exhibit10-43.htm


     

    EXHIBIT
10.43


    Photronics, Inc.
2007 Long Term Equity Incentive Plan
(as Amended on April 8, 2010) 

     

    1. Purposes of the Plan 

     

         The purposes of the Plan are to (a) promote
the long-term success of the Company and its Subsidiaries and to increase
stockholder value by providing Eligible Individuals with incentives to
contribute to the long-term growth and profitability of the Company by offering
them an opportunity to obtain a proprietary interest in the Company through the
grant of equity-based awards and (b) assist the Company in attracting, retaining
and motivating highly qualified individuals who are in a position to make
significant contributions to the Company and its Subsidiaries. 

     

         Upon the Effective Date, no further
Awards will be granted under the Prior Plans. 

     

    2. Definitions and Rules of Construction


     

         (a) Definitions. For purposes of the Plan, the following
capitalized words shall have the meanings set forth below: 

     

         “Award” means
an Option, Restricted Stock, Restricted Stock Unit, Stock Appreciation Right,
Performance Stock, Performance Unit or Other Award granted by the Committee
pursuant to the terms of the Plan.

     

         “Award Document” means an agreement, certificate or other type or form of document or
documentation approved by the Committee that sets forth the terms and conditions
of an Award. An Award Document may be in written, electronic or other media, may
be limited to a notation on the books and records of the Company and, unless the
Committee requires otherwise, need not be signed by a representative of the
Company or a Participant.

     

         “Beneficial Owner” and “Beneficially Owned” have the meaning set forth in Rule 13d-3 under the Exchange
Act.

     

         “Board” means
the Board of Directors of the Company, as constituted from time to
time.

     

         “Change of Control” means: 

     

         (i) Any Person becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing thirty-five percent (35%) or more of the
combined voting power of the Company’s then outstanding securities;
or 

     

         (ii) The following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the
Effective Date, constitute the Board and any new director (other than a director
whose initial assumption of office is in connection with an actual or threatened
election contest, including, but not limited to, a consent solicitation,
relating to the election of directors of the Company) whose appointment or
election by the Board or nomination for election by the Company’s stockholders
was approved or recommended by a vote of at least a majority of the directors
then still in office who either were directors on the Effective Date or whose
appointment, election or
nomination for election was previously so approved or recommended; or


     

    

    
    


         (iii) There is consummated a merger or consolidation of the Company or
any Subsidiary with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in combination with
the ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any Subsidiary of the Company, more than
fifty percent (50%) of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly or indirectly, of securities
of the Company representing thirty-five percent (35%) or more of the
combined voting power of the Company’s then outstanding securities;
or

     

         (iv) The stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the company of all or substantially all of the
Company’s assets, other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity, more than fifty percent
(50%) of the combined voting power of the voting securities of which are owned
by stockholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale. 

     

         Notwithstanding the foregoing, with respect to
an Award that is subject to Section 409A of the Code and the payment or
settlement of the Award will accelerate upon a Change of Control, no event set
forth herein will constitute a Change of Control for purposes of the Plan or any
Award Document unless such event also constitutes a “change in ownership,”
“change in effective control,” or “change in the ownership of a substantial
portion of the Company’s assets” as defined under Section 409A of the
Code. 

     

         “Code” means
the Internal Revenue Code of 1986, as amended, and the applicable rulings and
regulations promulgated thereunder.

     

         “Committee”
means the Compensation Committee of the Board, any successor committee thereto
or any other committee appointed from time to time by the Board to administer
the Plan, which committee shall meet the requirements of Section 162(m) of the
Code, Section 16(b) of the Exchange Act and the applicable rules of the NASDAQ;
provided, however, that, if
any Committee member is found not to have met the qualification requirements of
Section 162(m) of the Code and Section 16(b) of the Exchange Act, any actions
taken or Awards granted by the Committee shall not be invalidated by such
failure to so qualify.

     

         “Common Stock” means the common stock of the Company, par value $0.01 per share, or
such other class of share or other securities as may be applicable under Section
13 of the Plan.

     

         “Company”
means Photronics, Inc., a Connecticut corporation, or any successor to all or
substantially all of the Company's business that adopts the Plan.

     

         “EBITDA”
means earnings before interest, taxes, depreciation and amortization.


     

    2 

     

    

    
    


         “Effective Date” means the date on which the Plan is adopted by the Board and approved
by the Shareholders of the Company.

     

         “Eligible Individuals” means the individuals described in Section 4(a) of the Plan who are
eligible for Awards under the Plan.

     

         “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.

     

         “Fair Market Value” means, with respect to a share of Common Stock, the fair market value
on the date of valuation of such Award as determined by the Compensation
Committee; provided, however, that with respect to an incentive stock option
issued to a 10% or more shareholder, Fair Market Value shall mean 110% of the
fair market value or such other percentage as may be permitted by the Code and
regulations promulgated thereunder.

     

         “Incentive Stock Option” means an Option that is intended to comply
with the requirements of Section 422 of the Code or any successor provision
thereto.

     

         “NASDAQ”
means the NASDAQ Stock Market, Inc. 

     

         “Non-Employee Director” means any member of the Board who is not an
officer or employee of the Company or any Subsidiary. 

     

         “Nonqualified Stock Option” means an Option that is not intended to
comply with the requirements of Section 422 of the Code or any successor
provision thereto. 

     

         “Option”
means an Incentive Stock Option or Nonqualified Stock Option granted pursuant to
Section 7 of the Plan. 

     

         “Other Award”
means any form of Award other than an Option, Restricted Stock, Restricted Stock
Unit or Stock Appreciation Right granted pursuant to Section 11 of the
Plan. 

     

         “Participant”
means an Eligible Individual who has been granted an Award under the
Plan. 

     

         “Performance Period” means the period established by the Committee and set forth in the
applicable Award Document over which Performance Targets are
measured. 

     

         “Performance Stock” means a Target Number of Shares granted pursuant to Section 10(a) of
the Plan. 

