**Exhibit 10.1**

 

MEDICOR LTD.

 

NON-EMPLOYEEDIRECTORS’ DEFERRAL PLAN

 

MediCor Ltd., a corporation organized under the laws of the State ofDelaware, maintains the MediCor Ltd. Amended and Restated 1999 StockCompensation Program (the “Program”). Among the forms of compensation contemplated by the Program are awardsto Non-Employee Directors.  The Companywishes to align further the interests of Non-Employee Directors andstockholders and generally increase the effectiveness of its compensationstructure for Non-Employee Directors, by implementing the Non-EmployeeDirectors’ Deferral Plan (the “Plan”). In furtherance thereof, and in connection with the authority to makegrants under the Program, the Plan is adopted to implement certain such grants,and to govern the manner in which the Shares underlying such grants shall bedelivered, as set forth herein.  Inaddition, the Plan provides for other deferrals of certain directors’ fees inaccordance with the terms hereof.

 

1.             Definitions.

 

Capitalized terms used herein without definitions shall have themeanings given to those terms in the Program. In addition, whenever used herein, the following terms shall have themeanings set forth below except as the context requires otherwise:

 

“Account” means a deferred compensation account established for aParticipant in accordance with Section 5.2(c).

 

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

 

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

 

“Common Stock Equivalent” means a unit representing a right of aParticipant to payment of a Share, or if applicable, the Fair Market Value of aShare.

 

“Company” means MediCor Ltd., a corporation organized under the laws ofthe State of Delaware.

 

“CSE Agreement” means a written agreement in a form approved by theBoard, to be entered into by the Company and the Participant as provided inSection 6.

 

“CSE Value,” per Common Stock Equivalent as of a particular date, meansthe Fair Market Value of a Share as of such date.

 

“Disability” has the same meaning as in Section 409A(a)(2)(C) of theCode or as otherwise determined by the Board.

 

“Non-Employee Director” means a non-employee director of the Company.

 

“Participant” means a Non-Employee Director of the Company who iscredited with one or more Common Stock Equivalents or who has deferred receiptof fees hereunder as permitted by the Board.

 

“Plan” means the Company’s Non-Employee Directors’ Deferral Plan, asset forth herein and as the same may from time to time be amended.

 

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“Program” means the MediCor Ltd. Amended and Restated 1999 StockCompensation Program.

 

“Regular Distribution Date” means the date determined under Section 8.

 

“Reorganization” shall have the same meaning as in Part I Section 7 ofthe Program; provided, however, that no event or condition shall constitute aReorganization to the extent that, if it were, a 20% tax would be imposed underSection 409A of the Code; provided that, in such a case, the event or conditionshall continue to constitute a Reorganization to the maximum extent possible(e.g., if applicable, in respect of vesting without an acceleration ofdistribution) without causing the imposition of such 20% tax.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Shares” means shares of Common Stock.

 

“Valuation Date” means the last day of each calendar month and suchadditional dates as the Board may designate.

 

2.             Grants Under theProgram.

 

The grants of Common Stock Equivalents and Dividend Equivalent Rightsshall constitute grants under and governed by the Program.  Thus, the Common Stock Equivalents shall besubject to the provisions of the Program governing grants to Non-EmployeeDirectors; provided that the Program Administrators shall not be designated toact hereunder, and all functions of the Program Administrators shall befulfilled by the Board.  Cash paymentsunder the Plan not relating to Common Stock Equivalents or Dividend EquivalentRights shall also be governed by the same rules as are established under the Programas to interpretation, beneficiary designation, exculpation (andindemnification) and all other matters of administration.

 

3.             Effective Date ofPlan; Termination of the Plan.

 

The effective date of the Plan is March 31, 2006.  The Plan shall terminate on, and no CommonStock Equivalents shall be granted or other deferrals made hereunder on orafter, the 10-year anniversary of the effective date of the Plan (and, in thecase of Common Stock Equivalents and Dividend Equivalent Rights, the date oftermination or expiration of the Program, if earlier).

