exv10w3






EXHIBIT 10.3




HUTCHINSON TECHNOLOGY INCORPORATED

2011 EQUITY INCENTIVE PLAN




1. Purpose. The purpose of the Hutchinson Technology Incorporated 2011 Equity Incentive Plan
(the “Plan”) is to attract and retain the best available personnel for positions of responsibility
with the Company, to provide additional incentives to them and align their interests with those of
the Company’s shareholders, and to thereby promote the Company’s long-term business success.




2. Definitions. In this Plan, the following definitions will apply.




     (a) “Affiliate” means any corporation that is a Subsidiary or Parent of the Company.



     (b) “Agreement” means the written or electronic agreement containing the terms and conditions
applicable to each Award granted under the Plan. An Agreement is subject to the terms and
conditions of the Plan.



     (c) “Award” means a grant made under the Plan in the form of Options, Stock Appreciation
Rights, Restricted Stock, Stock Units, or Other Stock-Based Award.



     (d) “Board” means the Board of Directors of the Company.



     (e) “Cause” means what the term is expressly defined to mean in a then-effective written
agreement (including an Agreement) between a Participant and the Company or any Affiliate or, in
the absence of any such then-effective agreement or definition, means (i) a Participant’s material
breach of any confidentiality, non-solicitation, non-competition, invention assignment or similar
agreement with the Company or any Affiliate, (ii) an act or acts of dishonesty undertaken by a
Participant resulting in gain or personal enrichment of the Participant at the expense of the
Company, (iii) persistent failure by a Participant to perform the duties associated with
Participant’s employment or other status as a Service Provider, (iv) any failure by the Participant
to materially conform to the Company’s business conduct or ethics code, or (v) the indictment or
conviction of the Participant for a felony.



     (f) “Change in Control” means one of the following:


          (1) any individual, entity or Group (a “Person”) becomes a “beneficial owner” (as defined in
Rule 13d-3 or any successor rule under the Exchange Act), directly or indirectly, of 30% or more of
the combined voting power of the Company’s Voting Securities, except that the following shall not
constitute a Change in Control: (A) any acquisition or beneficial ownership by the Company or a
Subsidiary; (B) any acquisition or beneficial ownership by any employee benefit plan (or related
trust) sponsored or maintained by the Company or one or more Subsidiary; (C) any formation of a
Group consisting solely of beneficial owners of the Company’s Voting Securities as of the effective
date of this Plan, or any repurchase or other acquisition by the Company of its Voting Securities
that causes any Person to become the beneficial owner of 30% or more of the Company’s Voting
Securities, in either case so long as such Person does not acquire beneficial ownership of
additional Company Voting Securities after the Person initially became the beneficial owner of 30%
or more of the Company’s Voting Securities by one of the means described in this clause (C); or (D)
any acquisition of beneficial ownership by any entity with respect to which, immediately following
such acquisition, more than 70% of the combined voting power of such entity’s then outstanding
Voting Securities is beneficially owned, directly or indirectly, by all or substantially all of the
Persons who beneficially owned the Company’s Voting Securities immediately prior to such
acquisition in substantially the same proportions as their ownership of the Company’s Voting
Securities immediately prior to such acquisition;


          (2) Individuals who are Continuing Directors cease for any reason to constitute a majority of
the members of the Board; or


          (3) The consummation of a Corporate Transaction unless, immediately following such Corporate
Transaction, all or substantially all of the Persons who were the beneficial owners of the
Company’s Voting Securities immediately prior to such Corporate Transaction beneficially own,
directly or indirectly, more than 70% of the combined voting power of the then outstanding Voting
Securities of the surviving or acquiring entity (or its Parent) resulting from such Corporate
Transaction in substantially the same proportions as their ownership, immediately prior to such
Corporate Transaction, of the Company’s Voting Securities.


          Notwithstanding the foregoing, to the extent that any Award constitutes a deferral of
compensation subject to Code Section 409A, and if that Award provides for a change in the time or
form of payment upon a Change in Control, then no Change in Control shall be deemed to have
occurred upon an event described in Section 2(f) unless the event would also constitute a change in
ownership or effective control of, or a change in the ownership of a substantial portion of the
assets of, the Company under Code Section 409A.



     (g) “Code” means the Internal Revenue Code of 1986, as amended and in effect from time to
time, and the regulations promulgated thereunder.



     (h) “Committee” means two or more Non-Employee Directors designated by the Board to administer
the Plan under Section 3, each member of which shall be (i) an independent director within the
meaning of the rules and regulations of the Nasdaq Stock Market, (ii) a non-employee director
within the meaning of Exchange Act Rule 16b-3, and (iii) an outside director for purposes of Code
Section 162(m).



     (i) “Company” means Hutchinson Technology Incorporated, a Minnesota corporation, or any
successor thereto.



 









 





     (j) “Continuing Director” means an individual (A) who is, as of the effective date of the
Plan, a director of the Company, or (B) who is elected as a director of the Company subsequent to
the effective date of the Plan and whose initial election, or nomination for initial election by
the Company’s shareholders, was approved by at least a majority of the then Continuing Directors.



     (k) “Corporate Transaction” means a reorganization, merger or consolidation of the company, a
statutory exchange of outstanding Voting Securities, or a sale or disposition (in one or a series
of transactions) of all or substantially all of the assets of the Company.



     (l) “Disability” means (A) any permanent and total disability under any long-term disability
plan or policy of the Company or its Affiliates that covers the Participant, or (B) if there is no
such long-term disability plan or policy, “total and permanent disability” within the meaning of
Code Section 22(e)(3).



     (m) “Employee” means an employee of the Company or an Affiliate.



     (n) “Exchange Act” means the Securities Exchange Act of 1934, as amended and in effect from
time to time.



     (o) “Fair Market Value” means the fair market value of a Share determined as follows:


          (1) If the Shares are readily tradable on an established securities market (as determined
under Code Section 409A), then Fair Market Value will be the closing sales price for a Share on the
principal securities market on which it trades on the date for which it is being determined, or if
no sale of Shares occurred on that date, on the next preceding date on which a sale of Shares
occurred, as reported in The Wall Street Journal or such other source as the Committee deems
reliable; or


          (2) If the Shares are not then readily tradable on an established securities market (as
determined under Code Section 409A), then Fair Market Value will be determined by the Committee as
the result of a reasonable application of a reasonable valuation method that satisfies the
requirements of Code Section 409A.



     (p) “Full Value Award” means an Award other than an Option or Stock Appreciation Right.