     

         “Performance Target” means the performance measures established by the Committee, from among
the performance criteria provided in Section 6(g), and set forth in the
applicable Award Document. 

     

         “Performance Unit” means a right to receive a Target Number of Shares or cash in the
future granted pursuant to Section 10(b) of the Plan. 

     

         “Permitted Transferees” means (i) a Participant’s family member,
(ii) one or more trusts established in whole or in part for the benefit of one
or more of such family members, (iii) one or more entities which are beneficially owned in
whole or in part by one or more such family members, or (iv) a charitable or
not-for-profit organization. 

     

    3 

     

    

    
    


         “Person”
means any person, entity or "group" within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act, except that such term shall not include
(i) the Company or any of its Subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, or (v) a person or group as used in Rule
13d-1(b) under the Exchange Act. 

     

         “Plan” means
this 2007 Long Term Equity Incentive Plan, as amended or restated from time to
time. 

     

         “Plan Limit”
means the maximum aggregate number of Shares that may be issued for all purposes
under the Plan as set forth in Section 5(a)
of the Plan. 

     

         “Prior Plan”
means the 1996 Stock Option Plan, the 1998 Stock Option Plan, and the 2000 Stock
Plan, as amended from time to time. 

     

         “Restricted Stock” means one or more Shares granted or sold pursuant to Section
8(a) of the Plan. 

     

         “Restricted Stock Unit” means a
right to receive one or more Shares (or cash, if applicable) in the future
granted pursuant to Section 8(b)
of the Plan. 

     

         “Shares”
means shares of Common Stock, as may be adjusted pursuant to Section
13(b). 

     

         “Stock Appreciation Right” means a right to receive all or some portion
of the appreciation on Shares granted pursuant to Section 9 of
the Plan. 

     

         “Subsidiary”
means (i) a corporation or other entity with respect to which the Company,
directly or indirectly, has the power, whether through the ownership of voting
securities, by contract or otherwise, to elect at least a majority of the
members of such corporation’s board of directors or analogous governing body, or
(ii) any other corporation or other entity in which the Company, directly or
indirectly, has an equity or similar interest and which the Committee designates
as a Subsidiary for purposes of the Plan. For purposes of determining
eligibility for the grant of Incentive Stock Options under the Plan, the term
“Subsidiary” shall be defined in the manner required by Section 424(f) of the
Code. 

     

         “Substitute Award” means any Award granted upon assumption of, or in substitution or
exchange for, outstanding employee equity awards previously granted by a company
or other entity acquired by the Company or with which the Company combines
pursuant to the terms of an equity compensation plan that was approved by the
stockholders of such company or other entity. 

     

         “Target Number” means the target number of Shares or cash value established by the
Committee and set forth in the applicable Award Document. 

     

         (b) Rules of Construction. The masculine pronoun shall be deemed to
include the feminine pronoun, and the singular form of a word shall be deemed to
include the plural form, unless the context requires otherwise. Unless the text indicates otherwise,
references to sections are to sections of the Plan. 

     

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    3. Administration 

     

         (a) Committee. The Plan shall be administered by the
Committee, which shall have full power and authority, subject to the express
provisions hereof, to:

     

         (i) select the Participants from the Eligible
Individuals;

     

         (ii) grant Awards in accordance with the Plan; 

     

         (iii) determine the number of Shares subject to each
Award or the cash amount payable in connection with an Award; 

     

         (iv) determine the terms and conditions of each
Award, including, without limitation, those related to term, permissible methods
of exercise, vesting, cancellation, payment, settlement, exercisability,
Performance Periods, Performance Targets, and the effect, if any, of a
Participant’s termination of employment with the Company or any of its Subsidiaries or, subject to Section 6(d), a Change
of Control of the Company; 

     

         (v) subject to Sections 16 and 17(e) of the Plan, amend the terms and
conditions of an Award after the granting thereof; 

     

         (vi) specify and approve the provisions of the
Award Documents delivered to Participants in connection with their
Awards; 

     

         (vii) construe and interpret any Award Document delivered under the
Plan;

     

         (viii) make factual determinations in connection with
the administration or interpretation of the Plan; 

     

         (ix) adopt, prescribe, amend, waive and rescind
administrative regulations, rules and procedures relating to the
Plan; 

     

         (x) employ such legal counsel, independent
auditors and consultants as it deems desirable for the administration of the
Plan and to rely upon any advice, opinion or computation received
therefrom; 

     

         (xi) vary the terms of Awards to take account of
tax and securities law and other regulatory requirements or to procure favorable
tax treatment for Participants;

     

         (xii) correct any defects, supply any omission or
reconcile any inconsistency in any Award Document or the Plan;
and 

     

         (xiii) make all other determinations and take any
other action desirable or necessary to interpret, construe or implement properly
the provisions of the Plan or any Award Document. 

     

         (b) Plan Construction and
Interpretation. The
Committee shall have full power and authority, subject to the express provisions
hereof, to construe and interpret the Plan. 

     

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         (c) Determinations of Committee Final and
Binding. All
determinations by the Committee in carrying out and administering the Plan and
in construing and interpreting the Plan shall be made in the Committee’s sole
discretion and shall be final, binding and conclusive for all purposes and upon
all persons interested herein. 

     

         (d) Delegation of Authority. To the extent not prohibited by applicable
laws, rules and regulations, the Committee may, from time to time, delegate some
or all of its authority under the Plan to a subcommittee or subcommittees
thereof or other persons or groups of persons as it deems necessary, appropriate
or advisable under such conditions or limitations as it may set at the time of
such delegation or thereafter; provided,
however, that the Committee may not delegate its
authority (i) to make Awards to employees (A) who are subject on the date of the
Award to the reporting rules under Section 16(a) of the Exchange Act, (B) whose
compensation for such fiscal year may be subject to the limit on deductible
compensation pursuant to Section 162(m) of the Code or (C) who are officers of
the Company who are delegated authority by the Committee hereunder, or (ii)
pursuant to Section 16 of the Plan. For purposes of the Plan, reference to the
Committee shall be deemed to refer to any subcommittee, subcommittees, or other
persons or groups of persons to whom the Committee delegates authority pursuant
to this Section 3(d). 

