nothing in the Plan, in
any Award granted under the Plan or in any Award Agreement will confer any
right to any Participant to continue in the employment of the Corporation or
any Affiliate or to continue to be retained to provide Services to the
Corporation or any Affiliate as a Director, or Consultant or interfere in any
way with the rights of the Corporation or any Affiliate to terminate a
Participant’s Service at any time.


Section
10.2                            Amendment.  The Board specifically reserves the right to alter and
amend the Plan at any time and from time to time and the right to revoke or
terminate the Plan or to suspend the granting of Awards pursuant to the Plan;
provided always that no such revocation, termination, alteration or suspension
of any Award will terminate any outstanding Award theretofore granted under the
Plan, unless there is a liquidation or a dissolution of the Corporation; and
provided further that no such alteration or amendment of the Plan will, without
prior stockholder approval (i) increase the total number of shares which may be
issued or delivered under the Plan; (ii) make any changes in the class of
Eligible Individuals; (iii) extend the period set forth in the Plan during
which Awards may be granted; or (iv) make any changes that require stockholder
approval under the rules and regulations of any securities exchange or market
on which the Stock is traded.  No
alteration, amendment, revocation, or termination of the Plan or suspension of
any Award will adversely affect, without the written consent of the holder of
an Award theretofore granted under the Plan, the rights of such holder with
respect to such Award.  The Committee may
not amend any Award to extend the exercise period beyond a date that is later
than the earlier of the latest date upon which the Award could have expired by
its original terms under any circumstances or the tenth anniversary of the
original date of grant of the Award, or otherwise cause the Award to become
subject to Code Section 409A.  However,
if the exercise period of an Option is extended at a time when the Exercise
Price of the Option equals or exceeds the Fair Market Value of the Stock that
could be purchased (in the case of an Option) or the Fair Market Value of the
Stock used to determine the payment to the Participant (in the case of a Stock
Appreciation Right), it is not an extension of the original Award.


Section
10.3                            Effective Date and
Duration of Plan.  The Plan will be effective as of
September 18, 2007 (the “Effective Date”), the date of its adoption by the
Board, provided that the stockholders of the Corporation thereafter approve it
at a duly held stockholders’ meeting.  If
the Plan is not so approved by stockholders, the Plan (and any Award granted
under the Plan) will be null, void and of no force or effect.  If so approved, the Plan will remain in
effect until the earliest of the date (i) all shares authorized to be issued or
transferred hereunder have been issued or transferred (ii) the Plan is
terminated by the Board of Directors, or (iii) the tenth anniversary of the
Effective Date, and will continue in effect thereafter with respect to any
Awards outstanding at the time of such termination.  In no event will an Incentive Stock Option be
granted under the Plan more than ten (10) years from the date the Plan is
adopted by the Board, or the date the Plan is approved by the Corporation’s
stockholders, whichever is earlier, unless within such ten year period stockholders
approve an increase in the number of shares available for grants under the
Plan, in which case more than ten (10) years from the last date on which the
stockholders so approve any such increase.


Section
10.4                            Unfunded Status of Plan.  The Plan will be unfunded.  The Corporation will not be required to
establish any special or separate fund nor to make any other segregation of
assets to assume the payment of any benefits under the Plan.  With respect to any payments not yet made to
a Participant pursuant to an Award, nothing contained in the Plan or any Award
will 


 


19

















 


give any such Participant
any rights that are greater than those of a general unsecured creditor of the
Corporation; provided, however, that the Committee may authorize the creation
of trusts or make other arrangements to meet the Corporation’s obligations
under the Plan to deliver cash, shares or other property pursuant to any Award,
which trusts or other arrangements will be consistent with the “unfunded”
status of the Plan unless the Committee otherwise determines. Any provision of
this Plan that becomes subject to Code Section 409A, will be interpreted and
applied consistent with that Section.


Section
10.5                            Employee Status. 
For purposes of determining questions of Termination and exercise of an
Option or Stock Appreciation Right after a Participant’s Termination, a leave
of absence for military service, illness, short-term disability or other
reasons approved by a duly authorized officer of the Corporation will not be
treated as Termination or interruption of Service; provided, however, that,
with respect to an Incentive Stock Option, if such leave of absence exceeds
ninety (90) days, such Option will be deemed a Non-Qualified Stock Option
unless the Eligible Individual’s right to reemployment with the Corporation or
a Affiliate following such leave of absence is guaranteed by statute or by
contract.


Notwithstanding anything
in the Plan to the contrary, the Committee, in its sole discretion, reserves
the right to designate a Participant’s leave of absence longer than ninety (90)
consecutive days, other than for illness or short-term disability, as “Personal
Leave,” provided that military leaves and approved family or medical leaves
will not be considered Personal Leave.  A
Participant’s unvested Awards will remain unvested during a Personal Leave and
the time spent on a Personal Leave will not count towards the vesting of such
Awards.  A Participant’s vested Options
or SARs that may be exercised will remain exercisable upon commencement of
Personal Leave until the earlier of (i) a period of one year from the date of
commencement of such Personal Leave; or (ii) the remaining exercise period of
such Options.