     (q) “Grant Date” means the date on which the Committee approves the grant of an Award under
the Plan, or such later date as may be specified by the Committee on the date the Committee
approves the Award.



     (r) “Group” means two or more persons acting as a partnership, limited partnership, syndicate
or other group for the purpose of acquiring, holding or disposing of securities of the Company.



     (s) “Non-Employee Director” means a member of the Board who is not an Employee.



     (t) “Option” means a right granted under the Plan to purchase a specified number of Shares at
a specified price. An “Incentive Stock Option” or “ISO” means any Option designated as such and
granted in accordance with the requirements of Code Section 422. A “Non-Statutory Stock Option”
means an Option other than an Incentive Stock Option.



     (u) “Other Stock-Based Award” means an Award described in Section 11 of this Plan.



     (v) “Parent” means a “parent corporation,” as defined in Code Section 424(e).



     (w) “Participant” means a person to whom an Award is or has been made in accordance with the
Plan.



     (x) “Performance-Based Compensation” means an Award to a person who is, or is determined by
the Committee to likely become, a “covered employee” (as defined in Section 162(m)(3) of the Code)
and that is intended to constitute “performance-based compensation” within the meaning of Section
162(m)(4)(C) of the Code.



     (y) “Plan” means this Hutchinson Technology Incorporated 2011 Equity Incentive Plan, as
amended and in effect from time to time.



     (z) “Prior Plan” means the Hutchinson Technology Incorporated 1996 Incentive Plan, as amended
and restated as of October 10, 2008.



     (aa) “Restricted Stock” means Shares issued to a Participant that are subject to such
restrictions on transfer, forfeiture conditions and other restrictions or limitations as may be set
forth in this Plan and the applicable Agreement.



     (bb) “Service” means the provision of services by a Participant to the Company or any
Affiliate in any Service Provider capacity. A Service Provider’s Service shall be deemed to have
terminated either upon an actual cessation of providing services or upon the entity for which the
Service Provider provides services ceasing to be an Affiliate. Except as otherwise provided in this
Plan or any Agreement, Service shall not be deemed terminated in the case of (i) any approved leave
of absence; (ii) transfers among the Company and any Affiliates in any Service Provider capacity;
or (iii) any change in status so long as the individual remains in the service of the Company or
any Affiliate in any Service Provider capacity.



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     (cc) “Service Provider” means an Employee, a Non-Employee Director, or any consultant or
advisor who is a natural person and who provides services (other than in connection with (i) a
capital-raising transaction or (ii) promoting or maintaining a market in Company securities) to the
Company or any Affiliate.



     (dd) “Share” means a share of Stock.



     (ee) “Stock” means the common stock, $0.01 par value, of the Company.



     (ff) “Stock Appreciation Right” or “SAR” means a right granted under the Plan to receive, in
cash and/or Shares as determined by the Committee, an amount equal to the appreciation in value of
a specified number of Shares between the Grant Date of the SAR and its exercise date.



     (gg) “Stock Unit” means a right granted under the Plan to receive, in cash and/or Shares as
determined by the Committee, the Fair Market Value of a Share, subject to such restrictions on
transfer, forfeiture conditions and other restrictions or limitations as may be set forth in this
Plan and the applicable Agreement.



     (hh) “Subsidiary” means a “subsidiary corporation,” as defined in Code Section 424(f), of the
Company.



     (ii) “Substitute Award” means an Award granted upon the assumption of, or in substitution or
exchange for, outstanding awards granted by a company or other entity acquired by the Company or
any Affiliate or with which the Company or any Affiliate combines.



     (jj) “Voting Securities” of an entity means the outstanding securities entitled to vote
generally in the election of directors (or comparable equity interests) of such entity.



3. Administration of the Plan.




     (a) Administration. The authority to control and manage the operations and
administration of the Plan shall be vested in the Committee in accordance with this Section 3.



     (b) Scope of Authority. Subject to the terms of the Plan, the Committee shall have the
authority, in its discretion, to take such actions as it deems necessary or advisable to administer
the Plan, including:


          (1) determining the Service Providers to whom Awards will be granted, the timing of each such
Award, the types of Awards and the number of Shares covered by each Award, the terms, conditions,
performance criteria, restrictions and other provisions of Awards, and the manner in which Awards
are paid or settled;


          (2) cancelling or suspending an Award or the exercisability of an Award, accelerating the
vesting or extending the exercise period of an Award, or otherwise amending the terms and
conditions of any outstanding Award, subject to the requirements of Sections 6(b), 15(d) and 15(e);


          (3) establishing, amending or rescinding rules to administer the Plan, interpreting the Plan
and any Award or Agreement made under the Plan, and making all other determinations necessary or
desirable for the administration of the Plan; and


          (4) taking such actions as are described in Section 3(c) with respect to Awards to foreign
Service Providers.



     (c) Awards to Foreign Service Providers. The Committee may grant Awards to Service
Providers who are foreign nationals, who are located outside of the United States or who are not
compensated from a payroll maintained in the United States, or who are otherwise subject to (or
could cause the Company to be subject to) legal or regulatory requirements of countries outside of
the United States, on such terms and conditions different from those specified in the Plan as may,
in the judgment of the Committee, be necessary or desirable to comply with applicable foreign laws
and regulatory requirements and to promote achievement of the purposes of the Plan. In connection
therewith, the Committee may establish such subplans and modify exercise procedures and other Plan
rules and procedures to the extent such actions are deemed necessary or desirable, and may take any
other action that it deems advisable to obtain local regulatory approvals or to comply with any
necessary local governmental regulatory exemptions.



     (d) Acts of the Committee; Delegation. A majority of the members of the Committee
shall constitute a quorum for any meeting of the Committee, and any act of a majority of the
members present at any meeting at which a quorum is present or any act unanimously approved in
writing by all members of the Committee shall be the act of the Committee. Any such action of the
Committee shall be valid and effective even if the members of the Committee at the time of such
action are later determined not to have satisfied all of the criteria for membership in clauses
(i), (ii) and (iii) of Section 2(h). To the extent not inconsistent with applicable law or stock
exchange rules, the Committee may delegate all or any portion of its authority under the Plan to
any one or more of its members or, as to Awards to Participants who are not subject to Section 16
of the Exchange Act, to one or more executive officers of the Company. The Committee may also
delegate non-discretionary administrative responsibilities in connection with the Plan to such
other persons as it deems advisable.



     (e) Finality of Decisions. The Committee’s interpretation of the Plan and of any Award
or Agreement made under the Plan and all related decisions or resolutions of the Board or Committee
shall be final and binding on all parties with an interest therein.



