Exhibit 4.6





EXHIBIT 4.6




VERINT SYSTEMS INC.

2010 LONG-TERM STOCK INCENTIVE PLAN




Section 1. Purpose. The purposes of this Verint Systems Inc. 2010 Long-Term Stock
Incentive Plan are to promote the interests of Verint Systems Inc. and its stockholders by (i)
attracting and retaining employees and directors of, and consultants to, the Company and its
Subsidiaries, as defined below; (ii) motivating such individuals by means of performance-related
incentives to achieve longer-range performance goals; and (iii) enabling such individuals to
participate in the long-term growth and financial success of the Company.



Section 2. Definitions. As used in the Plan, the following terms shall have the
meanings set forth below:



“Affiliate” means any entity other than the Subsidiaries in which the Company has a
substantial direct or indirect equity interest, as determined by the Board.



“Award” shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Restricted
Stock Unit Award, Performance Award, Other Stock-Based Award or Performance Compensation Award made
or granted from time to time hereunder.



“Award Agreement” shall mean any written agreement, contract, or other instrument or document
evidencing any Award, which may, but need not, be executed or acknowledged by a Participant. An
Award Agreement may be in an electronic medium and may be limited to notation on the books and
records of the Company.



“Base Salary” means the base salary or wages of the Participant excluding overtime, bonuses,
contributions to or benefits under benefit plans, fringe benefits, perquisites, and other such
forms of compensation. Base Salary shall include any elective contributions that are paid through a
reduction in a Participant’s basic salary and which are not includible in the Participant’s gross
income under Sections 125 or 402(e)(3) of the Code.




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



“Cause” as a reason for a Participant’s termination of employment or service shall have the
meaning assigned such term in the employment, severance or similar agreement, if any, between the
Participant and the Company or a Subsidiary or Affiliate of the Company. If the Participant is not
a party to an employment, severance or similar agreement with the Company or a Subsidiary or
Affiliate of the Company in which such term is defined, then unless otherwise defined in the
applicable Award Agreement “Cause” shall mean the Participant’s: (A) conviction of, or plea of
guilty or nolo contendere to, a felony or indictment for a crime involving dishonesty, fraud or
moral turpitude; (B) willful and intentional breach of the Participant’s obligations to the Company
or a Subsidiary or Affiliate of the Company; (C) willful misconduct, or any dishonest or fraudulent
act or omission; (D) violation of any securities or financial reporting laws, rules or regulations
or any policy of the Company or a Subsidiary or Affiliate of the Company relating to the foregoing;
(E) violation of the policies of the Company or a Subsidiary or Affiliate of the Company on
harassment, discrimination or substance abuse; or (F) gross negligence, gross neglect of duties or
gross insubordination in the Participant’s performance of duties with the Company or a Subsidiary
or Affiliate of the Company.


 


 









 





“Change in Control” shall be deemed to have occurred if the event set forth in any one of the
following subparagraphs shall have occurred:



i. the acquisition by any Person, entity or affiliated group (other than Comverse), in one or
a series of transactions, of more than 50% of the voting power of the Company, or the acquisition
of all the common stock of the Company (other than equity held by employees which is assumed in
such transaction) following which the common stock of the Company is no longer publicly traded;



ii. the requirement that any Person, entity or affiliated group (other than Comverse)
consolidate with its financial results the financial results of the Company;



iii. a merger, combination, amalgamation, consolidation, spin-off or any other transaction in
which the holders of the Company’s common stock immediately prior to such transaction do not hold
in respect of their holdings of such stock 50% or more of the voting power of the merged, combined,
amalgamated, consolidated, spun-off or other resulting entity;



iv. a sale or other disposition, in one or a series of related transactions, of all or
substantially all of the assets of the Company (including its Subsidiaries); or



v. during any period of two consecutive years, Incumbent Directors cease to constitute at
least a majority of the board. “Incumbent Directors” shall mean: (1) the directors who were serving
at the beginning of such two-year period, (2) any directors whose election or nomination was
approved by the directors referred to in clause (1) or by a director approved under this clause
(2), and (3) at any time that Comverse owns a majority of the voting power of the Company, any
director nominated by Comverse.




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



“Committee” shall mean a committee of the Board designated by the Board to administer the Plan
and composed of not less than two directors, each of whom is required to be a ‘Non-Employee
Director’ (within the meaning of Rule 16b-3) and an “outside director” (within the meaning of
Section 162(m) of the Code) to the extent Rule 16b-3 and Section 162(m) of the Code, respectively,
are applicable to the Company and the Plan. If at any time such a committee has not been so
designated or is not so composed, the Board shall constitute the Committee.




“Company” shall mean Verint Systems Inc., together with any successor thereto.




“Comverse” shall mean Comverse Technology, Inc.



“Continuous Service” shall mean the absence of any interruption or termination of service as
an employee, director or consultant. Continuous Service shall not be considered interrupted in the
case of (i) sick leave; (ii) military leave; (iii) any other leave of absence approved by the
Committee, in each case, provided that such leave is for a period of not more than 90 days, unless
reemployment upon the expiration of such leave is guaranteed by contract or applicable law, or
unless provided otherwise pursuant to Company policy, as adopted from time to time; or (iv) in the
case of transfer between locations of the Company or between the Company, its Subsidiaries or
Affiliates or their respective successors. Changes in status between
service as an employee, a director and a consultant will not constitute an interruption of
Continuous Service; provided, however, that, unless otherwise determined by the Committee,
consultants providing services to the Company or a Subsidiary or Affiliate of the Company for less
than 32 hours per month shall incur an interruption of Continuous Service.


 


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



“Existing Plans” shall mean, collectively, the Verint Systems Inc. 2004 Stock Incentive
Compensation Plan, as amended, the Verint Systems Inc. Stock Incentive Compensation Plan, as
amended, and the Witness Systems, Inc. Amended and Restated Stock Incentive Plan, as amended.



“Fair Market Value” shall mean, unless otherwise defined in the applicable Award Agreement (i)
with respect to any property other than Shares, the fair market value of such property determined
by such methods or procedures as shall be established from time to time by the Committee and (ii)
with respect to the Shares, as of any date, (1) the closing sale price (excluding any “after hours”
trading) of the Shares as reported on the Nasdaq Stock Market for such date (or if not then trading
on the Nasdaq Stock Market, the closing sale price of the Shares on the stock exchange or
over-the-counter market on which the Shares are principally trading on such date), or, if there
were no sales on such date, on the closest preceding date on which there were sales of Shares or
(2) in the event there shall be no public market for the Shares on such date, the fair market value
of the Shares as determined in good faith by the Committee.