     

         (e) Liability of Committee. Subject to applicable laws, rules and
regulations: (i) no member of the Board or Committee (or its delegates) shall be
liable for any good faith action or determination made in connection with the
operation, administration or interpretation of the Plan and (ii) the members of
the Board or the Committee (and its delegates) shall be entitled to
indemnification and reimbursement in the manner provided in the Company’s
Certificate of Incorporation as it may be amended from time to time. In the
performance of its responsibilities with respect to the Plan, the Committee
shall be entitled to rely upon information and/or advice furnished by the
Company’s officers or employees, the Company’s accountants, the Company’s
counsel and any other party the Committee deems necessary, and no member of the
Committee shall be liable for any action taken or not taken in reliance upon any
such information and/or advice. 

     

         (f) Action by the Board. Anything in the Plan to the contrary
notwithstanding, subject to applicable laws, rules and regulations, any
authority or responsibility that, under the terms of the Plan, may be exercised
by the Committee may alternatively be exercised by the Board.

     

    4. Eligibility 

     

         (a) Eligible Individuals. Awards may be granted to officers,
employees, directors, Non-Employee Directors, consultants, advisors and
independent contractors of the Company or any of its Subsidiaries or joint
ventures, partnerships or business organizations in which the Company or its
Subsidiaries have an equity interest; provided,
however, that only employees of the Company or
Subsidiary may be granted Incentive Stock Options. The Committee shall have the
authority to select the persons to whom Awards may be granted and to determine
the type, number and terms of Awards to be granted to each such Participant.
Under the Plan, references to “employment” or “employed” include the engagement
of Participants who are consultants, advisors and independent contractors of the
Company or its Subsidiaries and the service of Participants who are Non-Employee
Directors, except for purposes of determining eligibility to be granted
Incentive Stock Options. 

     

         (b) Grants to Participants. The Committee shall have no obligation to
grant any Eligible Individual an Award or to designate an Eligible Individual as
a Participant solely by reason of such Eligible Individual having received a
prior Award or having been previously designated as a Participant. The Committee
may grant more than one Award to a Participant and may designate an Eligible
Individual as a Participant for overlapping periods of time. 

     

    6 

     

    

    
    


    5. Shares Subject to the Plan


     

         (a) Plan Limit. Subject to adjustment in accordance with
Section 13 of the Plan, the maximum aggregate number of Shares that may be
issued for all purposes under the Plan shall be six million (6,000,000) plus any
Shares that are available for issuance under the Prior Plans or that become
available for issuance upon cancellation or expiration of awards granted under
the Prior Plans without having been exercised or settled. Shares to be issued
under the Plan may be authorized and unissued shares, issued shares that have
been reacquired by the Company (in the open-market or in private transactions)
and that are being held in treasury, or a combination thereof. All of the Shares
subject to the Plan Limit may be issued pursuant to Incentive Stock
Options.

     

         (b) Rules Applicable to Determining Shares
Available for Issuance.
The number of Shares remaining available for issuance will be reduced by the
number of Shares subject to outstanding Awards and, for Awards that are not
denominated by Shares, by the number of Shares actually delivered upon
settlement or payment of the Award. For purposes of determining the number of
Shares that remain available for issuance under the Plan, (i) the number of
Shares that are tendered by a Participant or withheld by the Company to pay the
exercise price of an Award or to satisfy the Participant’s tax withholding
obligations in connection with the exercise or settlement of an Award and (ii)
all of the Shares covered by a stock-settled Stock Appreciation Right to the
extent exercised, will not be added back to the Plan Limit. In addition, for
purposes of determining the number of Shares that remain available for issuance
under the Plan, the number of Shares corresponding to Awards under the Plan that
are forfeited or cancelled or otherwise expire for any reason without having
been exercised or settled or that is settled through issuance of consideration
other than Shares (including, without limitation, cash) shall be added back to
the Plan Limit and again be available for the grant of Awards; provided,
however, that this provision shall not be applicable
with respect to (i) the cancellation of a Stock Appreciation Right granted in
tandem with an Option upon the exercise of the Option or (ii) the cancellation
of an Option granted in tandem with a Stock Appreciation Right upon the exercise
of the Stock Appreciation. 

     

         (c) Special Limits. Anything to the contrary in Section 5(a)
above notwithstanding, but subject to adjustment under Section 13 of the Plan,
the following special limits shall apply to Shares available for Awards under
the Plan: 

     

         (i) the maximum number of Shares that may be
issued pursuant to awards of Restricted Stock, Restricted Stock Units,
Performance Stock, Performance Units and Other Awards that are payable in Shares
granted under the Plan shall equal fifteen percent of the Shares in the
aggregate;

     

         (ii) the maximum amount of Awards (other than those
Awards set forth in Section 5(c)) that may be awarded to any Eligible Individual
in any calendar year is fifteen percent of the Shares measured as of the date of
grant (with respect to Awards denominated in Shares). 

     

         (d) Any Shares underlying Substitute Awards
shall not be counted against the number of Shares remaining for issuance and
shall not be subject to Section 5(c).

     

    6. Awards in General 

     

         (a) Types of Awards. Awards under the Plan may consist of
Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights,
Performance Stock, Performance Units and Other Awards. Any Award described in
Sections 7 through 11 of the Plan may be granted singly or in combination or
tandem with any other Award, as the Committee may determine. Awards under the
Plan may be made in combination
with, in replacement of, or as alternatives to awards or rights under any other
compensation or benefit plan of the Company, including the plan of any acquired
entity. 