 

4.             Eligibility.

 

Except as otherwise determined by the Board, each individual who is aNon-Employee Director shall be eligible to participate in the Plan.

 

5.             Cash Fees.

 

5.1           Types of Fees.

 

In consideration of each Non-Employee Director’s service as a member ofthe Board, each Non-Employee Director may be eligible to receive ascompensation (i) an annual retainer fee; (ii) a fee per Board meeting attended;and (iii) a fee per committee meeting attended (together with the annualretainer and Board meeting fees, collectively referred to as “Cash Fees”).  These amounts are subject to deferral underthe Plan, as set forth herein.

 

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5.2           Election to Defer Cash Fees.

 

(a)   The Participant may elect thatup to 100% (in increments of 1%) of the Participant’s Cash Fees shall bepayable as compensation deferred under the Plan.  With respect to a Participant’s election todefer all or a portion of the Cash Fees for a calendar year, such electionshall be made prior to December 31st of the year preceding the calendar yearwith respect to which the applicable services are performed, except that in thecase of a new Participant, the Participant may make an election within 30 daysafter such Participant first becomes eligible to participate in accordance withSection 4, with respect to Cash Fees otherwise payable in the annual period ofthe election, for services performed after the effective date of such election.

 

(b)   The election described inSection 5.2(a) shall be made in writing substantially in such form as theBoard may prescribe from time to time, within the times specified herein.  With respect to a Participant’s election todefer all or a portion of the Cash Fees, such election shall, except asotherwise permitted by the Board (taking into account, without limitation, theapplication of Section 409A of the Code, asthe Board may deem appropriate), be irrevocable as of the first day ofthe applicable annual period.  Except asmay be permitted by the Board, elections described in Section 5.2(a) shallcontinue in effect from year to year unless revoked prior to the beginning ofthe applicable year.  All deferrals underthis Section 5.2 shall be fully vested.

 

(c)   A Participant may elect, priorto earning a Cash Fee, to defer such a Cash Fee in the form of fixed-returncredits.  Upon such an election, theamount of the deferred fee shall not be paid currently but rather shall becredited to the Participant’s Account. Such credits shall be made when Cash Fees would otherwise have been paidto the Participant but for an election pursuant to Section 5.2(a).  A separate sub-account under each Participant’sAccount may in the discretion of the Board be established to record each year’sdeferrals, and the credits and deductions with respect thereto.  With respect to credits under this Section5.2(c), earnings and losses shall accrue on the balance in the applicableParticipant’s Account at the rate or rates specified in advance of theeffective time of the applicability of such rate or rates, and from time totime, by the Board.  As determined by theBoard, such rate or rates may be a fixed rate, and may be established byreference to an index or indices, or may be a return on one or more specificinvestments or on a specific investment fund or funds (including, if and to theextent so provided by the Board, hypothetical investments selected by theParticipant in accordance with procedures established by the Board).  Earnings and losses shall be credited toParticipants’ Accounts as of the end of each calendar month and, with respectto any particular Participant’s Account, shall continue to be credited theretountil all amounts are distributed with respect to the Participant’s Account inaccordance with the Plan.  Upondistribution, any accrued earnings shall be credited to the Participant’sAccount and distributed therewith, and any accrued losses shall reduce theamount of distributions hereunder.

 

(d)   The Board may permit a Participantto elect, two times per each 12-month period, to convert as of the end of thecalendar month of the election, Common Stock Equivalents to Account credits,and vice-versa, in whole or in part (but, in the case of Common StockEquivalents, only in whole Common Stock Equivalents) with credits andliquidation of Common Stock Equivalents to be effected based on the CSE Valueas of the end of such month, and credits and liquidation of Accounts to beeffected based on Account values as of the end of such month.

 

(e)   The establishment andmaintenance of, and credits to and deductions from, the Participant’s Accountshall be mere bookkeeping entries, and shall not vest in the Participant or hisbeneficiary any right, title or interest in or to any specific assets of theCompany.  A separate subaccount undereach Participant’s Account shall be established to record each year’sdeferrals, and the credits and deductions with respect thereto.