“GAAP” shall mean United States Generally Accepted Accounting Principles.



“Good Reason” as a reason for a Participant’s termination of employment or service shall have
the meaning assigned such term in the employment, severance or similar agreement, if any, between
the Participant and the Company or a Subsidiary or Affiliate of the Company. If the Participant is
not a party to an employment, severance agreement or similar agreement with the Company or a
Subsidiary or Affiliate of the Company in which such term is defined, then unless otherwise defined
in the applicable Award Agreement, for purposes of this Plan, “Good Reason” shall mean (i) a
material reduction (i.e., a least a 10% reduction) by the Company or a Subsidiary or Affiliate of
the Company in the Participant’s Base Salary; or (ii) the involuntary relocation of the
Participant’s own office location by more than 50 miles; provided that all such events shall be
Good Reason only if the Company (or the applicable Subsidiary or Affiliate of the Company) fails to
cure such event within 30 days after receipt from the Participant of written notice of the event
which constitutes Good Reason; provided, further, that Good Reason shall cease to exist for an
event on the 90th day following the later of its occurrence or the Participant’s knowledge thereof,
unless the Participant has given the Company written notice thereof prior to such date.



“Incentive Stock Option” shall mean a right to purchase Shares from the Company that is
granted under Section 6 of the Plan and that is intended to meet the requirements of Section 422 of
the Code or any successor provision thereto. Incentive Stock Options may be granted only to
Participants who meet the definition of “employees” under Section 3401(c) of the Code.


 


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“Negative Discretion” shall mean the discretion authorized by the Plan to be applied by the
Committee to eliminate or reduce the size of a Performance Compensation Award; provided
that the exercise of such discretion would not cause the Performance Compensation Award to
fail to qualify as “performance-based compensation” under Section 162(m) of the Code. By way of
example and not by way of limitation, in no event shall any discretionary authority granted to the
Committee by the Plan including, but not limited to, Negative Discretion, be used to (a) grant or
provide payment in respect of Performance Compensation Awards for a Performance Period if the
Performance Goals for such Performance Period have not been attained or (b) increase a Performance
Compensation Award above the maximum amount payable under Section 4(a) or 11(d)(vi) of the Plan. In
no event shall Negative Discretion be exercised by the Committee with respect to any Option or
Stock Appreciation Right (other than an Option or Stock Appreciation Right that is intended to be a
Performance Compensation Award under Section 11 of the Plan).



“Non-Qualified Stock Option” shall mean a right to purchase Shares from the Company that is
granted under Section 6 of the Plan and that is not intended to be an Incentive Stock Option.




“Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.




“Other Stock-Based Award” shall mean any right granted under Section 10 of the Plan.



“Participant” shall mean any (i) employee of, or consultant to, the Company or its
Subsidiaries, or non-employee director who is a member of the Board or the board of directors of a
Subsidiary of the Company, eligible for an Award under Section 5 and selected by the Committee to
receive an Award under the Plan or (ii) any employee of, or consultant to, an Affiliate, eligible
for a cash-settled Performance Award or cash-settled Restricted Stock Unit under Section 5 and
selected by the Committee to receive a cash-settled Performance Award or a cash-settled Restricted
Stock Unit under the Plan.




“Performance Award” shall mean any right granted under Section 9 of the Plan.



“Performance Compensation Award” shall mean any Award designated by the Committee as a
Performance Compensation Award pursuant to Section 11 of the Plan.



“Performance Criteria” shall mean the criterion or criteria that the Committee shall select
for purposes of establishing the Performance Goal(s) for a Performance Period with respect to any
Performance Compensation Award under the Plan. The Performance Criteria that will be used to
establish the Performance Goal(s) shall be based on the attainment of specific levels of
performance of the Company (or a Subsidiary, Affiliate, division or operational unit of the
Company) and shall be limited to the following, whether determined on a GAAP or non-GAAP basis:
revenue, operating income, day sales outstanding, return on net assets, return on stockholders’
equity, return on assets, return on capital, stockholder returns, profit margin, contribution
margin, earnings per Share, net earnings, operating earnings, free cash flow, earnings before
interest, taxes, depreciation and amortization, number of customers, growth of customers, operating
expenses, capital expenses, customer acquisition costs, Share price or sales or market share.


 


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“Performance Formula” shall mean, for a Performance Period, one or more objective formulas
applied against the relevant Performance Goal to determine, with regard to the Performance
Compensation Award of a particular Participant, whether all, some portion but less
than all, or none of the Performance Compensation Award has been earned for the Performance
Period.



“Performance Goals” shall mean, for a Performance Period, one or more goals established by the
Committee for the Performance Period based upon the Performance Criteria. To the extent required
under Section 162(m) of the Code with respect to Awards intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, the Committee shall, within the first 90 days of a
Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the
Code), define in an objective fashion the manner of calculating the Performance Criteria it selects
to use for such Performance Period. The Committee is authorized at any time during the first 90
days of a Performance Period (or, if shorter, within the maximum period allowed under Section
162(m) of the Code for establishing Performance Goals), or at any time thereafter (but only to the
extent the exercise of such authority after such period would not cause the Performance
Compensation Awards intended to qualify as “performance-based compensation” under Section 162(m) of
the Code granted to any Participant for the Performance Period to fail to qualify as
‘performance-based compensation’ under Section 162(m) of the Code), in its sole discretion, to
adjust or modify the calculation of a Performance Goal for such Performance Period to the extent
permitted under Section 162(m) of the Code, if applicable, in order to prevent the dilution or
enlargement of the rights of Participants, (a) in the event of, or in anticipation of, any unusual
or extraordinary corporate item, transaction, event or development affecting the Company; or (b) in
recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the
Company, or the financial statements of the Company, or in response to, or in anticipation of,
changes in applicable laws, regulations, accounting principles, or business conditions.



“Performance Period” shall mean the one or more periods of time of at least six months in
duration, as the Committee may select, over which the attainment of one or more Performance Goals
will be measured for the purpose of determining a Participant’s right to and the payment of a
Performance Compensation Award.



