ex10-1.htm


    
      
        

      

      EXHIBIT
        10.1

       

      


      VERSO
        TECHNOLOGIES, INC.

      2007
        STOCK INCENTIVE PLAN

       

      Effective
        Date: December 19, 2007

      


      


      
        
          
            
            

          

          
            1

            
              

            

          

          
            
            

          

        

      

      


      TABLE
        OF CONTENTS

      
        	 	
              	
              	
                   

              	 	
                   

              	
                Page

              
	
                1.

              	
                   

              	
                   

              	
                   

              	
                Purpose

              	
                   

              	
                    

              	
                3

              	
                   

              
	
                2.

              	
                   

              	
                   

              	
                   

              	
                Definitions

              	
                   

              	
                    

              	
                3

              	
                   

              
	
                3.

              	
                   

              	
                   

              	
                   

              	
                Successor
                  to Prior Plan

              	
                   

              	
                    

              	
                6

              	
                   

              
	
                4.

              	
                   

              	
                   

              	
                   

              	
                Shares
                  Subject to this Plan

              	
                   

              	
                    

              	
                7

              	
                   

              
	
                5.

              	
                   

              	
                   

              	
                   

              	
                Option
                  Rights

              	
                   

              	
                    

              	
                8

              	
                   

              
	
                6.

              	
                   

              	
                   

              	
                   

              	
                Restricted
                  Stock

              	
                   

              	
                    

              	
                8

              	
                   

              
	
                7.

              	
                   

              	
                   

              	
                   

              	
                Restricted
                  Stock Units

              	
                   

              	
                    

              	
                9

              	
                   

              
	
                8.

              	
                   

              	
                   

              	
                   

              	
                Performance
                  Shares and Performance Units

              	
                   

              	
                    

              	
                10

              	
                   

              
	
                9.

              	
                   

              	
                   

              	
                   

              	
                Effect
                  of Termination of Employment or Other Service

              	
                   

              	
                    

              	
                11

              	
                   

              
	
                10

              	
                   

              	
                   

              	
                   

              	
                Administration
                  of this Plan

              	
                   

              	
                    

              	
                12

              	
                   

              
	
                11

              	
                   

              	
                   

              	
                   

              	
                Adjustments

              	
                   

              	
                    

              	
                12

              	
                   

              
	
                12

              	
                   

              	
                   

              	
                   

              	
                Change
                  of Control

              	
                   

              	
                    

              	
                12

              	
                   

              
	
                13

              	
                   

              	
                   

              	
                   

              	
                Non-U.S.
                  Participants

              	
                   

              	
                    

              	
                13

              	
                   

              
	
                14

              	
                   

              	
                   

              	
                   

              	
                Transferability

              	
                   

              	
                    

              	
                13

              	
                   

              
	
                15

              	
                   

              	
                   

              	
                   

              	
                Withholding
                  Taxes

              	
                   

              	
                    

              	
                13

              	
                   

              
	
                16

              	
                   

              	
                   

              	
                   

              	
                Compliance
                  with Section 409A of the Code

              	
                   

              	
                    

              	
                14

              	
                   

              
	
                17

              	
                   

              	
                   

              	
                   

              	
                Parachute
                  Limitations

              	
                   

              	
                    

              	
                14

              	
                   

              
	
                18

              	
                   

              	
                   

              	
                   

              	
                Effective
                  Date

              	
                   

              	
                    

              	
                15

              	
                   

              
	
                19

              	
                   

              	
                   

              	
                   

              	
                Amendments

              	
                   

              	
                    

              	
                15

              	
                   

              
	
                20

              	
                   

              	
                   

              	
                   

              	
                Termination

              	
                   

              	
                    

              	
                16

              	
                   

              
	
                21

              	
                   

              	
                   

              	
                   

              	
                Requirements
                  of Law

              	
                   

              	
                    

              	
                16

              	
                   

              
	
                22

              	
                   

              	
                   

              	
                   

              	
                Governing
                  Law

              	
                   

              	
                    

              	
                16

              	
                   

              
	
                23

              	
                   

              	
                   

              	
                   

              	
                Unfunded
                  Plan

              	
                   

              	
                    

              	
                16

              	
                   

              
	
                24

              	
                   

              	
                   

              	
                   

              	
                Miscellaneous
                  Provisions

              	
                   

              	
                    

              	
                17

              	
                   

              


      

      


      


      
        
          
            
            

          

          
            2

            
              

            

          

          
            
            

          

        

      

      


      VERSO
        TECHNOLOGIES, INC.

      2007
        STOCK INCENTIVE PLAN

       

      1.  Purpose.
        The purpose of the Verso Technologies, Inc. 2007 Stock Incentive Plan is
        to
        advance the interest of the shareholders of the Company by enhancing its
        ability
        to attract, retain and motivate persons who are expected to make important
        contributions to the Company and by providing such persons with equity ownership
        opportunities and performance-based incentives that are intended to align
        their
        interests with those of the Company’s shareholders.

       

      2.  Definitions.
        As used in this Plan,

       

      (a)  “1999
        Stock Incentive Plan”
        means the Company’s 1999 Stock Incentive Plan, as amended.