Section
10.6                            Tax Withholding.  Whenever the Corporation proposes or is required to
distribute Stock under the Plan, the Corporation may require the recipient to
remit to the Corporation an amount sufficient to satisfy any Federal, state and
local tax withholding requirements prior to the delivery of any certificate for
such shares or, in the discretion of the Committee, the Corporation may
withhold from the shares to be delivered the minimum number of shares
sufficient to satisfy all or a portion of such tax withholding requirements.  Whenever under the Plan payments are to be
made in cash, such payments may be net of an amount sufficient to satisfy any
Federal, state and local tax withholding requirements.


Any Award may provide
that the Participant may elect, in accordance with any conditions set forth in
such Award, to pay any withholding taxes in shares of Stock; provided that, the
Participant, by accepting the Award will be deemed to instruct and authorize
the Corporation or its delegatee for such purpose to sell on his or her behalf a
whole number of shares of Stock from those shares of Stock issuable to the
Participant in payment of vested shares of Restricted Stock or units as the
Corporation or its delegatee determines to be appropriate to generate cash
proceeds sufficient to satisfy the minimum tax withholding obligation.  This direction and authorization is intended
to comply with the requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange
Act, and to be interpreted to comply with the requirements of Rule
10b5-1(c).  Such shares will be sold on
the day the Restricted Stock or units become vested, which is the date the
tax-withholding obligation arises, or as soon thereafter as practicable.  The Participant will be responsible for all
brokerage fees and other costs of sale, and the Participant will agree to 


 


20

















 


indemnify and hold the
Corporation harmless from any losses, costs, damages, or expenses relating to
any such sale.  To the extent the
proceeds of such sale exceed the Participant’s minimum tax withholding
obligation (e.g., because of the
need to sell whole shares), the Corporation or its delegatee will pay such
excess in cash to the Participant through payroll as soon as practicable.  The Corporation is under no obligation to arrange
for such sale at any particular price. 
The Participant agrees to pay to the Corporation as soon as practicable,
including through additional payroll withholding, any amount of the tax
withholding obligation that is not satisfied by the sale of shares described
above.


Section
10.7                            Benefits. 
Amounts received under the Plan are not to be taken into account for
purposes of computing benefits under other plans.


Section
10.8                            Successors and Assigns.  The terms of the Plan will be binding upon the Corporation
and its successors and assigns.


Section
10.9                            Headings.  Captions preceding the sections hereof are inserted
solely as a matter of convenience and in no way define or limit the scope or
intent of any provision hereof.


Section
10.10                     Federal and State Laws,
Rules and Regulations. 
The Plan
and the grant of Awards will be subject to all applicable federal and state
laws, rules, and regulations and to such approval by any government or
regulatory agency as may be required.


Section
10.11                     Governing Law. 
To the extent not preempted by federal law, this Plan, any Award
Agreement, and documents evidencing Awards or rights relating to Awards will be
construed, administered and governed in all respects under and by the laws of
the State of Illinois, without giving effect to its conflict of laws
principles.  If any provision of this
Plan will be held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions hereof will continue to be fully effective.  The jurisdiction and venue for any disputes
arising under, or any action brought to enforce (or otherwise relating to),
this Plan will be exclusively in the courts in the State of Illinois, County of
Cook, including the Federal Courts located therein (should Federal jurisdiction
exist).


Section
10.12                     Beneficiary Designation. 
Each Participant may name, from time to time, any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case the Participant should die or
become a Disabled Participant before receiving any or all of his or her Plan
benefits.  Each beneficiary designation
will revoke all prior designations by the same Participant, must be in a form
prescribed by the Committee, and must be made during the Participant’s
lifetime.  If the Participant’s
designated beneficiary predeceases the Participant or no beneficiary has been
designated, benefits remaining unpaid at the Participant’s death will be paid
to the Participant’s estate or other entity described in the Participant’s
Award Agreement.


Section
10.13                     Restrictive Covenants. 
An Award Agreement may provide that, notwithstanding any other provision
of this Plan to the contrary, if the Participant breaches the non-compete,
non-solicitation, non-disclosure or other restrictive covenants of the Award
Agreement, whether during or after Termination, in addition to any other
penalties or restrictions that may apply under any employment agreement, state
law, or otherwise, the Participant will forfeit:


 


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(a)                                  any and all Awards granted to him or her
under the Plan, including Awards that have become vested and exercisable;
and/or


(b)                                 the profit the Participant has realized
on the exercise of any Options, which is the difference between the Options’
Exercise Price and the Fair Market Value of any Option the Participant
exercised after terminating Service and within the six month period immediately
preceding the Participant’s termination of Service (the Participant may be
required to repay such difference to the Corporation).