“Person” has the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company and its
Subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan
of the Company or any of its affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by
the shareowners of the Company in substantially the same proportions as their ownership of stock of
the Company.




“Plan” shall mean this Verint Systems Inc. 2010 Long-Term Stock Incentive Plan.




“Restricted Stock” shall mean any Share granted under Section 8 of the Plan.




“Restricted Stock Unit” shall mean any unit granted under Section 8 of the Plan.



“Rule 16b-3” shall mean Rule 16b-3 as promulgated and interpreted by the SEC under the
Exchange Act, or any successor rule or regulation thereto as in effect from time to time.


 


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“SEC” shall mean the Securities and Exchange Commission or any successor thereto and shall
include the Staff thereof.



“Shares” shall mean the common stock of the Company, $.001 par value, or such other securities
of the Company (i) into which such common stock shall be changed by reason of a recapitalization,
merger, consolidation, split-up, combination, exchange of shares or other similar transaction or
(ii) as may be determined by the Committee pursuant to Section 4(b) of the Plan.




“Stock Appreciation Right” shall mean any right granted under Section 7 of the Plan.



“Subsidiary” of any Person means another Person (other than a natural Person), an aggregate
amount of the voting securities, other voting ownership or voting partnership interests, of which
is sufficient to elect at least a majority of the Board or other governing body (or, if there are
no such voting interests, 50% or more of the equity interests of which is owned directly or
indirectly by such first Person).




“Substitute Awards” shall have the meaning specified in Section 4(c) of the Plan.



Section 3. Administration. (a) The Plan shall be administered by the Committee.
Subject to the terms of the Plan and applicable law, and in addition to other express powers and
authorizations conferred on the Committee by the Plan, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted
to a Participant and designate those Awards which shall constitute Performance Compensation Awards;
(iii) determine the number of Shares to be covered by, or with respect to which payments, rights,
or other matters are to be calculated in connection with, Awards; (iv) determine the terms and
conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards
may be settled or exercised in cash, Shares, other securities, other Awards or other property, or
canceled, forfeited, or suspended and the method or methods by which Awards may be settled,
exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under
what circumstances cash, Shares, other securities, other Awards, other property, and other amounts
payable with respect to an Award (subject to Section 162(m) of the Code with respect to Performance
Compensation Awards) shall be deferred either automatically or at the election of the holder
thereof or of the Committee (in each case consistent with Section 409A of the Code); (vii)
interpret, administer or reconcile any inconsistency, correct any defect, resolve ambiguities
and/or supply any omission in the Plan, any Award Agreement, and any other instrument or agreement
relating to, or Award made under, the Plan; (viii) establish, amend, suspend, or waive such rules
and regulations and appoint such agents as it shall deem appropriate for the proper administration
of the Plan; (ix) establish and administer Performance Goals and certify whether, and to what
extent, they have been attained; (x) adopt and approve any supplements to or amendments,
restatements or alternative versions of the Plan (including, without limitation, sub-plans) in
accordance with Section 14(m) of the Plan; and (xi) make any other determination and take any other
action that the Committee deems necessary or desirable for the administration of the Plan.


 


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(b) Unless otherwise expressly provided in the Plan, all designations, determinations,
interpretations, and other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall
be final, conclusive, and binding upon all Persons, including the Company, any Subsidiary or
Affiliate of the Company, any Participant, any holder or beneficiary of any Award, and any
stockholder.



(c) The mere fact that a Committee member shall fail to qualify as a “Non-Employee Director”
or “outside director” within the meaning of Rule 16b-3 and Section 162(m) of the Code,
respectively, shall not invalidate any Award made by the Committee which Award is otherwise validly
made under the Plan.



(d) No member of the Committee shall be liable to any Person for any action or determination
made in good faith with respect to the Plan or any Award hereunder.



(e) With respect to any Performance Compensation Award granted to a Covered Employee (within
the meaning of Section 162(m) of the Code) under the Plan, the Plan shall be interpreted and
construed in accordance with Section 162(m) of the Code.



(f) The Committee may delegate to one or more officers of the Company (or, in the case of
awards of Shares, the Board may delegate to a committee made up of one or more directors) the
authority to grant awards to Participants who are not executive officers or directors of the
Company subject to Section 16 of the Exchange Act or Covered Employees (within the meaning of
Section 162(m) of the Code).




Section 4. Shares Available for Awards.




(a) Shares Available.



(i) Subject to adjustment as provided in Section 4(b), the aggregate number of Shares with
respect to which Awards may be granted from time to time under the Plan shall in the aggregate not
exceed, at any time, 4,000,000; provided, that the aggregate number of Shares with respect to which
Incentive Stock Options may be granted under the Plan shall be 2,000,000. The maximum number of
Shares with respect to which Options and Stock Appreciation Rights may be granted to any
Participant in any fiscal year shall be 1,500,000 and the maximum number of Shares which may be
paid to a Participant in the Plan in connection with the settlement of any Award(s) designated as
“Performance Compensation Awards” in respect of a single Performance Period shall be 500,000 or, in
the event such Performance Compensation Award is paid in cash, the equivalent cash value thereof on
the last day of the Performance Period to which such Award relates.



(ii) If any Shares subject to an Award are forfeited, cancelled, exchanged, withheld or
surrendered or if an Award terminates or expires without a distribution of Shares to the
Participant, the Shares with respect to such Award shall, to the extent of any such forfeiture,
cancellation, exchange, surrender, withholding, termination or expiration, again be available for
Awards under the Plan. For the avoidance of doubt, if two Awards are granted together in tandem,
the Shares underlying any portion of the tandem Award which is not exercised or otherwise settled
in Shares will again be available for Awards under the Plan. Upon payment in cash of the benefit
provided by any Award granted under this Plan, any Shares that were covered by that Award will
again be available for Awards under the Plan. If, under this Plan, a Participant
has elected to give up the right to receive compensation in exchange for Shares based on fair
market value, such Shares will not count against the aggregate limit described in Section 4(a)(i).


 


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(iii) Awards may, in the discretion of the Committee, be made under the Plan in assumption of,
or in substitution for, outstanding awards previously granted a company acquired by the Company or
with which the Company combines (“Substitute Awards”). The number of Shares underlying any
Substitute Awards shall not be counted against the aggregate number of Shares available for Awards
under the Plan.