       

      (b)  “Board”
        means the Board of
        Directors of the Company and, to the extent of any delegation by the Board
        to a
        committee (or subcommittee thereof) pursuant to Section 9 of this Plan, such
        committee (or subcommittee).

       

      (c)  “Benefit
        Arrangement” means
        any formal or informal plan or arrangement for the direct or indirect provision
        of compensation to a Participant (including groups or classes of Participants
        or
        beneficiaries of which the Participant is a member), whether or not such
        compensation is deferred, is in cash, or is in the form of a benefit to or
        for
        the Participant.

       

      (d)  “Cause”
        means (i) with
        respect to any Participant subject to any employment or other agreement with
        the
        Company or any Subsidiary, as such term is defined in such employment or
        other
        agreement, or (ii) if such term is not defined in such employment or other
        agreement or with respect to any Participant not subject to any employment
        or
        other agreement with the Company or any Subsidiary (A) fraud, misrepresentation,
        embezzlement or deliberate injury or attempted injury, in each case related
        to
        the Company or any Subsidiary, (B) any unlawful or criminal activity of a
        serious nature, (C) any intentional and deliberate breach of a duty or duties
        that, individually or in the aggregate, are material in relation to the
        Participant’s overall duties, or (D) any material breach of any employment,
        service or noncompete agreement entered into with the Company or any
        Subsidiary.

       

      (e)  “Change
        of Control” has the
        meaning provided in Section 12 of this Plan.

       

      (f)  “Code”
        means the Internal
        Revenue Code of 1986, as amended from time to time.

       

      (g)  “Common
        Stock” means the
        common stock, par value $0.01 per share, of the Company or any security into
        which such shares of Common Stock may be changed by reason of any transaction
        or
        event of the type referred to in Section 11 of this Plan.

       

      (h)  “Company”
        means Verso
        Technologies, Inc., a Minnesota corporation, and its successors.

       

      (i)  “Covered
        Employee” means a
        Participant who is, or is determined by the Board to be a Participant who
        may
        become, a “covered employee” within the meaning of Section 162(m) of the
        Code.

       

      (j)  “Date
        of Grant” means the
        date specified by the Board on which a grant of Option Rights, Performance
        Shares, Performance Units or a grant or sale of Restricted Stock or Restricted
        Stock Units, will become effective (which date will not be earlier than the
        date
        on which the Board takes action with respect thereto).

       

      (k)  “Director”
        means a member of
        the Board.

       

      (l)  “Disability”
        means, with
        respect to any Participant, the disability of the Participant such as would
        entitle the Participant to receive disability income benefits pursuant to
        the
        long-term disability plan of the Company or any Subsidiary then covering
        the
        Participant or, if no such plan exists or is applicable to the Participant,
        then
        the permanent and total disability of the Participant within the meaning
        of
        Section 22(e)(3) of the Code.

       

      (m)  “Effective
        Date” means the
        date immediately following the date that this Plan is approved by the
        shareholders of the Company.

       

      (n)  “Evidence
        of Award” means an
        agreement, certificate, resolution or other type or form of writing or other
        evidence that sets forth the terms and conditions of Option Rights, Performance
        Shares or Performance Units granted, or a grant or sale of Restricted Stock
        or
        Restricted Stock Units. An Evidence of Award may be in an electronic medium,
        may
        be limited to notation on the books and records of the Company and need not
        be
        signed by a representative of the Company or a Participant; provided, however,
        that in the case of any grant of an IncentiveStock
        Option, such Evidence of Award must satisfy the requirements of Treasury
        Regulation § 1.421-1(a)(3) (including any successor provision
        thereto).

      


      
        
          
            
            

          

          
            3

            
              

            

          

          
            
            

          

        

      

      


      (o)  “Exchange
        Act” means the
        Securities Exchange Act of 1934, as amended, and the rules and regulations
        thereunder, as such law, rules and regulations may be amended from time to
        time.

       

      (p)  “Incentive
        Stock Options”
        means Option Rights that are intended to qualify as “incentive stock options”
under Section 422 of the Code.

       

      (q)  “Incumbent
        Directors” means
        the individuals who, as of the Effective Date, are Directors of the Company
        and
        any individual becoming a Director subsequent to the date thereof whose
        election, nomination for election by the Company’s shareholders, or appointment,
        was approved by a vote of at least a majority of the then Incumbent Directors
        (either by a specific vote or by approval of the proxy statement of the Company
        in which such individual is named as a nominee for Director, without objection
        to such nomination); provided, however,
        that an
        individual shall not be an Incumbent Director if such individual’s election or
        appointment to the Board occurs as a result of an actual or threatened election
        contest (as described in Rule 14a-12(c) promulgated under the Exchange Act)
        with
        respect to the election or removal of Directors or other actual or threatened
        solicitation of proxies or consents by or on behalf of a Person other than
        the
        Board.