     

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         (b) Terms Set Forth in Award
Document. The terms and
conditions of each Award shall be set forth in an Award Document in a form
approved by the Committee for such Award, which Award Document shall contain
terms and conditions not inconsistent with the Plan. Notwithstanding the
foregoing, and subject to applicable laws, the Committee may accelerate (i) the
vesting or payment of any Award, (ii) the lapse of restrictions on any Award or
(iii) the date on which any Award first becomes exercisable. The terms of Awards
may vary among Participants, and the Plan does not impose upon the Committee any
requirement to make Awards subject to uniform terms. Accordingly, the terms of
individual Award Documents may vary.

     

         (c) Termination of Employment. The Committee shall specify at or after the
time of grant of an Award the provisions governing the disposition of an Award
in the event of a Participant’s termination of employment with the Company or
any of its Subsidiaries. Subject to applicable laws, rules and regulations, in
connection with a Participant’s termination of employment, the Committee shall
have the discretion to accelerate the vesting, exercisability or settlement of,
eliminate the restrictions and conditions applicable to, or extend the
post-termination exercise period of an outstanding Award. Such provisions may be
specified in the applicable Award Document or determined at a subsequent time.


     

         (d) Change of Control. (i) The Committee shall have full authority
to determine the effect, if any, of a Change of Control of the Company or any
Subsidiary on the vesting, exercisability, settlement,
payment or lapse of restrictions applicable to an Award, which effect may be
specified in the applicable Award Document or determined at a subsequent time.
Subject to applicable laws, rules and regulations, the Board or the Committee
shall, at any time prior to, coincident with or after the effective time of a
Change of Control, take such actions as it may consider appropriate, including,
without limitation: (A) providing for the acceleration of any vesting conditions
relating to the exercise or settlement of an Award or that an Award shall
terminate or expire unless exercised or settled in full on or before a date
fixed by the Committee; (B) making such adjustments to the Awards then
outstanding as the Committee deems appropriate to reflect such Change of
Control; (C) causing the Awards then outstanding to be assumed, or new rights
substituted therefor, by the surviving corporation in such Change of Control; or
(D) permit or require Participants to surrender outstanding Options and Stock
Appreciation Rights in exchange for a cash payment, if any, equal to the
difference between the highest price paid for a Share in the Change of Control
transaction and the Exercise Price of the Award. In addition, except as
otherwise specified in an Award Document (or a Participant’s written employment
agreement with the Company or any Subsidiary): 

     

         (1) any and all Options and Stock Appreciation
Rights outstanding as of the effective date of the Change of Control shall
become immediately exercisable, and shall remain exercisable until the earlier
of the expiration of their initial term or the second (2nd) anniversary of the Participant's termination
of employment with the Company;

     

         (2) any restrictions imposed on Restricted Stock
and Restricted Stock Units outstanding as of the effective date of the Change of
Control shall lapse; 

     

         (3) the Performance Targets with respect to all
Performance Units, Performance Stock and other performance-based Awards granted
pursuant to Sections 6(g) or 10 outstanding as of the effective date of the
Change of Control shall be deemed to have been attained at the specified target
level of performance; and

     

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         (4) the vesting of all Awards denominated in
Shares outstanding as of the effective date of the Change in Control shall be
accelerated. 

     

         (ii) Subject to applicable laws, rules and regulations, the Committee may
provide, in an Award Document or subsequent to the grant of an Award for the
accelerated vesting, exercisability and/or the deemed attainment of a
Performance Target with respect to an Award upon specified events similar to a
Change of Control.

     

         (iii) Notwithstanding any other provision of the Plan or any Award Document,
the provisions of this Section 6(d) may not be terminated, amended, or modified
upon or after a Change of Control in a manner that would adversely affect a
Participant’s rights with respect to an outstanding Award without the prior
written consent of the Participant. Subject to Section 16, the Board, upon
recommendation of the Committee, may terminate, amend or modify this Section
6(d) at any time and from time to time prior to a Change of
Control.

     

         (e) Dividends and Dividend
Equivalents. The Committee
may provide Participants with the right to receive dividends or payments
equivalent to dividends or interest with respect to an outstanding Award, which
payments can either be paid currently or deemed to have been reinvested in
Shares, and can be made in Shares, cash or a combination thereof, as the
Committee shall determine; provided,
however, that the terms of any reinvestment of
dividends must comply with all applicable laws, rules and regulations,
including, without limitation, Section 409A of the Code. Notwithstanding the
foregoing, no dividends or dividend equivalents shall be paid with respect to
Options or Stock Appreciation Rights. 

     

         (f) Rights of a Stockholder. A Participant shall have no rights as a
stockholder with respect to Shares covered by an Award (including voting rights)
until the date the Participant or his nominee becomes the holder of record of
such Shares. No adjustment shall be made for dividends or other rights for which
the record date is prior to such date, except as provided in Section 13.


     

         (g) Performance-Based Awards. (i) The Committee may determine whether any
Award under the Plan is intended to be “performance-based compensation” as that
term is used in Section 162(m) of the Code. Any such Awards designated to be
“performance-based compensation” shall be conditioned on the achievement of one
or more Performance Targets to the extent required by Section 162(m) of the Code
and will be subject to all other conditions and requirements of Section 162(m).
The Performance Targets will be comprised of specified levels of one or more of
the following performance criteria as the Committee deems appropriate: net
income; cash flow or cash flow on investment; pre-tax or post-tax profit levels
or earnings; operating earnings; return on investment; earned value added
expense reduction levels; free cash flow; free cash flow per share; earnings per
share; net earnings per share; return on assets; return on net assets; return on
equity; return on capital; return on sales; growth in managed assets; operating
margin; total stockholder return or stock price appreciation; EBITDA; adjusted
EBITDA; revenue; revenue before deferral, in each case determined in accordance
with generally accepted accounting principles (subject to modifications approved
by the Committee) consistently applied on a business unit, divisional,
subsidiary or consolidated basis or any combination thereof. The Performance
Targets may be described in terms of objectives that are related to the
individual Participant or objectives that are Company-wide or related to a
Subsidiary, division, department, region, function or business unit and may be
measured on an absolute or cumulative basis or on the basis of percentage of
improvement over time, and may be measured in terms of Company performance (or
performance of the applicable Subsidiary, division, department, region, function
or business unit) or measured relative to selected peer companies or a market
index. In addition, for Awards not intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, the Committee may establish
Performance Targets based on other criteria as it deems appropriate.