 

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6.             Equity Awards.

 

6.1           Awards of Common Stock Equivalents.

 

(a)   Effective as of each annualmeeting of stockholders of the Company at which directors are elected occurringafter 2005, each Non-Employee Director shall receive an annual award of 20,000 CommonStock Equivalents.

 

(b)   With respect to the 2005 annualmeeting, each Non-Employee Director shall be credited with an award of 20,000 CommonStock Equivalents.

 

6.2           Vesting.

 

Unless otherwise provided by the Board in the applicable CSE Agreement,and subject to the following provisions of this Section 6.2, Common StockEquivalents credited to a Participant under Section 6.1 will vest on the dateof the next following annual meeting after the date of grant, except that theCommon Stock Equivalents awarded under Section 6.1(b) shall vest six monthsafter the date of the 2005 annual meeting. Common Stock Equivalents credited pursuant to Section 6.1(a) shall besubject to the following vesting conditions:

 

(i)            If a Non-EmployeeDirector does not stand for re-election at an annual meeting at the request ofthe Company (other than a request made following a breach by the Non-EmployeeDirector of the Company’s Code of Business Conduct and Financial Ethics), thevesting of all of the Common Stock Equivalents held by the Non-Employee Directorwill be accelerated to the date of the annual meeting at which the Non-EmployeeDirector does not stand for reelection.

 

(ii)           If a Non-EmployeeDirector resigns of his or her own accord or otherwise ceases to serve as aNon-Employee Director before the end of a vesting period, then, except asotherwise provided herein or in the applicable CSE Agreement, the Non-EmployeeDirector will retain Common Stock Equivalents that have vested through the dateof resignation and will therewith forfeit all Common Stock Equivalents thathave not then vested.

 

(iii)          Notwithstanding anyother provision of the Plan, if the Company determines that a Non-EmployeeDirector has breached the Company’s Code of Business Conduct and FinancialEthics, the Non-Employee Director will forfeit all Common Stock Equivalentsthat have not then vested.

 

(iv)          The vesting of CommonStock Equivalents will be accelerated if a Non-Employee Director ceases toserve as a Non-Employee Director by reason of death or Disability or upon aReorganization.

 

7.             DividendEquivalent Rights.

 

(a)   Except as may otherwise beprovided by the Board at or before the time the applicable Common StockEquivalent is credited, Non-Employee Directors will receive a DividendEquivalent Right in respect of any credited Common Stock Equivalents (whetherfrom deferred Cash Fees or equity awards), which right consists of the right toreceive a cash payment in an amount equal to the dividend distributions paid ona Share from time to time.  Except asprovided in Section 7(b), or as may otherwise be provided by the Board (taking into account the rules applicable underSection 409A of the Code) at or before the time the applicable CommonStock Equivalent is paid, payment in respect of a Dividend Equivalent Rightshall be made at the same time as dividends are paid on the Common Stock.

 

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(b)   Instead of the form of paymentas contemplated by Section 7(a) above, except as may otherwise may be providedby the Board (taking into account the rulesapplicable under Section 409A of the Code), Participants may elect, inaccordance with the deferral election timing rules set forth in Section 5.2(a),to have Common Stock Equivalents credited in respect of the Dividend EquivalentRights referred to in Section 7(a). Unless otherwise determined by the Board, the number of Common StockEquivalents to be credited with respect to a Dividend Equivalent Right shall beequal to (i) the amount of the payment in respect of the DividendEquivalent Right otherwise to be made divided by (ii) the Fair MarketValue of a Share on the date the corresponding dividend distribution is made tostockholders of the Company, provided that such Common Stock Equivalent shallvest at such time as the underlying Common Stock Equivalent vests (and shall beforfeited if the underlying Common Stock Equivalent is forfeited).