Section
10.14                     Indemnification. 
Each person who is or has been a member of the Committee or the Board,
and any individual or individuals to whom the Committee has delegated authority
under Article 2 of the Plan, will be indemnified and held harmless by the
Corporation and its Affiliates from and against any loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by him or her in
connection with or as a result of any claim, action, suit or proceeding to
which he or she may be a party or in which he or she may be involved by reason
of any action taken, or failure to act, under the Plan to the extent permitted
by State law.  Each such person will also
be indemnified and held harmless by the Corporation and its Affiliates from and
against any and all amounts paid by him or her in a settlement approved by the
Corporation, or paid by him or her in satisfaction of any judgment, of or in a
claim, action, suit or proceeding against him or her and described in the
previous sentence, so long as he or she gives the Corporation an opportunity,
at its own expense, to handle and defend the claim, action, suit or proceeding
before he or she undertakes to handle and defend it.  The foregoing right of indemnification will
not be exclusive of any other rights of indemnification to which a person who
is or has been a member of the Committee or the Board may be entitled under the
Corporation’s Articles of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Corporation may have to indemnify him or her
or hold him or her harmless.


Section
10.15                     Notice. 
Any notice or other communication required or permitted under the Plan
must be in writing and must be delivered personally, sent by certified,
registered, or express mail, or sent by overnight courier, at the sender’s
expense.  Notice will be deemed given (i)
when delivered personally or, (ii) if mailed, three days after the date of
deposit in the United States mail or, (iii) if sent by overnight courier, on
the regular business day following the date sent.  Notice to the Participant should be sent to
the address set forth on the Corporation’s records.  Either party may change the address to which
the other party must give notice under this Section by giving the other party
written notice of such change, in accordance with the procedures described
above.


Section
10.16                     Awards Not Transferable. 
Except as otherwise provided by the Committee, Awards under the Plan are
not transferable other than to a beneficiary designated by the Participant in
the event of a Participant’s death, or by will or the laws of descent and
distribution.  An Award Agreement for a
grant of Non-Qualified Stock Options may permit or may be amended to permit the
Participant who received the Option, at any time prior to the Participant’s
death, to assign all or any portion of the Option granted to him or her to (a)
the Participant’s spouse or lineal descendants; (b) the trustee of a trust for
the primary benefit of the Participant, the Participant’s spouse or lineal
descendants, or any combination thereof; (c) a partnership of which the
Participant, the Participant’s spouse and/or lineal descendants are the only
partners; (d) custodianships for lineal descendants under the Uniform Transfers
to Minors Act or any other similar statute; or (e) upon the termination of a
trust by the custodian or trustee thereof, or the 


 


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dissolution or other
termination of the family partnership or the termination of a custodianship
under the Uniform Transfers to Minors Act or other similar statute, to the
person or persons who, in accordance with the terms of such trust, partnership
or custodianship are entitled to receive Options held in trust, partnership or
custody.  In such event, the spouse,
lineal descendant, trustee, partnership or custodianship will be entitled to
all of the Participant’s rights with respect to the assigned portion of such
Option, and such portion of the Option will continue to be subject to all of
the terms, conditions and restrictions applicable to the Option, as set forth
herein and in the related option agreement. 
Any such assignment will be permitted only if: (x) the Participant does
not receive any consideration therefor; and (y) the applicable Award Agreement
expressly permits the assignment.  The
Committee’s approval of an Award Agreement with assignment rights will not
require the Committee to include such assignment rights in an Award Agreement
with any other Participant.  Any such
assignment will be evidenced by an appropriate written document executed by the
Participant, and the Participant will deliver a copy thereof to the Committee
on or prior to the effective date of the assignment.  An assignee or transferee of an Option must
sign an agreement with the Corporation to be bound by the terms of the
applicable Award Agreement.


Except as otherwise
provided in a Participant’s Award Agreement, no Option, SAR, RSU, Restricted
Stock or Performance Unit granted under the Plan may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution, or pursuant to a domestic relations
order (as defined in Code Section 414(p)). 
The Committee may require, in its discretion, a Participant’s guardian
or legal representative to supply it with the evidence the Committee deems
necessary to establish the authority of the guardian or legal representative to
act on behalf of the Participant.


Section
10.17                     Awards to Foreign
Nationals and Employees Outside the United States. 
To the extent the Committee deems it necessary, appropriate or desirable
to comply with foreign law or practice and to further the purposes of this
Plan, the Committee may, without amending the Plan, (i) establish rules
applicable to Awards granted to Participants who are foreign nationals, are
employed outside the United States, or both, including rules that differ from
those set forth in this Plan, and (ii) grant Awards to such Participants in
accordance with those rules.


Section
10.18                     Compliance With Code
Section 409A.  Notwithstanding any provision of this Plan to
the contrary, all Awards made under this Plan are intended to be exempt from
or, in the alternative, comply with Code Section 409A and the interpretive
guidance thereunder, including the exceptions for stock rights and short-term
deferrals.  The Plan will be construed
and interpreted in accordance with such intent.


 


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