     

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         (ii) The Participants will be designated, and
the applicable Performance Targets will be established, by the Committee within
ninety (90) days following the commencement of the applicable Performance Period
(or such earlier or later date permitted or required by Section 162(m) of the
Code). Each Participant will be assigned a Target Number payable if Performance
Targets are achieved. Any payment of an Award granted with Performance Targets
shall be conditioned on the written certification of the Committee in each case
that the Performance Targets and any other material conditions were satisfied.
The Committee may determine, at the time of Award grant, that if performance
exceeds the specified Performance Targets, the Award may be settled with payment
greater than the Target Number, but in no event may such payment exceed the
limits set forth in Section 5(c). The Committee retains the right to reduce any
Award notwithstanding the attainment of the Performance Targets.

     

         (h) Deferrals. In accordance with the procedures authorized
by, and subject to the approval of, the Committee, Participants may be given the
opportunity to defer the payment or settlement of an Award to one or more dates
selected by the Participant; provided,
however, that the terms of any deferrals must comply
with all applicable laws, rules and regulations, including, without limitation,
Section 409A of the Code. No deferral opportunity shall exist with respect to an
Award unless explicitly permitted by the Committee on or after the time of
grant. 

     

         (i) Repricing of Options and Stock Appreciation
Rights. Notwithstanding
anything in the Plan to the contrary, an Option or Stock Appreciation Right
shall not be granted in substitution for a previously granted Option or Stock
Appreciation Right being canceled or surrendered as a condition of receiving a
new Award, if the new Award would have a lower exercise price than the Award it
replaces, nor shall the exercise price of an Option or Stock Appreciation Right
be reduced once the Option or Stock Appreciation Right is granted. The foregoing
shall not (i) prevent adjustments pursuant to Section 13 or (ii) apply to grants
of Substitute Awards. 

     

    7. Terms and Conditions of Options


     

         (a) General. The Committee, in its discretion, may grant
Options to Eligible Individuals and shall determine whether such Options shall
be Incentive Stock Options or Nonqualified Stock Options. Each Option shall be
evidenced by an Award Document that shall expressly identify the Option as an
Incentive Stock Option or Nonqualified Stock Option, and be in such form and
contain such provisions as the Committee shall from time to time deem
appropriate. 

     

         (b) Exercise Price. The exercise price of an Option shall be
fixed by the Committee at the time of grant or shall be determined by a method
specified by the Committee at the time of grant. In no event shall the exercise
price of an Option be less than one hundred percent (100%) of the Fair Market
Value of a Share on the date of grant; provided,
however that the exercise price of a Substitute Award
granted as an Option shall be determined in accordance with Section 409A of the
Code and may be less than one hundred percent (100%) of the Fair Market Value.


     

         (c) Term. An Option shall be effective for such term
as shall be determined by the Committee and as set forth in the Award Document
relating to such Option, and the Committee may extend the term of an Option
after the time of grant; provided,
however, that the term of an Option may in no event
extend beyond the tenth (10th) anniversary
of the date of grant of such Option. 

     

    10 

     

    

    
    


         (d) Exercise; Payment of Exercise
Price. Options shall be
exercised by delivery of a notice of exercise in a form approved by the Company.
Subject to the provisions of the applicable Award Document, the exercise price
of an Option may be paid (i) in cash or cash equivalents, (ii) by actual
delivery or attestation to ownership of freely transferable Shares already owned
by the person exercising the Option, (iii) by a combination of cash and Shares
equal in value to the exercise price, (iv) through net share settlement or similar procedure
involving the withholding of Shares subject to the Option with a value equal to
the exercise price or (v) by such other means as the Committee may authorize. In
accordance with the rules and procedures authorized by the Committee for this
purpose, the Option may also be exercised through a “cashless exercise”
procedure authorized by the Committee from time to time that permits
Participants to exercise Options by delivering irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan proceeds
necessary to pay the exercise price and the amount of any required tax or other
withholding obligations or such other procedures determined by the Company from
time to time. 

     

         (e) Incentive Stock Options. The exercise price per Share of an Incentive
Stock Option shall be fixed by the Committee at the time of grant or shall be
determined by a method specified by the Committee at the time of grant, but in
no event shall the exercise price of an Incentive Stock Option be less than one
hundred percent (100%) of the Fair Market Value of a Share on the date of grant.
No Incentive Stock Option may be issued pursuant to the Plan to any individual
who, at the time the Incentive Stock Option is granted, owns stock possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any of its Subsidiaries, unless (i) the exercise price
determined as of the date of grant is at least one hundred ten percent (110%) of
the Fair Market Value on the date of grant of the Shares subject to such
Incentive Stock Option and (ii) the Incentive Stock Option is not exercisable
more than five (5) years from the date of grant thereof. No Participant shall be
granted any Incentive Stock Option which would result in such Participant
receiving a grant of Incentive Stock Options that would have an aggregate Fair
Market Value in excess of one hundred thousand dollars ($100,000), determined as
of the time of grant, that would be exercisable for the first time by such
Participant during any calendar year. No Incentive Stock Option may be granted
under the Plan after the tenth anniversary of the Effective Date. The terms of
any Incentive Stock Option granted under the Plan shall comply in all respects
with the provisions of Section 422 of the Code, or any successor provision
thereto, as amended from time to time. 

     

    8. Terms and Conditions of Restricted Stock and
Restricted Stock Units 

     

         (a) Restricted Stock. The Committee, in its discretion, may grant
or sell Restricted Stock to Eligible Individuals. An Award of Restricted Stock
shall consist of one or more Shares granted or sold to an Eligible Individual,
and shall be subject to the terms, conditions and restrictions set forth in the
Plan and established by the Committee in connection with the Award and specified
in the applicable Award Document. Restricted Stock may, among other things, be
subject to restrictions on transferability, vesting requirements or other
specified circumstances under which it may be canceled. 