 

8.             Settlement andWithdrawal.

 

(a)   Distributions with respect to(i) vested Common Stock Equivalents will be settled by the transfer of CommonStock to the Participant, or, in the discretion of the Board, solely in cash orin a combination of cash and Common Stock, with an aggregate amount of any cashand the Fair Market Value of any such Common Stock to equal the aggregate CSEValue of such Common Stock Equivalents on the date of such distribution; and(ii) cash deferrals from a Participant’s Account will be settled by a cashpayment to the Participant, or, in the discretion of the Board, solely inCommon Stock or in a combination of Common Stock and cash, in an amount equalto the value of the Participant’s Account as of the Valuation Date coincidentwith or immediately prior to the date of such distribution.  Unless otherwise elected, as provided below,such distributions shall be made as soon as practicable after the RegularDistribution Date by the transfer of Common Stock or cash, as applicable, tothe Participant.  Notwithstandinganything to the contrary contained in the Plan, in no event will Common Stock beused to settle distributions unless the Common Stock is available for such usepursuant to the rules of any stock exchange on which the Common Stock is thentraded.

 

(b)   The Regular Distribution Datewith respect to a Participant is the earlier of (1) the January 1coincident with or next following the earlier of (i) the Non-EmployeeDirector’s ceasing to be a Non-Employee Director of the Company (or itssuccessor in interest), and (ii) the Non-Employee Director’s death, and(2) a Reorganization (the “Regular Distribution Date”).

 

(c)   A Non-Employee Director will bepermitted, prior to the beginning of the applicable annual period, with respectto Cash Fees paid during such applicable annual period, to elect to receivedistributions at times other than the Regular Distribution Date.  Each such election will apply to all CommonStock Equivalents and credits to a Participant’s Account during the applicableannual period after the election is made, unless the Non-Employee Directorspecifically elects otherwise.  Electionsto defer distributions to a time or times after the Regular Distribution Datewill be permitted only to the extent the election is accepted by the Board.

 

(d)   After a Common Stock Equivalentis awarded or Cash Fees are deferred to a Participant’s Account, theNon-Employee Director will have the right to make a new distribution electionwith respect thereto in accordance with this Section 8(d).  Such an election, unless otherwise determined by the Board (taking into account the rulesapplicable under Section 409A of the Code) must (A) be effective at least oneyear after the election is made, or, in the case of payments to commence at aspecific time, be made at least one year before the first scheduled payment and(B) defer the commencement of distributions (and each affected distribution)for at least five years.  Eachsuch election will apply to all Common Stock Equivalents and credits to thedeferral Account (other than distributions that do not satisfy the timingrequirements of the foregoing sentence), unless the Non-Employee Directorspecifically elects otherwise.  Electionsto defer distributions to a time or times after the Regular Distribution Datewill be permitted only to the extent the election is accepted by the Board.

 

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(e)   All distributions in respect ofCommon Stock Equivalents and Participant Accounts will be made no later than 45days after the amounts become eligible for settlement as provided in thisSection 8; provided, however, that, in lieu of providing a single delivery ofCommon Stock or a single sum of cash, a Non-Employee Director may elect to havethe aggregate amounts paid in substantially equal annual installments over aperiod not to exceed 10 years.  (Theamount of each installment shall be determined without regard to thepossibility of earnings and losses subsequent to such installment.)  Any such election must be made within thetime frame for making distribution elections as described in Section 5.2 andSection 8(c) or (d), as applicable.

 

(f)    Notwithstanding the foregoingprovisions of this Section 8, a Participant may receive any amounts deferred bythe Participant in the event of an “Unforeseeable Emergency.”  For these purposes, an “UnforeseeableEmergency,” as determined by the Board in its sole discretion, is a severefinancial hardship to the Participant resulting from a sudden and unexpectedillness or accident of the Participant or “dependent,” as defined in Section152(a) of the Code, of the Participant, loss of the Participant’s property dueto casualty, or other similar extraordinary and unforeseeable circumstancesarising as a result of events beyond the control of the Participant.  The circumstances that will constitute anUnforeseeable Emergency will depend upon the facts of each case, but, in anycase, payment may not be made to the extent that such hardship is or may berelieved:

 

(i)            through reimbursementor compensation by insurance or otherwise,

 

(ii)           by liquidation of theParticipant’s assets, to the extent the liquidation of such assets would notitself cause severe financial hardship, or

 

(iii)          by future cessation ofthe making of additional deferrals.