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     (f) Indemnification. Each person who is or has been a member of the Committee or of
the Board, and any other person to whom the Committee delegates authority under the Plan, shall be
indemnified by the Company, to the maximum extent permitted by law, against liabilities and
expenses imposed upon or reasonably incurred by such person in connection with or resulting from
any claims against such person by reason of the performance of the individual’s duties under the
Plan. This right to indemnification is conditioned upon such person providing the Company an
opportunity, at the Company’s expense, to handle and defend the claims before such person
undertakes to handle and defend them on such person’s own behalf. The Company will not be required
to indemnify any
person for any amount paid in settlement of a claim unless the Company has first consented in
writing to the settlement. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such person or persons may be entitled under the Company’s
Articles of Incorporation or Bylaws, as a matter of law, or otherwise.




4. Shares Available Under the Plan.




     (a) Maximum Shares Available. Subject to Section 4(b) and to adjustment as provided in
Section 12(a), the number of Shares that may be the subject of Awards and issued under the Plan
shall be 1,200,000, plus any Shares remaining available for future grants under the Prior Plan on
the effective date of this Plan. After the effective date of the Plan, no additional awards may be
granted under the Prior Plan. Shares issued under the Plan shall come from authorized and unissued
Shares. In determining the number of Shares to be counted against this share reserve in connection
with any Award, the following rules shall apply:


          (1) Shares that are subject to Awards of Options or Stock Appreciation Rights shall be counted
against the share reserve as one Share for every one Share granted.


          (2) Shares that are subject to Full Value Awards shall be counted against the share reserve as
1.25 Shares for every one Share granted.


          (3) Where the number of Shares subject to an Award is variable on the Grant Date, the number
of Shares to be counted against the share reserve prior to the settlement of the Award shall be the
maximum number of Shares that could be received under that particular Award.


          (4) Where two or more types of Awards are granted to a Participant in tandem with each other,
such that the exercise of one type of Award with respect to a number of Shares cancels at least an
equal number of Shares of the other, the number of Shares to be counted against the share reserve
shall be the largest number of Shares that would be counted against the share reserve under either
of the Awards.


          (5) Substitute Awards shall not be counted against the share reserve, nor shall they reduce
the Shares authorized for grant to a Participant in any calendar year.



     (b) Effect of Forfeitures and Other Actions. Any Shares subject to an Award, or to an
award granted under the Prior Plan that is outstanding on the effective date of this Plan (a “Prior
Plan Award”), that is forfeited or expires or is settled for cash shall, to the extent of such
forfeiture, expiration or cash settlement, again become available for Awards under this Plan, and
the total number of Shares available for grant under Section 4(a) shall be correspondingly
increased as provided in Section 4(c) below. The following Shares shall not, however, again become
available for Awards or increase the number of Shares available for grant under Section 4(a): (i)
Shares tendered by the Participant or withheld by the Company in payment of the purchase price of a
stock option issued under this Plan or the Prior Plan, (ii) Shares tendered by the Participant or
withheld by the Company to satisfy any tax withholding obligation with respect to an Award or Prior
Plan Award, (iii) Shares repurchased by the Company with proceeds received from the exercise of an
option issued under this Plan or the Prior Plan, and (iv) Shares subject to a stock appreciation
right issued under this Plan or the Prior Plan that are not issued in connection with the stock
settlement of that stock appreciation right upon its exercise.



     (c) Counting Shares Again Available. Each Share that again becomes available for
Awards as provided in Section 4(b) shall increase the total number of Shares available for grant
under Section 4(a) by (i) one Share if such Share was subject to an Option or Stock Appreciation
Right under the Plan or to a stock option or stock appreciation right award under the Prior Plan,
and (ii) 1.25 Shares if such Share was subject to a Full Value Award under the Plan or to an award
other than a stock option or stock appreciation right award under the Prior Plan.



     (d) Effect of Plans Operated by Acquired Companies. If a company acquired by the
Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available
under a pre-existing plan approved by shareholders and not adopted in contemplation of such
acquisition or combination, the shares available for grant pursuant to the terms of such
pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other
adjustment or valuation ratio or formula used in such acquisition or combination to determine the
consideration payable to the holders of common stock of the entities party to such acquisition or
combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for
grant under the Plan. Awards using such available shares shall not be made after the date awards or
grants could have been made under the terms of the pre-existing plan, absent the acquisition or
combination, and shall only be made to individuals who were not Employees or Non-Employee Directors
prior to such acquisition or combination.



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     (e) No Fractional Shares. Unless otherwise determined by the Committee, the number of
Shares subject to an Award shall always be a whole number. No fractional Shares may be issued under
the Plan, and in connection with any calculation under the Plan that would otherwise result in the
issuance or withholding of a fractional Share, the number of Shares shall be rounded down to the
nearest whole Share.



     (f) Individual Option and SAR Limit. The aggregate number of Shares subject to Options
and/or Stock Appreciation Rights granted during any calendar year to any one Participant shall not
exceed 250,000 Shares.



5. Eligibility. Participation in the Plan is limited to Service Providers. Incentive Stock
Options may only be granted to Employees.




6. General Terms of Awards.




     (a) Award Agreement. Except for any Award that involves only the immediate issuance of
unrestricted Shares, each Award shall be evidenced by an Agreement setting forth the number of
Shares subject to the Award together with such other terms and conditions applicable to the Award
(and not inconsistent with the Plan) as determined by the Committee. An Award will not become
effective unless acceptance of the Agreement in a manner permitted by the Committee is received by
the Company within 30 days of the date the Agreement is delivered to the Participant. An Award to a
Participant may be made singly or in combination with any form of Award. Two types of Awards may be
made in tandem with each other such that the exercise of one type of Award with respect to a number
of Shares reduces the number of Shares subject to the related Award by at least an equal amount.



     (b) Vesting and Term. Each Agreement shall set forth the period until the applicable
Award is scheduled to expire (which shall not be more than ten years from the Grant Date), and any
applicable performance period. The Committee may provide in an Agreement for such vesting
conditions as it may determine, subject to the following limitations:


          (1) A Full Value Award that vests solely as the result of the passage of time and continued
Service by the Participant shall be subject to a vesting period of not less than three years from
the applicable Grant Date (but permitting pro rata vesting over such vesting period); and


          (2) A Full Value Award whose vesting is subject to the satisfaction of performance goals over
a performance period shall be subject to a performance period of not less than one year.