(b) Adjustments. Notwithstanding any provisions of the Plan to the contrary, in the event that
the Committee determines that any dividend or other distribution (whether in the form of cash,
Shares, other securities, or other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of
Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares
or other securities of the Company, or other corporate transaction or event affects the Shares such
that an adjustment is appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the Committee shall equitably
adjust any or all of (i) the number of Shares or other securities of the Company (or number and
kind of other securities or property) with respect to which Awards may be granted, (ii) the number
of Shares or other securities of the Company (or number and kind of other securities or property)
subject to outstanding Awards, and (iii) the grant or exercise price with respect to any Award or,
if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award in
consideration for the cancellation of such Award, which, in the case of Options and Stock
Appreciation Rights shall equal the excess, if any, of the Fair Market Value of the Share subject
to each such Option or Stock Appreciation Right over the per Share exercise price or grant price of
such Option or Stock Appreciation Right.



(c) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may
consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.



Section 5. Eligibility. Any employee of, or consultant to, the Company or any of its
Subsidiaries (including any prospective employee), or non-employee director who is a member of the
Board or the board of directors of a Subsidiary of the Company, shall be eligible to be selected as
a Participant and receive any Award as determined by the Committee. Any employee of, or consultant
to, an Affiliate (including any prospective employee), shall be eligible to be selected as a
Participant and receive any cash-settled Performance Award or cash-settled Restricted Stock Unit as
determined by the Committee.


 


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Section 6. Stock Options.



(a) Grant. Subject to the terms of the Plan, the Committee shall have sole authority to
determine the Participants to whom Options shall be granted, the number of Shares to be covered by
each Option, the exercise price thereof and the conditions and limitations applicable to the
exercise of the Option. The Committee shall have the authority to grant Incentive Stock Options, or
to grant Non-Qualified Stock Options, or to grant both types of
Options. In the case of Incentive Stock Options, the terms and conditions of such grants shall
be subject to and comply with such rules as may be prescribed by Section 422 of the Code, as from
time to time amended, and any regulations implementing such statute. All Options when granted under
the Plan are intended to be Non-Qualified Stock Options, unless the applicable Award Agreement
expressly states that the Option is intended to be an Incentive Stock Option. If an Option is
intended to be an Incentive Stock Option, and if for any reason such Option (or any portion
thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such
nonqualification, such Option (or portion thereof) shall be regarded as a Non-Qualified Stock
Option appropriately granted under the Plan; provided that such Option (or portion thereof)
otherwise complies with the Plan’s requirements relating to Non-Qualified Stock Options. No Option
shall be exercisable more than ten years from the date of grant.



(b) Exercise Price. The Committee shall establish the exercise price at the time each Option
is granted, which exercise price shall be set forth in the applicable Award Agreement and which
shall not be less than the Fair Market Value per Share on the date of grant.



(c) Exercise. Each Option shall be exercisable at such times and subject to such terms and
conditions as the Committee may, in its sole discretion, specify in the applicable Award Agreement.
The applicable Award Agreement shall specify the period or periods of Continuous Service by the
Participant that is necessary before the Option or installments thereof will become exercisable.
The Committee may impose such conditions with respect to the exercise of Options, including without
limitation, any relating to the application of federal or state securities laws, as it may deem
necessary or advisable.



(d) Payment. (i) No Shares shall be delivered pursuant to any exercise of an Option until
payment in full of the aggregate exercise price therefor is received by the Company. Such payment
may be made in cash, or its equivalent, or (x) by exchanging Shares owned by the optionee (which
are not the subject of any pledge or other security interest and which have been owned by such
optionee for at least six months), or (y) subject to such rules as may be established by the
Committee, through delivery of irrevocable instructions to a broker to sell the Shares otherwise
deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal
to the aggregate exercise price or by a combination of the foregoing, provided that the combined
value of all cash and cash equivalents and the Fair Market Value of any such Shares so tendered to
the Company as of the date of such tender is at least equal to such aggregate exercise price.



(ii) Wherever in this Plan or any Award Agreement a Participant is permitted to pay the
exercise price of an Option or taxes relating to the exercise of an Option by delivering Shares,
the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery
requirement by presenting proof of beneficial ownership of such Shares, in which case the Company
shall treat the Option as exercised without further payment and shall withhold such number of
Shares from the Shares acquired by the exercise of the Option.


 


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Section 7. Stock Appreciation Rights.



(a) Grant. Subject to the provisions of the Plan, the Committee shall have sole authority to
determine the Participants to whom Stock Appreciation Rights shall be granted, the
number of Shares to be covered by each Stock Appreciation Right Award, the grant price thereof
and the conditions and limitations applicable to the exercise thereof. Stock Appreciation Rights
with a grant price equal to or greater than the Fair Market Value per Share as of the date of grant
are intended to qualify as “performance-based compensation” under Section 162(m) of the Code. In
the sole discretion of the Committee, Stock Appreciation Rights may, but need not, qualify as
performance-based compensation in accordance with Section 11 hereof. Stock Appreciation Rights may
be granted in tandem with another Award, in addition to another Award, or freestanding and
unrelated to another Award. Stock Appreciation Rights granted in tandem with or in addition to an
Award may be granted either before, at the same time as the Award or at a later time. No Stock
Appreciation Right shall be exercisable more than ten years from the date of grant.



(b) Exercise and Payment. A Stock Appreciation Right shall entitle the Participant to receive
an amount equal to the excess of the Fair Market Value of a Share on the date of exercise of the
Stock Appreciation Right over the grant price thereof (which shall not be less than the Fair Market
Value on the date of grant). The Committee shall determine in its sole discretion whether a Stock
Appreciation Right shall be settled in cash, Shares or a combination of cash and Shares.



(c) Other Terms and Conditions. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine, at the grant of a Stock Appreciation Right, the term,
methods of exercise, methods and form of settlement, and any other terms and conditions of any
Stock Appreciation Right. The Committee may impose such conditions or restrictions on the exercise
of any Stock Appreciation Right as it shall deem appropriate.




Section 8. Restricted Stock and Restricted Stock Units.