 

Without limitation, theneed to send a Participant’s child to college or the desire to purchase a homeshall not constitute an Unforeseeable Emergency.  Distributions of amounts because of anUnforeseeable Emergency shall be permitted to the extent reasonably needed tosatisfy the emergency need.  It isunderstood that, no event or condition shall constitute an UnforeseeableEmergency to the extent that, if it were, a 20% tax would be imposed underSection 409A of the Code; provided that, in such a case, the event or conditionshall continue to constitute an Unforeseeable Emergency to the maximum extentpossible without causing the imposition of such 20% tax.

 

(g)   Notwithstanding the foregoingprovisions of this Section 8, in the event of a Reorganization, the RegularDistribution Date shall be the date of such Reorganization and all amounts duewith respect to Common Stock Equivalents and Accounts to a Participanthereunder shall be paid as soon as practicable (but in no event more than 30days) after such Reorganization, unless the Board permits such Participant toelect otherwise and the Participant so elects in accordance with procedures establishedby the Board.

 

9.             Tax Withholding.

 

Each Non-Employee Director is generally responsible for his or her owntax obligations as a result of the operation of the Plan.  However, in the event the Company is requiredto withhold any taxes in connection with credits of Common Stock Equivalents(including any related Dividend Equivalent Rights) or deferred Cash Fees orrelated payments hereunder, the Company may in its sole discretion determinethe method and amount of withholding, including, if payment with respect to theCommon Stock Equivalent is made in Common Stock, (i) requiring theParticipant to pay to the Company, at the time such payment is made to suchParticipant, the amount that the Board deems necessary to satisfy the Company’sobligation to withhold federal, state or local income or other taxes incurredby reason of such payment or (ii) withholding Shares from the Sharesotherwise to be received

 

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by the Participant in order to satisfy the liabilityfor such withholding taxes.  In the eventthat the Board chooses the method described in clause (ii) above, thenumber of Shares so withheld shall have an aggregate Fair Market Value on theapplicable Valuation Date sufficient to satisfy the applicable withholdingtaxes.  Notwithstanding anythingcontained in the Plan to the contrary, the Participant’s satisfaction of anytax-withholding requirements imposed by the Board shall be a conditionprecedent to the Company’s obligation as may otherwise be provided hereunder tomake any payments or other distributions with respect to Common StockEquivalents and deferred Cash Fees, and the failure of the Participant tosatisfy such requirements with respect to the payment in respect of any CommonStock Equivalent or deferred cash fee shall cause the applicable Common StockEquivalent or deferred cash fee and any rights relating thereto and to beforfeited.

 

10.           Administration ofPlan.

 

(a)   The Plan shall be administeredby the Board.  The Board shall have authorityto (taking into account, without limitation, the application of Section 409A ofthe Code, as the Board may deem appropriate): (i) determine the number of Common Stock Equivalents to be creditedto each Participant; (ii) determine the amount of Cash Fees to be paid toeach Participant; and (iii) determine or impose conditions on such CommonStock Equivalents and deferred Cash Fees under the Plan as it may deemappropriate.  The Participant shall takewhatever additional actions and execute whatever additional documents the Boardmay in its reasonable judgment deem necessary or advisable in order to carryout or effect one or more of the obligations or restrictions imposed on theParticipant pursuant to the express provisions of the Plan.  Notwithstanding the foregoing, the Board maydelegate any or all of its powers under the Plan to a committee of the Board,and to the extent of such delegation, such committee shall have the powers andauthority otherwise applicable with respect to the Board hereunder.

 

11.           Regulations andApprovals.

 

(a)   The Board may make such changesto the Plan as may be necessary or appropriate to comply with the rules andregulations of any government authority or to obtain tax benefits applicable todeferred equity units.