The minimum vesting periods specified in clauses (1) and (2) above will not, however, apply: (i) to
Awards made in payment of or exchange for other earned compensation (including performance-based
Awards); (ii) upon a Change in Control; (iii) to termination of Service due to death or Disability;
(iv) to termination of Service after a Participant has reached the age of 55 and has been a Service
Provider for at least ten years (whether or not consecutive); (v) to a Substitute Award that does
not reduce the vesting period of the award being replaced; and (vi) Awards involving an aggregate
number of Shares not in excess of 5% of the number of Shares available for Awards under Section
4(a).




     (c) Transferability. Except as provided in this Section 6(c), (i) during the lifetime
of a Participant, only the Participant or the Participant’s guardian or legal representative may
exercise an Option or SAR, or receive payment with respect to any other Award; and (ii) no Award
may be sold, assigned, transferred, exchanged or encumbered other than by will or the laws of
descent and distribution. Any attempted transfer in violation of this Section 6(c) shall be of no
effect. The Committee may, however, provide in an Agreement or otherwise that an Award (other than
an Incentive Stock Option) may be transferred pursuant to a qualified domestic relations order or
may be transferable by gift to any “family member” (as defined in General Instruction A(5) to Form
S-8 under the Securities Act of 1933) of the Participant. Any Award held by a transferee shall
continue to be subject to the same terms and conditions that were applicable to that Award
immediately before the transfer thereof. For purposes of any provision of the Plan relating to
notice to a Participant or to acceleration or termination of an Award upon the death or termination
of employment of a Participant, the references to “Participant” shall mean the original grantee of
an Award and not any transferee.



     (d) Designation of Beneficiary. Each Participant may designate a beneficiary or
beneficiaries to exercise any Award or receive a payment under any Award payable on or after the
Participant’s death. Any such designation shall be on a written or electronic form approved by the
Committee and shall be effective upon its receipt by the Company or an agent selected by the
Company.



     (e) Termination of Service. Unless otherwise provided in an Agreement, and subject to
Section 12 of this Plan, if a Participant’s Service with the Company and all of its Affiliates
terminates, the following provisions shall apply (in all cases subject to the scheduled expiration
of an Option or Stock Appreciation Right, as applicable):


          (1) Upon termination of Service for Cause, all unexercised Options and SARs and all unvested
portions of any other outstanding Awards shall be immediately forfeited without consideration.


          (2) Upon termination of Service for any other reason, all unvested and unexercisable portions
of any outstanding Awards shall be immediately forfeited without consideration.


          (3) Upon termination of Service for any reason other than Cause, death or Disability, the
currently vested and exercisable portions of Options and SARs may be exercised for a period ending
at 5:00 p.m. Central Time on the day that is three months after the



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date of such termination,
regardless of whether such day is a business day, provided that if a Participant thereafter dies
during such three-month period, the vested and exercisable portions of the Options and SARs may be
exercised for a period ending at 5:00 p.m. Central Time on the day that is one year after the date
of such termination, regardless of whether such day is a business day. However, if a Participant
has been a Service Provider for at least ten years (whether or not consecutive) and the termination
of Service for any reason other than Cause, death or Disability occurs after the Participant has
reached age 55, then the currently vested and exercisable portions of Options and SARs may be
exercised for a period ending at 5:00 p.m. Central Time on the day that is three years after the
date of such termination, regardless of whether such day is a business day.



          (4) Upon termination of Service due to death or Disability, the currently vested and
exercisable portions of Options and SARs may be exercised for a period ending at 5:00 p.m. Central
Time on the day that is one year after the date of such termination, regardless of whether such day
is a business day.



     (f) Rights as Shareholder. No Participant shall have any rights as a shareholder with
respect to any securities covered by an Award unless and until the date the Participant becomes the
holder of record of the Shares, if any, to which the Award relates.



     (g) Performance-Based Awards. Any Award may be granted as a performance-based Award if
the Committee establishes one or more measures of corporate, divisional or individual performance
which must be attained, and the performance period over which the specified performance is to be
attained, as a condition to the vesting, exercisability, lapse of restrictions and/or settlement in
cash or Shares of such Award. In connection with any such Award, the Committee shall determine the
extent to which performance measures have been attained and other applicable terms and conditions
have been satisfied, and the degree to which vesting, exercisability, lapse of restrictions and/or
settlement in cash or Shares of such Award has been earned. Any performance-based Award that is
intended by the Committee to qualify as Performance-Based Compensation shall additionally be
subject to the requirements of Section 17 of this Plan. Except as provided in Section 17 with
respect to Performance-Based Compensation, the Committee shall also have the authority to provide,
in an Agreement or otherwise, for the modification of a performance period and/or an adjustment or
waiver of the achievement of performance goals upon the occurrence of certain events, which may
include a Change of Control, a Corporate Transaction, a recapitalization, a change in the
accounting practices of the Company, or the Participant’s death or Disability.



7. Stock Option Awards.




     (a) Type and Exercise Price. The Agreement pursuant to which an Option is granted
shall specify whether the Option is an Incentive Stock Option or a Non-Statutory Stock Option. The
exercise price at which each Share subject to an Option may be purchased shall be determined by the
Committee and set forth in the Agreement, and shall not be less than the Fair Market Value of a
Share on the Grant Date, except in the case of Substitute Awards.



     (b) Payment of Exercise Price. The purchase price of the Shares with respect to which
an Option is exercised shall be payable in full at the time of exercise. The purchase price may be
paid in cash or in such other manner as the Committee may permit, including payment under a
broker-assisted sale and remittance program acceptable to the Committee or by withholding Shares
otherwise issuable to the Participant upon exercise of the Option or by delivery to the Company of
Shares (by actual delivery or attestation) already owned by the Participant (in each case, such
Shares having a Fair Market Value as of the date the Option is exercised equal to the purchase
price of the Shares being purchased).



     (c) Exercisability and Expiration. Each Option shall be exercisable in whole or in
part on the terms provided in the Agreement. No Option shall be exercisable at any time after its
scheduled expiration. When an Option is no longer exercisable, it shall be deemed to have
terminated.



     (d) Incentive Stock Options.


          (1) An Option will constitute an Incentive Stock Option only if the Participant receiving the
Option is an Employee, and only to the extent that (i) it is so designated in the applicable
Agreement and (ii) the aggregate Fair Market Value (determined as of the Option’s Grant Date) of
the Shares with respect to which Incentive Stock Options held by the Participant first become
exercisable in any calendar year (under the Plan and all other plans of the Company and its
Affiliates) does not exceed $100,000. To the extent an Option granted to a Participant exceeds this
limit, the Option shall be treated as a Non-Statutory Stock Option. The maximum number of Shares
that may be issued upon the exercise of Incentive Stock Options shall equal the maximum number of
Shares that may be the subject of Awards and issued under the Plan as provided in the first
sentence of Section 4(a).