(a) Grant. Subject to the provisions of the Plan, the Committee shall have sole authority to
determine the Participants to whom Shares of Restricted Stock and Restricted Stock Units shall be
granted, the number of Shares of Restricted Stock and/or the number of Restricted Stock Units to be
granted to each Participant, the duration of the period during which, and the conditions, if any,
under which, the Restricted Stock and Restricted Stock Units may be forfeited to the Company, and
the other terms and conditions of such Awards.



(b) Transfer Restrictions. Shares of Restricted Stock and Restricted Stock Units may not be
sold, assigned, transferred, pledged or otherwise encumbered, except, in the case of Restricted
Stock, as provided in the Plan or the applicable Award Agreements. Unless otherwise directed by the
Committee, (i) certificates issued in respect of Shares of Restricted Stock shall be registered in
the name of the Participant and deposited by such Participant, together with a stock power endorsed
in blank, with the Company, or (ii) Shares of Restricted Stock shall be held at the Company’s
transfer agent in book entry form with appropriate restrictions relating to the transfer of such
Shares of Restricted Stock. Upon the lapse of the restrictions applicable to such Shares of
Restricted Stock, the Company shall, as applicable, either deliver such certificates to the
Participant or the Participant’s legal representative or the transfer agent shall remove the
restrictions relating to the transfer of such Shares.


 


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(c) Payment. Each Restricted Stock Unit shall have a value equal to the Fair Market Value of a
Share. Restricted Stock Units shall be paid in cash, Shares, other securities or other property, as
determined in the sole discretion of the Committee, upon the lapse of the restrictions applicable
thereto, or otherwise in accordance with the applicable Award Agreement. Dividends paid on any
Shares of Restricted Stock shall be paid directly to the Participant, withheld by the Company
subject to vesting of the Restricted Stock pursuant to the terms of the applicable Award Agreement,
or may be reinvested in additional Shares of Restricted Stock or in additional Restricted Stock
Units, as determined by the Committee in its sole discretion.




Section 9. Performance Awards.



(a) Grant. The Committee shall have sole authority to determine the Participants who shall
receive a “Performance Award”, which shall consist of a right which is (i) denominated in cash or
Shares, (ii) valued, as determined by the Committee, in accordance with the achievement of such
Performance Goals during such Performance Periods as the Committee shall establish, and (iii)
payable at such time and in such form as the Committee shall determine.



(b) Terms and Conditions. Subject to the terms of the Plan and any applicable Award Agreement,
the Committee shall determine the Performance Goals to be achieved during any Performance Period,
the length of any Performance Period, the amount of any Performance Award and the amount and kind
of any payment or transfer to be made pursuant to any Performance Award.



(c) Payment of Performance Awards. Performance Awards may be paid in a lump sum or in
installments following the close of the Performance Period as set forth in the Award Agreement on
the date of grant.




Section 10. Other Stock-Based Awards.



(a) General. The Committee shall have authority to grant to Participants an “Other Stock-Based
Award”, which shall consist of any right which is (i) not an Award described in Sections 6 through
9 above and (ii) an Award of Shares or an Award denominated or payable in, valued in whole or in
part by reference to, or otherwise based on or related to, Shares (including, without limitation,
securities convertible into Shares), as deemed by the Committee to be consistent with the purposes
of the Plan; provided that any such rights must comply, to the extent deemed desirable by the
Committee, with Rule 16b-3 and applicable law. Subject to the terms of the Plan and any applicable
Award Agreement, the Committee shall determine the terms and conditions of any such Other Stock-
Based Award, including the price, if any, at which securities may be purchased pursuant to any
Other Stock-Based Award granted under this Plan.



(b) Dividend Equivalents. In the sole discretion of the Committee, an Award (other than
Options or Stock Appreciation Rights), whether made as an Other Stock-Based Award under this
Section 10 or as an Award granted pursuant to Sections 6 through 9 hereof, may provide the
Participant with dividends or dividend equivalents, payable in cash, Shares, other securities or
other property on a current or deferred basis; provided, that in the case of Awards with respect to
which any applicable Performance Criteria have not been achieved,
dividend equivalents may be paid only on a deferred basis, to the extent the underlying Award
vests.


 


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Section 11. Performance Compensation Awards.



(a) General. The Committee shall have the authority, at the time of grant of any Award
described in Sections 6 through 10 (other than Options and Stock Appreciation Rights), to designate
such Award as a Performance Compensation Award in order to qualify such Award as “performance-based
compensation” under Section 162(m) of the Code.



(b) Eligibility. The Committee will, in its sole discretion, designate which Participants will
be eligible to receive Performance Compensation Awards in respect of such Performance Period.
Designation of a Participant eligible to receive an Award hereunder for a Performance Period shall
not in any manner entitle the Participant to receive payment in respect of any Performance
Compensation Award for such Performance Period. The determination as to whether or not such
Participant becomes entitled to payment in respect of any Performance Compensation Award shall be
decided solely in accordance with the provisions of this Section 11. Moreover, designation of a
Participant eligible to receive an Award hereunder for a particular Performance Period shall not
require designation of such Participant eligible to receive an Award hereunder in any subsequent
Performance Period and designation of one person as a Participant eligible to receive an Award
hereunder shall not require designation of any other person as a Participant eligible to receive an
Award hereunder in such period or in any other period.



(c) Discretion of Committee with Respect to Performance Compensation Awards. With regard to a
particular Performance Period, the Committee shall have full discretion to select the applicable
Participants, the length of such Performance Period, the type(s) of Performance Compensation Awards
to be issued, the Performance Criteria that will be used to establish the Performance Goal(s), the
kind or level of each Performance Goal to apply to the Company, and the Performance Formula. Within
the first 90 days of a Performance Period (or, if shorter, within the maximum period allowed under
Section 162(m) of the Code), the Committee shall, with regard to the Performance Compensation
Awards to be issued for such Performance Period, exercise its discretion with respect to each of
the matters enumerated in the immediately preceding sentence of this Section 11(c) and record the
same in writing.



(d) Payment of Performance Compensation Awards. (i) Condition to Receipt of Payment. Unless
otherwise provided in the applicable Award Agreement, a Participant must be employed by the Company
on the last day of a Performance Period to be eligible for payment in respect of a Performance
Compensation Award for such Performance Period.