     

         (b) Restricted Stock Units. The Committee, in its discretion, may grant
Restricted Stock Units to Eligible Individuals. A Restricted Stock Unit shall
entitle a Participant to receive, subject to the terms, conditions and
restrictions set forth in the Plan and the applicable Award Document, one or
more Shares. Restricted Stock Units may, among other things, be subject to
restrictions on transferability, vesting requirements or other specified
circumstances under which they may be canceled. If and when the cancellation
provisions lapse, the Restricted Stock Units shall become Shares owned by the
applicable Participant or, at the sole discretion of the Committee, cash, or a
combination of cash and Shares, with a value equal to the Fair Market Value of
the Shares at the time of payment. 

     

    11 

     

    

    
    


    9. Stock Appreciation Rights 

     

         (a) General. The Committee, in its discretion, may grant
Stock Appreciation Rights to Eligible Individuals. A Stock Appreciation Right
shall entitle a Participant to receive, upon satisfaction of the conditions to
payment specified in the applicable Award Document, an amount equal to the
excess, if any, of the Fair Market Value on the exercise date of the number of
Shares for which the Stock Appreciation Right is exercised over the grant price for such Stock
Appreciation Right specified in the applicable Award Document. The grant price
per share of Shares covered by a Stock Appreciation Right shall be fixed by the
Committee at the time of grant or, alternatively, shall be determined by a
method specified by the Committee at the time of grant, but in no event shall
the grant price of a Stock Appreciation Right be less than one hundred percent
(100%) of the Fair Market Value of a Share on the date of grant; provided,
however, that the grant price of a Substitute Award
granted as a Stock Appreciation Rights shall be in accordance with Section 409A
of the Code and may be less than one hundred percent (100%) of the Fair Market
Value. Payments to a Participant upon exercise of a Stock Appreciation Right may
be made in cash or Shares, having an aggregate Fair Market Value as of the date
of exercise equal to the excess, if any, of the Fair Market Value on the
exercise date of the number of Shares for which the Stock Appreciation Right is
exercised over the grant price for such Stock Appreciation Right. The term of a
Stock Appreciation Right settled in Shares shall not exceed seven (7) years.


     

         (b) Stock Appreciation Rights in Tandem with
Options. A Stock
Appreciation Right granted in tandem with an Option may be granted either at the
same time as such Option or subsequent thereto. If granted in tandem with an
Option, a Stock Appreciation Right shall cover the same number of Shares as
covered by the Option (or such lesser number of shares as the Committee may
determine) and shall be exercisable only at such time or times and to the extent
the related Option shall be exercisable, and shall have the same term as the
related Option. The grant price of a Stock Appreciation Right granted in tandem
with an Option shall equal the per-share exercise price of the Option to which
it relates. Upon exercise of a Stock Appreciation Right granted in tandem with
an Option, the related Option shall be canceled automatically to the extent of
the number of Shares covered by such exercise; conversely, if the related Option
is exercised as to some or all of the shares covered by the tandem grant, the
tandem Stock Appreciation Right shall be canceled automatically to the extent of
the number of Shares covered by the Option exercise. 

     

    10. Terms and Conditions of Performance Stock and
Performance Units 

     

         (a) Performance Stock. The Committee may grant Performance Stock to
Eligible Individuals. An Award of Performance Stock shall consist of a Target
Number of Shares granted to an Eligible Individual based on the achievement of
Performance Targets over the applicable Performance Period, and shall be subject
to the terms, conditions and restrictions set forth in the Plan and established
by the Committee in connection with the Award and specified in the applicable
Award Document.

     

         (b) Performance Units. The Committee, in its discretion, may grant
Performance Units to Eligible Individuals. A Performance Unit shall entitle a
Participant to receive, subject to the terms, conditions and restrictions set
forth in the Plan and established by the Committee in connection with the Award
and specified in the applicable Award Document, a Target Number of Shares or
cash based upon the achievement of Performance Targets over the applicable
Performance Period. At the sole discretion of the Committee, Performance Units
shall be settled through the delivery of Shares or cash, or a combination of
cash and Shares, with a value equal to the Fair Market Value of the underlying
Shares as of the last day of the applicable Performance Period. 

     

    11. Other Awards 

     

         The Committee shall have the authority to
specify the terms and provisions of other forms of equity-based or
equity-related Awards not described above that the Committee determines to be
consistent with the purpose of the Plan and the interests of the Company, which
Awards may provide for cash payments based in whole or in part on the value or
future value of Shares, for the acquisition or future acquisition of Shares, or
any combination thereof. 

     

    12 

     

    

    
    


    12. Certain Restrictions 

     

         (a) Transfers. No Award shall be
transferable other than pursuant to a beneficiary designation under Section
12(c), by last will and testament or by the laws of descent and distribution or,
except in the case of an Incentive Stock Option, pursuant to a domestic
relations order, as the case may be; provided, however, that the Committee may, subject to
applicable laws, rules and regulations and such terms and conditions as it shall
specify, permit the transfer of an Award, other than an Incentive Stock Option,
for no consideration to a Permitted Transferee. Any Award transferred to a
Permitted Transferee shall be further transferable only by last will and
testament or the laws of descent and distribution or, for no consideration, to
another Permitted Transferee of the Participant. 

     

         (b) Award Exercisable Only by
Participant. During the
lifetime of a Participant, an Award shall be exercisable only by the Participant
or by a Permitted Transferee to whom such Award has been transferred in
accordance with Section 12(a) above. The grant of an Award shall impose no
obligation on a Participant to exercise or settle the Award. 