          (2) No Participant may receive an Incentive Stock Option under the Plan if, immediately after
the grant of such Award, the Participant would own (after application of the rules contained in
Code Section 424(d)) Shares possessing more than 10% of the total combined voting power of all
classes of stock of the Company or an Affiliate, unless (i) the option price for that Incentive
Stock Option is at least 110% of the Fair Market Value of the Shares subject to that Incentive
Stock Option on the Grant Date and (ii) that Option will expire no later than five years after its
Grant Date.


          (3) For purposes of continued Service by a Participant who has been granted an Incentive Stock
Option, no approved leave of absence may exceed three months unless reemployment upon expiration of
such leave is provided by statute or contract. If reemployment is not so provided, then on the date
six months following the first day of such leave, any Incentive Stock Option held



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by the
Participant shall cease to be treated as an Incentive Stock Option and shall be treated for tax
purposes as a Non-Statutory Stock Option.



          (4) If an Incentive Stock Option is exercised after the expiration of the exercise periods
that apply for purposes of Code Section 422, such Option shall thereafter be treated as a
Non-Statutory Stock Option.


          (5) The Agreement covering an Incentive Stock Option shall contain such other terms and
provisions that the Committee determines necessary to qualify the Option as an Incentive Stock
Option.



8. Stock Appreciation Rights.




     (a) Nature of Award. An Award of Stock Appreciation Rights shall be subject to such
terms and conditions determined by the Committee, to receive upon exercise of the Stock
Appreciation Right all or a portion of the excess of (i) the Fair Market Value of a specified
number of Shares as of the date of exercise of the Stock Appreciation Right over (ii) a specified
exercise price that shall not be less than 100% of the Fair Market Value of such Shares on the
Grant Date of the Stock Appreciation Right, except in the case of Substitute Awards.



     (b) Exercise of SAR. Each Stock Appreciation Right may be exercisable in whole or in
part at the times, on the terms and in the manner provided in the Agreement. No Stock Appreciation
Right shall be exercisable at any time after its scheduled expiration. When a Stock Appreciation
Right is no longer exercisable, it shall be deemed to have terminated. Upon exercise of a Stock
Appreciation Right, payment to the Participant shall be made at such time or times as shall be
provided in the Agreement in the form of cash, Shares or a combination of cash and Shares as
determined by the Committee. The Agreement may provide for a limitation upon the amount or
percentage of the total appreciation on which payment (whether in cash and/or Shares) may be made
in the event of the exercise of a Stock Appreciation Right.



9. Restricted Stock Awards.




     (a) Vesting and Consideration. Shares subject to a Restricted Stock Award shall be
subject to vesting conditions, and the corresponding lapse or waiver of forfeiture conditions and
other restrictions, based on such factors and occurring over such period of time as the Committee
may determine in its discretion. The Committee may provide whether any consideration other than
Services must be received by the Company or any Affiliate as a condition precedent to the grant of
a Restricted Stock Award.



     (b) Shares Subject to Restricted Stock Awards. Unvested Shares subject to a Restricted
Stock Award shall be evidenced by a book-entry in the name of the Participant with the Company’s
transfer agent. Such book-entry shall be subject to transfer restrictions and accompanied by an
appropriate legend referring to the restricted nature of the Restricted Stock evidenced thereby.
Upon the vesting of Shares of Restricted Stock and the corresponding lapse of the restrictions and
forfeiture conditions, the corresponding transfer restrictions and restrictive legend will be
removed from the book-entry evidencing such Shares. Such vested Shares may, however, remain subject
to additional restrictions as provided in Section 18(c). Except as otherwise provided in the Plan
or an applicable Agreement, a Participant with a Restricted Stock Award shall have all the rights
of a shareholder, including the right to vote the Shares of Restricted Stock.



     (c) Dividends and Distributions. Except as otherwise provided in an applicable
Agreement, any dividends or distributions (other than regular quarterly cash dividends in the case
of Restricted Stock Awards that are subject only to service-based vesting conditions) paid with
respect to Shares subject to the unvested portion of a Restricted Stock Award will be subject to
the same restrictions as the Shares to which such dividends or distributions relate.



10. Stock Unit Awards.




     (a) Vesting and Consideration. A Stock Unit Award shall be subject to vesting
conditions, and the corresponding lapse or waiver of forfeiture conditions and other restrictions,
based on such factors and occurring over such period of time as the Committee may determine in its
discretion. The Committee may provide whether any consideration other than Services must be
received by the Company or any Affiliate as a condition precedent to the settlement of a Stock Unit
Award.



     (b) Payment of Award. Following the vesting of a Stock Unit Award, settlement of the
Award and payment to the Participant shall be made at such time or times in the form of cash,
Shares (which may themselves be considered Restricted Stock under the Plan subject to restrictions
on transfer and forfeiture conditions) or a combination of cash and Shares as determined by the
Committee. If the Stock Unit Award is not by its terms exempt from the requirements of Code Section
409A, then the applicable Agreement shall contain terms and conditions necessary to avoid adverse
tax consequences specified in Code Section 409A.



11. Other Stock-Based Awards. The Committee may from time to time grant Stock and other Awards
that are valued by reference to and/or payable in whole or in part in Shares under the Plan. The
Committee, in its sole discretion, shall determine the terms and conditions of such Awards, which
shall be consistent with the terms and purposes of the Plan. The Committee may, in its sole
discretion, direct the Company to issue Shares subject to restrictive legends and/or stop transfer
instructions that are consistent with the terms and conditions of the Award to which the Shares
relate.




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12. Changes in Capitalization, Corporate Transactions, Change in Control.