 

(b)   Each credit of Common StockEquivalents (or issuance of Shares in respect thereof) is subject to therequirement that, if at any time the Board determines, in its discretion, thatthe listing, registration or qualification of Shares issuable pursuant to thePlan is required by any securities exchange or under any state or federal law,or the consent or approval of any governmental regulatory body or of thestockholders of the Company is necessary or desirable as a condition of, or inconnection with, the issuance of Common Stock Equivalents or Shares, no paymentshall be made, or Common Stock Equivalents or Shares issued, in whole or inpart, unless listing, registration, qualification, consent or approval has beeneffected or obtained free of any conditions in a manner acceptable to theBoard.

 

(c)   In the event that thedisposition of stock acquired pursuant to the Plan is not covered by a thencurrent registration statement under the Securities Act, and is not otherwiseexempt from such registration, such Shares shall be restricted against transferto the extent required under the Securities Act, and the Board may require anyindividual receiving Shares pursuant to the Plan, as a condition precedent toreceipt of such Shares, to represent to the Company in writing that such Shareswill be disposed of only if registered for sale under the Securities Act or ifthere is an available exemption for such disposition, and may provide for alegending of such Shares to that effect.

 

12.           Interpretation andAmendments.

 

(a)   The Board may make such rulesand regulations and establish such procedures for the administration of thePlan as it deems appropriate.  Withoutlimiting the generality of the foregoing, the

 

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Board may (i) determine the extent, if any, towhich Cash Fees or equity awards shall be forfeited (whether or not suchforfeiture is expressly contemplated hereunder); (ii) interpret the Plan,elections made under the Plan, and the Common Stock Equivalents hereunder, withsuch interpretations to be conclusive and binding on all persons and otherwiseaccorded the maximum deference permitted by law; and (iii) take any otheractions and make any other determinations or decisions that it deems necessaryor appropriate in connection with the Plan or the administration orinterpretation thereof.  Unless otherwiseexpressly provided hereunder, the Board, with respect to any Participant’sAccount, may exercise its discretion hereunder at the time of such credit orthereafter.  In the event of any disputeor disagreement as to the interpretation of the Plan or of any rule, regulationor procedure, or as to any question, right or obligation arising from orrelated to the Plan, the decision of the Board shall be final and binding uponall persons.

 

(b)   The Board may amend the Plan asit shall deem advisable, except that no amendment may adversely affect aParticipant with respect to deferred Cash Fees or equity awards previouslycredited unless such amendments are required in order to comply with applicablelaws; provided that the Board may not make any amendment to the Plan thatwould, if such amendment were not approved by the holders of the Common Stock,cause the Plan to fail to comply with any requirement of applicable law orregulation, unless and until the approval of the holders of such Common Stockis obtained.

 

13.           Assignment andAlienation; No Funding; Etc.

 

(a)   Rights or benefits with respectto Cash Fees or equity awards credited to a Participant’s Account under thePlan (including any related Dividend Equivalent Rights) shall not be subject inany manner to anticipation, alienation, sale, transfer, assignment, pledge,encumbrance, attachment, charge, garnishment, execution, or levy of any kind,either voluntary or involuntary, prior to actually being received by the personentitled to the benefit under the terms of the Plan; and any attempt toanticipate, alienate, sell, transfer, assign, pledge, encumber, attach, chargeor otherwise dispose of any right or benefits payable hereunder shall be void.

 

(b)   A Participant may designate inwriting, on forms to be prescribed by the Board, a beneficiary or beneficiariesto receive any payments payable after his or her death and may amend or revokesuch designation at any time.  If nobeneficiary designation is in effect at the time of a Participant’s death,payments hereunder shall be made to the Participant’s estate.  If a Participant dies: (i) with a vestedCommon Stock Equivalent, such Common Stock Equivalent shall be settled andShares or the CSE Value, as applicable, with respect to such Common StockEquivalents paid; (ii) any payments deferred pursuant to an election underSection 5 shall be accelerated and paid; or (iii) any other amounts in theParticipant’s Account then payable to the Participant shall be paid, as soon aspracticable (but no later than 90 days) after the date of death to suchParticipant’s beneficiary or estate, as applicable.