     

         (c) Beneficiary Designation. The beneficiary or beneficiaries of the
Participant to whom any benefit under the Plan is to be paid in case of his
death before he receives any or all of such benefit shall be determined under
the Company's Group Life Insurance Plan. A Participant may, from time to time,
name any beneficiary or beneficiaries to receive any benefit in case of his
death before he receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, including the beneficiary
designated under the Company's Group Life Insurance Plan, and will be effective
only when filed by the Participant in writing (in such form or manner as may be
prescribed by the Committee) with the Company during the Participant's lifetime.
In the absence of a valid designation under the Company's Group Life Insurance
Plan or otherwise, if no validly designated beneficiary survives the Participant
or if each surviving validly designated beneficiary is legally impaired or
prohibited from receiving the benefits under an Award, the Participant's
beneficiary shall be the Participant's estate. 

     

    13. Recapitalization or Reorganization


     

         (a) Authority of the Company and
Stockholders. The
existence of the Plan, the Award Documents and the Awards granted hereunder
shall not affect or restrict in any way the right or power of the Company or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or business, any merger or consolidation of the Company, any issue of
stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Shares or the rights thereof or which are convertible into or
exchangeable for Shares, or the dissolution or liquidation of the Company, or
any sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.


     

         (b) Change in Capitalization. Notwithstanding any provision of the Plan or
any Award Document, the number and kind of Shares authorized for issuance under
Section 5 of the Plan, including the maximum number of Shares available under
the special limits provided for in Section 5(c), may be equitably adjusted in
the sole discretion of the Committee in the event of a stock split, reverse
stock spit, stock dividend, recapitalization, reorganization, partial or
complete liquidation, reclassification, merger, consolidation, separation,
extraordinary cash dividend, split-up, spin-off, combination, exchange of
Shares, warrants or rights offering to purchase Shares at a price substantially
below Fair Market Value, or any other corporate event or distribution of stock
or property of the Company affecting the Shares in order to preserve, but not
increase, the benefits or potential benefits intended to be made available under
the Plan. In addition, upon the occurrence of any of the foregoing events, the
number and kind of Shares subject
to any outstanding Award and the exercise price per Share (or the grant price
per Share, as the case may be), if any, under any outstanding Award may be
equitably adjusted (including by payment of cash to a Participant) in the sole
discretion of the Committee in order to preserve the benefits or potential
benefits intended to be made available to Participants. Such adjustments shall
be made by the Committee. Unless otherwise determined by the Committee, such
adjusted Awards shall be subject to the same restrictions and vesting or
settlement schedule to which the underlying Award is subject.

     

    13 

     

    

    
    


    14. Term of the Plan 

     

         Unless earlier terminated pursuant to Section
16, the Plan shall terminate on the tenth (10th) anniversary
of the Effective Date, except with respect to Awards then outstanding. No Awards
may be granted under the Plan after the tenth (10th) anniversary
of the Effective Date. 

     

    15. Effective Date 

     

         The Plan shall become effective on the
Effective Date, subject to approval by the stockholders of the Company.


     

    16. Amendment and Termination 

     

         Subject to applicable laws, rules and
regulations, the Board may at any time terminate or, from time to time, amend,
modify or suspend the Plan; provided,
however, that no termination, amendment, modification
or suspension (i) will be effective without the approval of the stockholders of
the Company if such approval is required under applicable laws, rules and
regulations, including the rules of NASDAQ and (ii) shall materially and
adversely alter or impair the rights of a Participant in any Award previously
made under the Plan without the consent of the holder thereof. Notwithstanding
the foregoing, the Board shall have broad authority to amend the Plan or any
Award under the Plan without the consent of a Participant to the extent it deems
necessary or desirable (a) to comply with, take into account changes in, or
interpretations of, applicable tax laws, securities laws, employment laws,
accounting rules and other applicable laws, rules and regulations, (b) to take
into account unusual or nonrecurring events or market conditions (including,
without limitation, the events described in Section 13(b)), or (c) to take into
account significant acquisitions or dispositions of assets or other property by
the Company. 

     

    17. Miscellaneous 

     

         (a) Tax Withholding. The Company or a Subsidiary, as appropriate,
may require any individual entitled to receive a payment of an Award to remit to
the Company, prior to payment, an amount sufficient to satisfy any applicable
tax withholding requirements. In the case of an Award payable in Shares, the
Company or a Subsidiary, as appropriate, may permit or require a Participant to
satisfy, in whole or in part, such obligation to remit taxes by directing the
Company to withhold shares that would otherwise be received by such individual
or to repurchase shares that were issued to the Participant to satisfy the
minimum statutory withholding rates for any applicable tax withholding purposes,
in accordance with all applicable laws and pursuant to such rules as the
Committee may establish from time to time. The Company or a Subsidiary, as
appropriate, shall also have the right to deduct from all cash payments made to
a Participant (whether or not such payment is made in connection with an Award)
any applicable taxes required to be withheld with respect to such payments.


     

    14 

     

    

    
    


         (b) No Right to Awards or
Employment. No person
shall have any claim or right to receive Awards under the Plan. Neither the
Plan, the grant of Awards under the Plan nor any action taken or omitted to be
taken under the Plan shall be deemed to create or confer on any Eligible
Individual any right to be
retained in the employ of the Company or any Subsidiary or other affiliate
thereof, or to interfere with or to limit in any way the right of the Company or
any Subsidiary or other affiliate thereof to terminate the employment of such
Eligible Individual at any time. No Award shall constitute salary, recurrent
compensation or contractual compensation for the year of grant, any later year
or any other period of time. Payments received by a Participant under any Award
made pursuant to the Plan shall not be included in, nor have any effect on, the
determination of employment-related rights or benefits under any other employee
benefit plan or similar arrangement provided by the Company and the
Subsidiaries, unless otherwise specifically provided for under the terms of such
plan or arrangement or by the Committee. 