     (a) Adjustments for Changes in Capitalization. In the event of any equity
restructuring (within the meaning of FASB ASC Topic 718 — Stock Compensation) that causes the per
share value of Shares to change, such as a stock dividend, stock split, spinoff, rights offering or
recapitalization through an extraordinary dividend, the Committee shall make such adjustments as it
deems equitable and appropriate to (i) the aggregate number and kind of Shares or other securities
issued or reserved for issuance under the Plan, (ii) the number and kind of Shares or other
securities subject to outstanding Awards, (iii) the exercise price of outstanding Options and SARs,
and (iv) any maximum limitations prescribed by the Plan with respect to certain types of Awards or
the grants to individuals of certain types of Awards. In the event of any other change in corporate
capitalization, including a merger, consolidation, reorganization, or partial or complete
liquidation of the Company, such equitable adjustments described in the foregoing sentence may be
made as determined to be appropriate and equitable by the Committee to prevent dilution or
enlargement of rights of Participants. In either case, any such adjustment shall be conclusive and
binding for all purposes of the Plan. No adjustment shall be made pursuant to this Section 12(a) in
connection with the conversion of any convertible securities of the Company, or in a manner that
would cause Incentive Stock Options to violate Section 422(b) of the Code or cause an Award to be
subject to adverse tax consequences under Section 409A of the Code.



     (b) Corporate Transactions. Unless otherwise provided in an applicable Agreement, the
following provisions shall apply to outstanding Awards in the event of a Change in Control that
involves a Corporate Transaction.


          (1) Continuation, Assumption or Replacement of Awards. In the event of a Corporate
Transaction, then the surviving or successor entity (or its Parent) may continue, assume or replace
Awards outstanding as of the date of the Corporate Transaction (with such adjustments as may be
required or permitted by Sections 12(a) and 6(g)), and such Awards or replacements therefor shall
remain outstanding and be governed by their respective terms, subject to Section 12(b)(4) below. A
surviving or successor entity may elect to continue, assume or replace only some Awards or portions
of Awards. For purposes of this Section 12(b)(1), an Award shall be considered assumed or replaced
if, in connection with the Corporate Transaction and in a manner consistent with Code Sections 409A
and 424, either (i) the contractual obligations represented by the Award are expressly assumed by
the surviving or successor entity (or its Parent) with appropriate adjustments to the number and
type of securities subject to the Award and the exercise price thereof that preserves the intrinsic
value of the Award existing at the time of the Corporate Transaction, or (ii) the Participant has
received a comparable equity-based award that preserves the intrinsic value of the Award existing
at the time of the Corporate Transaction and provides for a vesting or exercisability schedule that
is the same as or more favorable to the Participant.


          (2) Acceleration. If and to the extent that outstanding Awards under the Plan are not
continued, assumed or replaced in connection with a Corporate Transaction, then (i) all outstanding
Options and SARs shall become fully exercisable for such period of time prior to the effective time
of the Corporate Transaction as is deemed fair and equitable by the Committee, and shall terminate
at the effective time of the Corporate Transaction, and (ii) all outstanding Full Value Awards
shall fully vest immediately prior to the effective time of the Corporate Transaction. The
Committee shall provide written notice of the period of accelerated exercisability of Options and
SARs to all affected Participants. The accelerated exercisability of any Option or SAR pursuant to
this Section 12(b)(2) and the exercise of any Option or SAR whose exercisability is so accelerated
shall be conditioned upon the consummation of the Corporate Transaction, and any such exercise
shall be effective only immediately before such consummation.


          (3) Payment for Awards. If and to the extent that outstanding Awards under the Plan
are not continued, assumed or replaced in connection with a Corporate Transaction, then the
Committee may provide that some or all of such outstanding Awards shall be canceled at or
immediately prior to the effective time of the Corporate Transaction in exchange for payments to
the holders as provided in this Section 12(b)(3). The Committee will not be required to treat all
Awards similarly for purposes of this Section 12(b)(3). The payment for any Award canceled shall be
in an amount equal to the difference, if any, between (i) the fair market value (as determined in
good faith by the Committee) of the consideration that would otherwise be received in the Corporate
Transaction for the number of Shares subject to the Award, and (ii) the aggregate exercise price
(if any) for the Shares subject to such Award. If the amount determined pursuant to clause (i) of
the preceding sentence is less than or equal to the amount determined pursuant to clause (ii) of
the preceding sentence with respect to any Award, such Award may be canceled pursuant to this
Section 12(b)(3) without payment of any kind to the affected Participant. Payment of any amount
under this Section 12(b)(3) shall be made in such form, on such terms and subject to such
conditions as the Committee determines in its discretion, which may or may not be the same as the
form, terms and conditions applicable to payments to the Company’s shareholders in connection with
the Corporate Transaction, and may, in the Committee’s discretion, include subjecting such payments
to vesting conditions comparable to those of the Award surrendered, subjecting such payments to
escrow or holdback terms comparable to those imposed upon the Company’s shareholders under the
Corporate Transaction, or calculating and paying the present value of payments that would otherwise
be subject to escrow or holdback terms.


          (4) Termination After a Corporate Transaction. If and to the extent that Awards are
continued, assumed or replaced under the circumstances described in Section 12(b)(1), and if within
one year after the Corporate Transaction a Participant experiences an involuntary termination of
Service for reasons other than Cause, then (i) outstanding Options and SARs issued to the
Participant that are not yet fully exercisable shall immediately become exercisable in full and
shall remain exercisable for one year following the Participant’s termination of Service, and (ii)
any Full Value Awards that are not yet fully vested shall immediately vest in full.



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     (c) Change in Control. In connection with a Change in Control that does not involve a
Corporate Transaction, the Committee may provide (in the applicable Agreement or otherwise) for one
or more of the following: (i) that any Award shall become fully vested and exercisable upon the
occurrence of the Change in Control or upon the involuntary termination of the Participant without
Cause within one year of the Change in Control, (ii) that any Option or SAR shall remain
exercisable during all or some specified portion of its remaining term, or (iii) that Awards shall
be canceled in exchange for payments in a manner similar to that provided in Section 12(b)(3). The
Committee will not be required to treat all Awards similarly in such circumstances.



     (d) Dissolution or Liquidation. Unless otherwise provided in an applicable Agreement,
in the event the shareholders of the Company approve the complete dissolution or liquidation of the
Company, all outstanding Awards shall vest and become fully exercisable, and will terminate
immediately prior to the consummation of any such proposed action. The Committee will notify each
Participant as soon as practicable of such accelerated vesting and exercisability and pending
termination.



     (e) Limitation on Change in Control Payments. Notwithstanding anything in Section
12(b) or 12(c) to the contrary, if, with respect to a Participant, the acceleration of the vesting
and exercisability of any Award or the payment of cash in exchange for all or part of any Award as
provided in Section 12(b) and 12(c) (which acceleration or payment could be deemed a “payment”
within the meaning of Section 280G(b)(2) of the Code), together with any other payments that such
Participant has the right to receive from the Company or any corporation that is a member of an
“affiliated group” (as defined in Section 1504(a) of the Code without regard to Section 1504(b) of
the Code) of which the Company is a member, would constitute a “parachute payment” (as defined in
Section 280G(b)(2) of the Code), then such acceleration and payments pursuant to Section 12(b) or
12(c) shall be reduced to the largest amount as, in the sole judgment of the Committee, will result in no portion of such payments
being subject to the excise tax imposed by Section 4999 of the Code.