(ii) Limitation. A Participant shall be eligible to receive payment in respect of a
Performance Compensation Award only to the extent that: (1) the Performance Goals for such period
are achieved; and (2) the Performance Formula as applied against such Performance Goals determines
that all or some portion of such Participant’s Performance Award has been earned for the
Performance Period.


 


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(iii) Certification. Following the completion of a Performance Period, the Committee shall
meet to review and certify in writing whether, and to what extent, the
Performance Goals for the Performance Period have been achieved and, if so, to calculate and
certify in writing that amount of the Performance Compensation Awards earned for the period based
upon the Performance Formula. The Committee shall then determine the actual size of each
Participant’s Performance Compensation Award for the Performance Period and, in so doing, may apply
Negative Discretion, if and when it deems appropriate.



(iv) Negative Discretion. Unless otherwise determined by the Committee, in determining the
actual size of an individual Performance Award for a Performance Period, the Committee may reduce
or eliminate the amount of the Performance Compensation Award earned under the Performance Formula
in the Performance Period through the use of Negative Discretion if, in its sole judgment, such
reduction or elimination is appropriate.



(v) Timing of Award Payments. Unless otherwise set forth in the applicable Award Agreement,
the Awards granted for a Performance Period shall be paid to Participants as soon as
administratively possible following completion of the certifications required by this Section 11;
provided, that, unless otherwise set forth in the applicable Award Agreement, in no event shall any
Award granted for a Performance Period be paid later than the 15th calendar day of the third month
following the end of the Participant’s first taxable year in which the right to payment is no
longer subject to a “substantial risk of forfeiture” (within the meaning of Section 409A of the
Code) or the 15th calendar day of the third month following the end of the Company’s first taxable
year in which the payment is no longer subject to a “substantial risk of forfeiture”.



(vi) Maximum Award Payable. Notwithstanding any provision contained in the Plan to the
contrary, the maximum Performance Compensation Award payable to any one Participant under the Plan
for a Performance Period is 500,000 Shares or, in the event the Performance Compensation Award is
paid in cash, the equivalent cash value thereof on the last day of the Performance Period to which
such Award relates. Furthermore, any Performance Compensation Award that has been deferred shall
not (between the date as of which the Award is deferred and the payment date) increase (i) with
respect to Performance Compensation Award that is payable in cash, by a measuring factor for each
fiscal year greater than a reasonable rate of interest set by the Committee or (ii) with respect to
a Performance Compensation Award that is payable in Shares, by an amount greater than the
appreciation of a Share from the date such Award is deferred to the payment date.




Section 12. Amendment and Termination.



(a) Amendments to the Plan. The Board may amend, alter, suspend, discontinue, or terminate the
Plan or any portion thereof at any time; provided that if an amendment to the Plan that (i) would
materially increase the benefits accruing to Participants under the Plan, (ii) would materially
increase the number of securities which may be issued under the Plan, (iii) would materially modify
the requirements for participation in the Plan or (iv) must otherwise be approved by the
stockholders of the Company in order to comply with applicable law or the rules of the Nasdaq Stock
Market, or, if the Shares are not traded on the Nasdaq Stock Market, the principal national
securities exchange upon which the Shares are traded or quoted, such amendment will be subject to
stockholder approval and will not be effective unless and until such approval has been obtained;
and provided, further, that any such amendment, alteration,
suspension, discontinuance or termination that would impair the rights of any Participant or
any holder or beneficiary of any Award previously granted shall not be effective as to such
Participant without the written consent of the affected Participant, holder or beneficiary.


 


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(b) Amendments to Awards. The Committee may waive any conditions or rights under, amend any
terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted;
provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination that would impair the rights of any Participant or any holder or beneficiary of any
Award previously granted shall not be effective as to such Participant without the written consent
of the affected Participant, holder or beneficiary.



(c) Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The
Committee is hereby authorized to make equitable adjustments in the terms and conditions of, and
the criteria included in, all outstanding Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in Section 4(b) hereof) affecting the Company,
any Subsidiary of the Company, or the financial statements of the Company or any Subsidiary of the
Company, or of changes in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available under the Plan.



(d) Repricing. Except in connection with a corporate transaction or event described in Section
4(b) hereof, the terms of outstanding Awards may not be amended to reduce the exercise price of
Options or the grant price of Stock Appreciation Rights, or cancel Options or Stock Appreciation
Rights in exchange for cash, other awards or Options or Stock Appreciation Rights with an exercise
price or grant price, as applicable, that is less than the exercise price of the original Options
or grant price of the original Stock Appreciation Rights, as applicable, without stockholder
approval.




Section 13. Change in Control.



(a) Except as otherwise provided in an Award Agreement or by the Committee at the date of
grant, to the extent outstanding Awards granted under this Plan are not assumed, converted or
replaced by the resulting entity in the event of a Change in Control, all outstanding Awards that
may be exercised shall become fully exercisable, all restrictions with respect to outstanding
Awards shall lapse and become vested and non-forfeitable, and any specified Performance Goals with
respect to outstanding Awards shall be deemed to be satisfied at target immediately prior to the
consummation of a Change in Control.



(b) Except as otherwise provided in an Award Agreement or by the Committee at the date of
grant or thereafter, to the extent outstanding Awards granted under this Plan are assumed,
converted or replaced by the resulting entity in the event of a Change in Control, (i) any
outstanding Awards that are subject to Performance Goals shall be converted, assumed or replaced by
the resulting entity as if target performance had been achieved as of the date of the Change in
Control, (ii) each Performance Award or Performance Compensation Award with service requirements
shall continue to vest with respect to such requirements during the remaining period set forth in
the Award Agreement, and (iii) all other Awards shall continue to
vest (and/or the restrictions thereon shall continue to lapse) during the remaining period set
forth in the Award Agreement.


 


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(c) Except as otherwise provided in an Award Agreement or by the Committee at the date of
grant, to the extent outstanding Awards granted under this Plan are either assumed, converted or
replaced by the resulting entity in the event of a Change in Control, if a Participant’s employment
or service is terminated without Cause by the Company or a Subsidiary or Affiliate of the Company
or a Participant terminates his or her employment or service with the Company or a Subsidiary or
Affiliate of the Company for Good Reason, in either case, during the two year period following a
Change in Control, all outstanding Awards held by the Participant that may be exercised shall
become fully exercisable and all restrictions with respect to outstanding Awards shall lapse and
become vested and non-forfeitable.