     

         (c) Securities Law Restrictions. An Award may not be exercised or settled,
and no Shares may be issued in connection with an Award, unless the issuance of
such shares (i) has been registered under the Securities Act of 1933, as
amended, (ii) has qualified under applicable state “blue sky” laws (or the
Company has determined that an exemption from registration and from
qualification under such state “blue sky” laws is available) and (iii) complies
with all applicable foreign securities laws. The Committee may require each
Participant purchasing or acquiring Shares pursuant to an Award under the Plan
to represent to and agree with the Company in writing that such Eligible
Individual is acquiring the Shares for investment purposes and not with a view
to the distribution thereof. All certificates for Shares delivered under the
Plan shall be subject to such stock-transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any exchange upon which
the Shares are then listed, and any applicable securities law, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions. 

     

         (d) Section 162(m) of the Code. The Plan is intended to comply in all
respects with Section 162(m) of the Code; provided,
however, that in the event the Committee determines
that compliance with Section 162(m) of the Code is not desired with respect to a
particular Award, compliance with Section 162(m) of the Code will not be
required. In addition, if any provision of this Plan would cause Awards that are
intended to constitute “qualified performance-based compensation” under Section
162(m) of the Code, to fail to so qualify, that provision shall be severed from,
and shall be deemed not to be a part of, the Plan, but the other provisions
hereof shall remain in full force and effect. 

     

         (e) Section 409A of the Code. Notwithstanding any contrary provision in
the Plan or an Award Document, if any provision of the Plan or an Award Document
contravenes any regulations or guidance promulgated under Section 409A of the
Code or would cause an Award to be subject to additional taxes, accelerated
taxation, interest and/or penalties under Section 409A of the Code, such
provision of the Plan or Award Document may be modified by the Committee without
consent of the Participant in any manner the Committee deems reasonable or
necessary. In making such modifications the Committee shall attempt, but shall
not be obligated, to maintain, to the maximum extent practicable, the original
intent of the applicable provision without contravening the provisions of
Section 409A of the Code. Moreover, any discretionary authority that the
Committee may have pursuant to the Plan shall not be applicable to an Award that
is subject to Section 409A of the Code to the extent such discretionary
authority would contravene Section 409A of the Code or the guidance promulgated
thereunder. 

     

         (f) Awards to Individuals Subject to Laws of a
Jurisdiction Outside of the United States. To the extent that Awards under the Plan are
awarded to Eligible Individuals who are domiciled or resident outside of the
United States or to persons who are domiciled or resident in the United States
but who are subject to the tax laws of a jurisdiction outside of the United
States, the Committee may adjust the terms of the Awards granted hereunder to
such person (i) to comply with the laws, rules and regulations of such
jurisdiction and (ii) to permit the grant of the Award not to be a taxable event
to the Participant. The authority granted under the previous sentence shall
include the discretion for the Committee to adopt, on behalf of the Company, one or more sub-plans
applicable to separate classes of Eligible Individuals who are subject to the
laws of jurisdictions outside of the United States. 

     

    15 

     

    

    
    


         (g) Satisfaction of Obligations. Subject to applicable law, the Company may
apply any cash, Shares, securities or other consideration received upon exercise
or settlement of an Award to any obligations a Participant owes to the Company
and the Subsidiaries in connection with the Plan or otherwise, including,
without limitation, any tax obligations or obligations under a currency facility
established in connection with the Plan. 

     

         (h) No Limitation on Corporate
Actions. Nothing contained
in the Plan shall be construed to prevent the Company or any Subsidiary from
taking any corporate action, whether or not such action would have an adverse
effect on any Awards made under the Plan. No Participant, beneficiary or other
person shall have any claim against the Company or any Subsidiary as a result of
any such action. 

     

         (i) Unfunded Plan. The Plan is
intended to constitute an unfunded plan for incentive compensation. Prior to the
issuance of Shares, cash or other form of payment in connection with an Award,
nothing contained herein shall give any Participant any rights that are greater
than those of a general unsecured creditor of the Company. The Committee may,
but is not obligated, to authorize the creation of trusts or other arrangements
to meet the obligations created under the Plan to deliver Shares with respect to
awards hereunder. 

     

         (j) Successors. All obligations of the Company under the
Plan with respect to Awards granted hereunder shall be binding on any successor
to the Company, whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Company. 

     

         (k) Application of Funds. The proceeds received by the Company from
the sale of Shares pursuant to Awards will be used for general corporate
purposes. 

     

         (l) Award Document. In the event of any conflict or
inconsistency between the Plan and any Award Document, the Plan shall govern and
the Award Document shall be interpreted to minimize or eliminate any such
conflict or inconsistency. 

     

         (m) Headings. The headings of Sections herein are included
solely for convenience of reference and shall not affect the meaning of any of
the provisions of the Plan. 

     

         (n) Severability. If any provision of this Plan is held
unenforceable, the remainder of the Plan shall continue in full force and effect
without regard to such unenforceable provision and shall be applied as though
the unenforceable provision were not contained in the Plan.

     

         (o) Expenses. The costs and expenses of administering the
Plan shall be borne by the Company. 

     

    16 

     

    

    
    


         (p) Arbitration. Any dispute, controversy or claim arising
out of or relating to the Plan that cannot be resolved by the Participant on the
one hand, and the Company on the other, shall be submitted to arbitration in the
State of Connecticut under the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association; provided,
however, that any such submission by the Participant
must be made within one (1) year of the date of the events giving rise to such
dispute, controversy or claim. The determination of the arbitrator shall be
conclusive and binding on the Company and the Participant, and judgment may be
entered on the arbitrator’s award in any court having jurisdiction. The expenses of such
arbitration shall be borne by the Company; provided,
however, that each party shall bear its own legal
expenses unless the Participant is the prevailing party, in which case the
Company shall promptly pay or reimburse the Participant for the reasonable legal
fees and expenses incurred by the Participant in connection with such contest or
dispute (excluding any fees payable pursuant to a contingency fee arrangement).


     

         (q) Governing Law. Except as to matters of federal law, the
Plan and all actions taken thereunder shall be governed by and construed in
accordance with the laws of the State of Connecticut. 

     

    17