13. Plan Participation and Service Provider Status. Status as a Service Provider shall not be
construed as a commitment that any Award will be made under the Plan to that Service Provider or to
eligible Service Providers generally. Nothing in the Plan or in any Agreement or related documents
shall confer upon any Service Provider or Participant any right to continued Service with the
Company or any Affiliate, nor shall it interfere with or limit in any way any right of the Company
or any Affiliate to terminate the person’s Service at any time with or without Cause or change such
person’s compensation, other benefits, job responsibilities or title.




14. Tax Withholding. The Company or any Affiliate, as applicable, shall have the right to (i)
withhold from any cash payment under the Plan or any other compensation owed to a Participant an
amount sufficient to cover any required withholding taxes related to the grant, vesting, exercise
or settlement of an Award, and (ii) require a Participant or other person receiving Shares under
the Plan to pay a cash amount sufficient to cover any required withholding taxes before actual
receipt of those Shares. In lieu of all or any part of a cash payment from a person receiving
Shares under the Plan, the Committee may permit the individual to cover all or any part of the
required withholdings (up to the Participant’s minimum required tax withholding rate) through a
reduction in the number of Shares delivered or a delivery or tender to the Company of Shares held
by the Participant or other person, in each case valued in the same manner as used in computing the
withholding taxes under applicable laws.




15. Effective Date, Duration, Amendment and Termination of the Plan.




     (a) Effective Date. The Plan shall become effective on the date it is approved by the
Company’s shareholders, which shall be considered the date of its adoption for purposes of Treasury
Regulation §1.422-2(b)(2)(i). No Awards shall be made under the Plan prior to its effective date.
If the Company’s shareholders fail to approve the Plan within 12 months of its approval by the
Board, the Plan shall be of no further force or effect.



     (b) Duration of the Plan. The Plan shall remain in effect until all Shares subject to
it shall be distributed, all Awards have expired or terminated, the Plan is terminated pursuant to
Section 15(c), or the tenth anniversary of the effective date of the Plan, whichever occurs first
(the “Termination Date”). Awards made before the Termination Date may be exercised, vested or
otherwise effectuated beyond the Termination Date unless limited in the Agreement or otherwise.



     (c) Amendment and Termination of the Plan. The Board may at any time terminate,
suspend or amend the Plan. The Company shall submit any amendment of the Plan to its shareholders
for approval only to the extent required by applicable laws or regulations or the rules of any
securities exchange on which the Shares may then be listed. No termination, suspension, or
amendment of the Plan may materially impair the rights of any Participant under a previously
granted Award without the Participant’s consent, unless such action is necessary to comply with
applicable law or stock exchange rules.



     (d) Amendment of Awards. Subject to Section 15(e), the Committee may unilaterally
amend the terms of any Agreement previously granted, except that no such amendment may materially
impair the rights of any Participant under the applicable Award without the Participant’s consent,
unless such amendment is necessary to comply with applicable law or stock exchange rules.



     (e) No Option or SAR Repricing. Except as provided in Section 12(a), no Option or
Stock Appreciation Right granted under the Plan may be amended to decrease the exercise price
thereof, be cancelled in exchange for the grant of any new Option or Stock Appreciation Right with
a lower exercise price or any new Full Value Award, be repurchased by the Company or any Affiliate,
or otherwise be subject to any action that would be treated under accounting rules or otherwise as
a “repricing” of such Option or Stock Appreciation Right, unless such action is first approved by
the Company’s shareholders.



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16. Substitute Awards. The Committee may also grant Awards under the Plan in substitution for,
or in connection with the assumption of, existing awards granted or issued by another corporation
and assumed or otherwise agreed to be provided for by the Company pursuant to or by reason of a
transaction involving a merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation to which the Company or an Affiliate is a party. The terms and
conditions of the Substitute Awards may vary from the terms and conditions set forth in the Plan to
the extent that the Committee at the time of the grant may deem appropriate to conform, in whole or
in part, to the provisions of the awards in substitution for which they are granted.




17. Performance-Based Compensation.




     (a) Designation of Awards. If the Committee determines at the time a Full Value Award
is granted to a Participant that such Participant is, or is likely to be, a “covered employee” for
purposes of Code Section 162(m) as of the end of the tax year in which the Company would ordinarily
claim a tax deduction in connection with such Award, then the Committee may provide that this
Section 17 will be applicable to such Award, which shall be considered Performance-Based
Compensation.



     (b) Compliance with Code Section 162(m). If an Award is subject to this Section 17,
then the lapsing of restrictions thereon and the distribution of cash, Shares or other property
pursuant thereto, as applicable, shall be subject to the achievement over the applicable
performance period of one or more performance goals based on one or more of the performance
measures specified in Section 17(d). The Committee will select the applicable performance
measure(s) and specify the performance goal(s) based on those performance measures for any
performance period, specify in terms of an objective formula or standard the method for calculating
the amount payable to a Participant if the performance goal(s) are satisfied, and certify the
degree to which applicable performance goals have been satisfied and any amount payable in
connection with an Award subject to this Section 17, all within the time periods
prescribed by and consistent with the other requirements of Code Section 162(m). In specifying
the performance goals applicable to any performance period, the Committee may provide that one or
more objectively determinable adjustments shall be made to the performance measures on which the
performance goals are based, which may include adjustments that would cause such measures to be
considered “non-GAAP financial measures” within the meaning of Rule 101 under Regulation G
promulgated by the Securities and Exchange Commission. The Committee may also adjust performance
measures for a performance period to the extent permitted by Code Section 162(m) in connection with
an event described in Section 12(a) to prevent the dilution or enlargement of a Participant’s
rights with respect to Performance-Based Compensation. The Committee may adjust downward, but not
upward, any amount determined to be otherwise payable in connection with such an Award. The
Committee may also provide, in an Agreement or otherwise, that the achievement of specified
performance goals in connection with an Award subject to this Section 17 may be waived upon the
death or Disability of the Participant or under any other circumstance with respect to which the
existence of such possible waiver will not cause the Award to fail to qualify as “performance-based
compensation” under Code Section 162(m).