 

(c)   Common Stock Equivalents andthe Accounts are solely a device for the measurement and determination of theamounts to be paid to a Participant under the Plan.  Each Participant’s right in the Common StockEquivalents (including any related Dividend Equivalent Rights) and the Accountsis limited to the right to receive payment, if any, as may herein beprovided.  The Common Stock Equivalentsdo not constitute Common Stock and any other credits to a Participant’s Accounthereunder shall not be treated as (or as giving rise to) property or as a trustfund of any kind; provided, however, that the Company may establish a merebookkeeping reserve to meet its obligations hereunder or a trust or otherfunding vehicle that would not cause the Plan to be deemed to be funded for taxpurposes.  The right of any Participantto receive payments by virtue of participation in the Plan shall be no greaterthan the right of any unsecured general creditor of the Company.  Nothing contained in the Plan, and no actiontaken pursuant to the provisions of the Plan (including without limitationSection 5.2(c)), shall create or shall be construed to create a trust of anykind, or a fiduciary relationship between the Company or its officers or theBoard, on the one hand, and the Participant, the Company or any other

 

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person or entity, on the other.  Nothing contained in the Plan shall beconstrued to give any Participant any rights with respect to Shares or anyownership interest in the Company. Without limiting Section 7, no provision of the Plan shall beinterpreted to confer upon any Participant any voting, dividend or derivativeor other similar rights with respect to any Common Stock Equivalent.

 

(d)   Common Stock distributedhereunder, if any, may, without limitation, be treasury Shares or authorized butunissued Shares.

 

14.           Changes in CapitalStructure.

 

(a)   If (i) the Company or itsSubsidiaries shall at any time be involved in a merger, consolidation,dissolution, liquidation, reorganization, exchange of shares, sale of all orsubstantially all of the assets or stock of the Company or its Subsidiaries ora transaction similar thereto, (ii) any stock dividend, stock split,reverse stock split, stock combination, reclassification, recapitalization orother similar change in the capital structure of the Company or itsSubsidiaries, or any distribution to holders of Common Stock other than cashdividends, shall occur or (iii) any other event shall occur which in thejudgment of the Board necessitates action by way of adjusting the terms of theoutstanding Common Stock Equivalents, then the Board may take any such actionas in its judgment shall be necessary to preserve the Participants’ rights intheir respective Common Stock Equivalents substantially proportionate to therights existing in such Common Stock Equivalents prior to such event,including, without limitation, adjustments in the number of Common StockEquivalents credited, CSE Value, Dividend Equivalent Rights, and the number andkind of shares to be distributed in respect of Common Stock Equivalents (asapplicable).

 

(b)   The judgment of the Board withrespect to any matter referred to in this Section 14 shall be conclusive andbinding upon each Participant without the need for any amendment to the Plan.

 

15.           Notices.

 

All notices under the Plan shall be in writing, and if to the Company,shall be delivered to the Board or mailed to its principal office, addressed tothe attention of the Board; and if to the Participant, shall be deliveredpersonally or mailed to the Participant at the address appearing in the recordsof the Company.  Such addresses may bechanged at any time by written notice to the other party given in accordancewith this Section 15.

 

16.           No Rights toService.

 

Nothing in the Plan, in amounts credited to a Participant’s Account, orin Common Stock Equivalents credited pursuant to the Plan shall confer on anyindividual any right to continue in the service of the Company or itsSubsidiaries or interfere in any way with the right of the Company or itsSubsidiaries and its stockholders to terminate the individual’s service at anytime.

 

17.           Exculpation andIndemnification.

 

The Company shall indemnify and hold harmless the members of the Boardand the members of the Committee from and against any and all liabilities,costs and expenses incurred by such persons as a result of any act or omissionto act in connection with the performance of such person’s duties,responsibilities and obligations under the Plan, to the maximum extentpermitted by law, other than such liabilities, costs and expenses as may resultfrom the gross negligence, bad faith, breach of the Company’s Code of Ethics,willful misconduct or criminal acts of such persons.

 

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18.           Captions.

 

The use of captions in this Plan is for convenience.  The captions are not intended to providesubstantive rights.

 

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