(d) Notwithstanding anything in this Plan or any Award Agreement to the contrary, to the
extent any provision of this Plan or an Award Agreement would cause a payment of deferred
compensation that is subject to Section 409A of the Code to be made upon the occurrence of (i) a
Change in Control, then such payment shall not be made unless such Change in Control also
constitutes a “change in ownership”, “change in effective control” or “change in ownership of a
substantial portion of the Company’s assets” within the meaning of Section 409A of the Code or (ii)
a termination of employment or service, then such payment shall not be made unless such termination
of employment or service also constitutes a “separation from service” within the meaning of Section
409A of the Code. Any payment that would have been made except for the application of the preceding
sentence shall be made in accordance with the payment schedule that would have applied in the
absence of a Change in Control or termination of employment or service, but disregarding any future
service or performance requirements.




Section 14. General Provisions.




(a) Nontransferability.



(i) Each Award, and each right under any Award, shall be exercisable only by the Participant
during the Participant’s lifetime, or, if permissible under applicable law, by the Participant’s
legal guardian or representative.



(ii) No Award may be sold, assigned, alienated, pledged, attached or otherwise transferred or
encumbered by a Participant otherwise than by will or by the laws of descent and distribution, and
any such purported sale, assignment, alienation, pledge, attachment, transfer or encumbrance shall
be void and unenforceable against the Company or any Subsidiary or Affiliate of the Company;
provided that the designation of a beneficiary shall not constitute a sale, assignment, alienation,
pledge, attachment, transfer or encumbrance.


 


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(iii) Notwithstanding the foregoing, the Committee may, in the applicable Award Agreement
evidencing an Option granted under the Plan or at any time thereafter in an amendment to an Award
Agreement, provide that Options which are not intended to qualify as Incentive Options may be
transferred by the Participant to whom such Option was granted (the “Grantee”) without
consideration, after such time as all vesting conditions with respect to such Option have been
satisfied, and subject to such rules as the Committee may adopt to preserve the
purposes of the Plan, to: (1) the Grantee’s spouse, children or grandchildren (including
adopted and stepchildren and grandchildren) (collectively, the “Immediate Family”); (2) a trust
solely for the benefit of the Grantee and his or her Immediate Family; or (3) a partnership,
corporation or limited liability company whose only partners, members or stockholders are the
Grantee and his or her Immediate Family; (each transferee described in clauses (1), (2) and (3)
above is hereinafter referred to as a “Permitted Transferee”); provided that the Grantee gives the
Committee advance written notice describing the terms and conditions of the proposed transfer and
the Committee notifies the Grantee in writing that such a transfer would comply with the
requirements of the Plan and any applicable Award Agreement evidencing the Option.



The terms of any Option transferred in accordance with the immediately preceding sentence
shall apply to the Permitted Transferee and any reference in the Plan or in an Award Agreement to
an optionee, Grantee or Participant shall be deemed to refer to the Permitted Transferee, except
that (a) Permitted Transferees shall not be entitled to transfer any Options, other than by will or
the laws of descent and distribution; (b) Permitted Transferees shall not be entitled to exercise
any transferred Options unless there shall be in effect a registration statement on an appropriate
form covering the Shares to be acquired pursuant to the exercise of such Option if the Committee
determines that such a registration statement is necessary or appropriate, (c) the Committee or the
Company shall not be required to provide any notice to a Permitted Transferee, whether or not such
notice is or would otherwise have been required to be given to the Grantee under the Plan or
otherwise and (d) the consequences of termination of the Grantee’s employment by, or services to,
the Company under the terms of the Plan and the applicable Award Agreement shall continue to be
applied with respect to the Grantee, following which the Options shall be exercisable by the
Permitted Transferee only to the extent, and for the periods, specified in the Plan and the
applicable Award Agreement.



(iv) Notwithstanding anything to the contrary herein, only gratuitous transfers of Awards
shall be permitted.



(b) No Rights to Awards. No Participant or other Person shall have any claim to be granted any
Award, and there is no obligation for uniformity of treatment of Participants, or holders or
beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and
interpretations with respect thereto need not be the same with respect to each Participant (whether
or not such Participants are similarly situated).



(c) Share Certificates. Shares or other securities of the Company or any Subsidiary of the
Company delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to
such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan
or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such
Shares or other securities are then listed, and any applicable Federal or state laws, and the
Committee may cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.


 


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(d) Withholding. (i) A Participant may be required to pay to the Company or any Subsidiary or
Affiliate of the Company, and the Company or any Subsidiary or Affiliate of the Company shall have
the right and is hereby authorized to withhold from any Award, from any payment due or transfer
made under any Award or under the Plan, or from any compensation or
other amount owing to a Participant the amount (in cash, Shares, other securities, other
Awards or other property) of any applicable withholding taxes in respect of an Award, its exercise,
or any payment or transfer under an Award or under the Plan, and to take such other action as may
be necessary in the opinion of the Company to satisfy all obligations for the payment of such
taxes.



(i) Without limiting the generality of clause (i) above, a Participant may satisfy, in whole
or in part, the foregoing withholding liability by delivery of Shares owned by the Participant
(which are not subject to any pledge or other security interest and which have been owned by the
Participant for at least six months) with a Fair Market Value equal to such withholding liability
or by having the Company withhold from the number of Shares otherwise deliverable to the
Participant with respect to an Award a number of Shares with a Fair Market Value equal to such
withholding liability.



(ii) Notwithstanding any provision of this Plan to the contrary, in connection with the
transfer of an Option to a Permitted Transferee pursuant to Section 14(a), the Grantee shall remain
liable for any withholding taxes required to be withheld upon the exercise of such Option by the
Permitted Transferee.



(e) Detrimental Activity. In the event the Committee determines (or discovers) during or after
the course of a Participant’s employment or service that a Participant committed an act during the
course of his or her employment or service that constitutes or would have constituted Cause for
termination, the Committee shall have the right to cancel any or all of Participant’s then
outstanding Awards (whether or not vested).



(f) Award Agreements. Each Award hereunder shall be evidenced by an Award Agreement which
shall be delivered to the Participant and shall specify the terms and conditions of the Award and
any rules applicable thereto, including but not limited to, the effect on such Award of the death,
disability or termination of employment or service of a Participant and the effect, if any, of such
other events as may be determined by the Committee.