     (c) Limitations. Subject to adjustment as provided in Section 12(a), the maximum
number of Shares that may be the subject of Full Value Awards of Performance-Based Compensation
granted to any Participant during any calendar year shall not exceed 150,000 Shares.



     (d) Performance Measures. For purposes of any Full Value Award considered
Performance-Based Compensation subject to this Section 17, the performance measures to be utilized
shall be limited to one or a combination of two or more of the following: net sales; net earnings;
earnings before income taxes; earnings before interest and taxes; earnings before interest, taxes,
depreciation and amortization; earnings per share (basic or diluted); profitability as measured by
return ratios (including, but not limited to, return on assets, return on equity, return on
investment and return on net sales) or by the degree to which any of the foregoing earnings
measures exceed a percentage of net sales; cash flow or free cash flow; market share; margins
(including, but not limited to, one or more of gross, operating and net earnings margins); stock
price; total shareholder return; asset quality; non-performing assets; revenue growth; operating
income; operating assets; improvement in or attainment of expense level, cost saving or cost per
unit goals; economic value added; market penetration goals and improvement in or attainment of
working capital levels. Any performance goal based on one or more of the foregoing performance
measures may be expressed in absolute amounts, on a per share basis, as a growth rate or change
from preceding periods, or as a comparison to the performance of specified companies or other
external measures, and may relate to one or any combination of corporate, group, unit, division,
Affiliate or individual performance.



18. Other Provisions.




     (a) Unfunded Plan. The Plan shall be unfunded and the Company shall not be required to
segregate any assets that may at any time be represented by Awards under the Plan. Neither the
Company, its Affiliates, the Committee, nor the Board shall be deemed to be a trustee of any
amounts to be paid under the Plan nor shall anything contained in the Plan or any action taken
pursuant to its provisions create or be construed to create a fiduciary relationship between the
Company and/or its Affiliates, and a Participant. To the extent any person has or acquires a right
to receive a payment in connection with an Award under the Plan, this right shall be no greater
than the right of an unsecured general creditor of the Company.



     (b) Limits of Liability. Except as may be required by law, neither the Company nor any
member of the Board or of the Committee, nor any other person participating (including
participation pursuant to a delegation of authority under Section 3(c) of the Plan) in any
determination of any question under the Plan, or in the interpretation, administration or
application of the Plan, shall have any liability to any party for any action taken, or not taken,
in good faith under the Plan.



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     (c) Compliance with Applicable Legal Requirements. No Shares distributable pursuant to
the Plan shall be issued and delivered unless the issuance of the Shares complies with all
applicable legal requirements, including compliance with the provisions of applicable state and
federal securities laws, and the requirements of any securities exchanges on which the Company’s
Shares may, at the time, be listed. During any period in which the offering and issuance of Shares
under the Plan are not registered under federal or state securities laws, Participants shall
acknowledge that they are acquiring Shares under the Plan for investment purposes and not for
resale, and that Shares may not be transferred except pursuant to an effective registration
statement under, or an exemption from the registration requirements of, such securities laws. Any
book-entry or stock certificate evidencing Shares issued under the Plan that are subject to such
securities law restrictions shall be accompanied by or bear an appropriate restrictive legend.



     (d) Other Benefit and Compensation Programs. Payments and other benefits received by a
Participant under an Award made pursuant to the Plan shall not be deemed a part of a Participant’s
regular, recurring compensation for purposes of the termination, indemnity or severance pay laws of
any country and shall not be included in, nor have any effect on, the determination of benefits
under any other employee benefit plan, contract or similar arrangement provided by the Company or
an Affiliate unless expressly so provided by such other plan, contract or arrangement, or unless
the Committee expressly determines that an Award or portion of an Award should be included to
accurately reflect competitive compensation practices or to recognize that an Award has been made
in lieu of a portion of competitive cash compensation.



     (e) Governing Law. To the extent that federal laws do not otherwise control, the Plan
and all determinations made and actions taken pursuant to the Plan shall be governed by the laws of
the State of Minnesota without regard to its conflicts-of-law principles and shall be construed
accordingly.



     (f) Severability. If any provision of the Plan shall be held illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the
Plan shall be construed and enforced as if the illegal or invalid provision had not been included.



     (g) Code Section 409A. It is intended that (i) all Awards of Options, SARs and
Restricted Stock under the Plan will not provide for the deferral of compensation within the
meaning of Code Section 409A and thereby be exempt from Code Section 409A, and (ii) all other
Awards under the Plan will either not provide for the deferral of compensation within the meaning
of Code Section 409A, or will comply with the requirements of Code Section 409A, and Awards shall
be structured and the Plan administered and interpreted in accordance with this intent. The Plan
and any Agreement may be unilaterally amended by the Company in any manner deemed necessary or
advisable by the Committee or Board in order to maintain such exemption from or compliance with
Code Section 409A, and any such amendment shall conclusively be presumed to be necessary to comply
with applicable law. Notwithstanding anything to the contrary in the Plan or any Agreement, with
respect to any Award that constitutes a deferral of compensation subject to Code Section 409A:


          (1) If any amount is payable under such Award upon a termination of Service, a termination of
Service will be deemed to have occurred only at such time as the Participant has experienced a
“separation from service” as such term is defined for purposes of Code Section 409A;


          (2) If any amount shall be payable with respect to any such Award as a result of a
Participant’s “separation from service” at such time as the Participant is a “specified employee”
within the meaning of Code Section 409A, then no payment shall be made, except as permitted under
Code Section 409A, prior to the first business day after the earlier of (i) the date that is six
months after the Participant’s separation from service or (ii) the Participant’s death. Unless the
Committee has adopted a specified employee identification policy as contemplated by Code Section
409A, specified employees will be identified in accordance with the default provisions specified
under Code Section 409A.



     (h) Rule 16b-3. It is intended that the Plan and all Awards granted pursuant to it
shall be administered by the Committee so as to permit the Plan and Awards to comply with Exchange
Act Rule 16b-3. If any provision of the Plan or of any Award would otherwise frustrate or conflict
with the intent expressed in this Section 18(e)(4), that provision to the extent possible shall be
interpreted and deemed amended in the manner determined by the Committee so as to avoid the
conflict. To the extent of any remaining irreconcilable conflict with this intent, the provision
shall be deemed void as applied to Participants subject to Section 16 of the Exchange Act to the
extent permitted by law and in the manner deemed advisable by the Committee.



     (i) Compensation Recoupment Policy. Awards may be made subject to any compensation
recoupment policy adopted by the Board or the Committee at any time prior to or after the effective
date of the Plan, and as such policy may be amended from time to time after its adoption.




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