(g) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent
the Company or any Subsidiary or Affiliate of the Company from adopting or continuing in effect
other compensation arrangements, which may, but need not, provide for the grant of options,
restricted stock, Shares and other types of Awards provided for hereunder (subject to stockholder
approval if such approval is required), and such arrangements may be either generally applicable or
applicable only in specific cases.



(h) No Right to Employment. The grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of, or in any consulting relationship to, or as
a director on the Board or board of directors, as applicable, of, the Company or any Subsidiary or
Affiliate of the Company. Further, the Company or a Subsidiary or Affiliate of the Company may at
any time dismiss a Participant from employment or discontinue any consulting relationship, free
from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan,
any Award Agreement or any applicable employment contract or agreement.


 


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(i) No Rights as Stockholder. Subject to the provisions of the applicable Award, no
Participant or holder or beneficiary of any Award shall have any rights as a stockholder with
respect to any Shares to be distributed under the Plan until he or she has become the holder of
such Shares. Notwithstanding the foregoing, in connection with each grant of Restricted Stock
hereunder, the applicable Award shall specify if and to what extent the Participant shall not be
entitled to the rights of a stockholder in respect of such Restricted Stock.



(j) Governing Law. The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan and any Award Agreement shall be determined in accordance with the
laws of the State of New York, applied without giving effect to its conflict of laws principles.



(k) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would
disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to the applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person
or Award and the remainder of the Plan and any such Award shall remain in full force and effect.



(l) Other Laws. The Committee may refuse to issue or transfer any Shares or other
consideration under an Award if, acting in its sole discretion, it determines that the issuance or
transfer of such Shares or such other consideration might violate any applicable law or regulation
or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment
tendered to the Company by a Participant, other holder or beneficiary in connection with the
exercise of such Award shall be promptly refunded to the relevant Participant, holder or
beneficiary. Without limiting the generality of the foregoing, no Award granted hereunder shall be
construed as an offer to sell securities of the Company, and no such offer shall be outstanding,
unless and until the Committee in its sole discretion has determined that any such offer, if made,
would be in compliance with all applicable requirements of the U.S. federal securities laws.



(m) Foreign Employees. In order to facilitate the making of any Award or combination of Awards
under this Plan, the Committee may provide for such special terms for awards to Participants who
are foreign nationals or who are employed by the Company or any Subsidiary or Affiliate of the
Company outside of the United States of America as the Committee may consider necessary or
appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Committee
may approve such supplements to or amendments, restatements or alternative versions of this Plan
(including, without limitation, sub-plans) as it may consider necessary or appropriate for such
purposes, without thereby affecting the terms of this Plan as in effect for any other purpose, and
the Secretary or other appropriate officer of the Company may certify any such document as having
been approved and adopted in the same manner as this Plan. No such special terms, supplements,
amendments or restatements, however, shall include any provisions that are inconsistent with the
terms of this Plan as then in effect unless this Plan could have been amended to eliminate such
inconsistency without further approval by the stockholders of the Company.


 


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(n) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to
create a trust or separate fund of any kind or a fiduciary relationship between the Company or any
Subsidiary or Affiliate of the Company and a Participant or any other Person. To the extent that
any Person acquires a right to receive payments from the Company or any Subsidiary or Affiliate of
the Company pursuant to an Award, such right shall be no greater than the right of any unsecured
general creditor of the Company or any Subsidiary or Affiliate of the Company.



(o) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the
Plan or any Award, and the Committee shall determine whether cash, other securities, or other
property shall be paid or transferred in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.



(p) Deferrals. In the event the Committee permits a Participant to defer any Award payable in
the form of cash, all such elective deferrals shall be accomplished by the delivery of a written,
irrevocable election by the Participant on a form provided by the Company. All deferrals shall be
made in accordance with administrative guidelines established by the Committee to ensure that such
deferrals comply with all applicable requirements of Section 409A of the Code.



(q) Headings. Headings are given to the Sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision thereof.




Section 15. Compliance with Section 409A of the Code.



(a) To the extent applicable, it is intended that this Plan and any grants made hereunder
comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of
Section 409A(a)(1) of the Code do not apply to the Participants. This Plan and any grants made
hereunder shall be administered in a manner consistent with this intent.



(b) Neither a Participant nor any of a Participant’s creditors or beneficiaries shall have the
right to subject any deferred compensation (within the meaning of Section 409A of Code) payable
under this Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A of the Code,
any deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant
or for a Participant’s benefit under this Plan and grants hereunder may not be reduced by, or
offset against, any amount owing by a Participant to the Company or any of its Subsidiaries.


 


19









 





(c) If, at the time of a Participant’s separation from service (within the meaning of Section
409A of the Code), (i) the Participant shall be a specified employee (within the meaning of Section
409A of the Code and using the identification methodology selected by the Company from time to
time) and (ii) the Company shall make a good faith determination that an amount payable hereunder
constitutes deferred compensation (within the meaning of Section 409A of the Code) the payment of
which is required to be delayed pursuant to the six-month delay rule set
forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of
the Code, then the Company shall not pay such amount on the otherwise scheduled payment date but
shall instead pay it, without interest, on the earlier of the first business day of the seventh
month following separation from service or death.



(d) Notwithstanding any provision of this Plan and grants hereunder to the contrary, in light
of the uncertainty with respect to the proper application of Section 409A of the Code, the Company
shall amend this Plan and grants hereunder as the Company deems necessary or desirable to avoid the
imposition of taxes or penalties under Section 409A of the Code. In any case, a Participant shall
be solely responsible and liable for the satisfaction of all taxes and penalties that may be
imposed on a Participant or for a Participant’s account in connection with this Plan and grants
hereunder (including any taxes and penalties under Section 409A of the Code), and neither the
Company nor any of its Subsidiaries shall have any obligation to indemnify or otherwise hold a
Participant harmless from any or all of such taxes or penalties.




Section 16. Term of the Plan.



(a) Effective Date. The Plan shall be effective as of the date of its approval by the Board
(the “Effective Date”), subject to approval of the Plan by the stockholders of the Company.



(b) Expiration Date. No grant will be made under this Plan more than ten years after the
Effective Date, but all grants made on or prior to such date will continue in effect thereafter
subject to the terms thereof and of this Plan.




 


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