       

      (r)  “Management
        Objectives” means
        the measurable performance objective or objectives established pursuant to
        this
        Plan for Participants who have received grants of Performance Shares or
        Performance Units or, when so determined by the Board, Option Rights, Restricted
        Stock, Restricted Stock Units or dividend credits pursuant to this Plan.
        Management Objectives may be described in terms of Company-wide objectives
        or
        objectives that are related to the performance of the individual Participant
        or
        of the Subsidiary, division, department, region or function within the Company
        or Subsidiary in which the Participant is employed. The Management Objectives
        may be made relative to the performance of other companies. The Management
        Objectives applicable to any award to a Covered Employee will be based on
        specified levels of, or growth in, one or more of the following
        criteria:

       

      
        	
                (i)  

              	
              	
                Appreciation
                  in value of shares;

              


      

      


      
        	
                (ii)

              	
              	
                Total
                  shareholder return;

              


      

      


      
        	
                (iii)

              	
              	
                Earnings
                  per share;

              


      

      


      
        	
                (iv)

              	
              	
                Operating
                  income;

              


      

      


      
        	
                (v)

              	
              	
                Operating
                  income before depreciation or
                  amortization;

              


      

      


      
        	
                (vi)

              	
              	
                Net
                  income;

              


      

      


      
        	
                (vii)

              	
              	
                Pretax
                  earnings;

              


      

      


      
        	
                (viii)

              	
              	
                Earnings
                  before interest, taxes, depreciation and
                  amortization;

              


      

      


      
        	
                (ix)

              	
              	
                Pro
                  forma net income;

              


      

      


      
        	
                (x)

              	
              	
                Return
                  on equity;

              


      

      


      
        	
                (xi)

              	
              	
                Return
                  on designated assets;

              


      

      


      
        	
                (xii)

              	
              	
                Return
                  on capital;

              


      

      


      
        	
                (xiii)

              	
              	
                Economic
                  value added;

              


      

      


      
        	
                (xiv)

              	
              	
                Revenues
                  or sales;

              


      

      


      
        	
                (xv)

              	
              	
                Expenses;

              


      

      


      
        	
                (xvi)

              	
              	
                Operating
                  profit margin;

              


      

      


      
        	
                (xvii)

              	
              	
                Operating
                  cash flow;

              


      

       

      
        
          	
                  (xviii)

                	
                	
                  
                    Free
                      cash flow;

                  

                


        

      

    

     

    
      


      
        
          
            
            

          

          
            4

            
              

            

          

          
            
            

          

        

      

       

      
        	
                (xix)

              	
              	
                Cash
                  flow return on investment;

              


      

      


      
        	
                (xx)

              	
              	
                Operating
                  margin or net profit margin; or

              


      

      


      
        	
                (xxi)

              	
              	
                Any
                  of the above criteria as compared to the performance of a published
                  or a
                  special index deemed applicable by the
                  Board.

              


      

      


      If
        the
        Board determines that a change in the business, operations, corporate structure
        or capital structure of the Company, or the manner in which it conducts its
        business, or other events or circumstances render the Management Objectives
        unsuitable, then the Board may in its discretion modify such Management
        Objectives or the related level or levels of achievement, in whole or in
        part,
        as the Board deems appropriate and equitable, except in the case of a Covered
        Employee where such action would result in the loss of the otherwise available
        exemption of the award under Section 162(m) of the Code and the Board intends
        that such award should qualify as “performance-based compensation” for purposes
        of such section. In such case, the Board will not make any modification of
        the
        Management Objectives or the level or levels of achievement with respect
        to such
        Covered Employee.

       

      (s)  “Market
        Value Per Share”
        means the value of a share of Common Stock determined as follows: if on the
        Date
        of Grant or other determination date the Common Stock is listed on an
        established national or regional stock exchange, or is publicly traded on
        an
        established securities market, the Market Value Per Share shall be the closing
        price of the Common Stock on such exchange or in such market (if there is
        more
        than one such exchange or market the Board shall determine the appropriate
        exchange or market) on the Date of Grant or such other determination date
        (or if
        there is no such reported closing price, the Market Value Per Share shall
        be the
        mean between the highest bid and lowest asked prices or between the high
        and low
        sale prices on such trading day) or, if no sale of Common Stock is reported
        for
        such trading day, on the next preceding day on which any sale shall have
        been
        reported. If the Common Stock is not listed on such an exchange, quoted on
        such
        system or traded on such a market, then the Market Value Per Share shall
        be the
        value of the Common Stock as determined by the Board in good faith in a manner
        consistent with Section 409A of the Code.

       

      (t)  “Optionee”
        means the optionee
        named in an Evidence of Award evidencing an outstanding Option
        Right.

       

      (u)  “Option
        Price” means the
        purchase price payable on exercise of an Option Right.

       

      (v)  “Option
        Right” means the
        right to purchase shares of Common Stock upon exercise of an option granted
        pursuant to Section 5 of this Plan.

       

      (w)  “Other
        Agreement” means any
        agreement, contract or understanding entered into by a Participant with the
        Company or any Subsidiary that expressly addresses Section 280G or Section
        4999
        of the Code.

       

      (x)  “Parachute
        Payment” means a
“parachute payment” within the meaning of Section 280G(b)(2) of the
        Code.

       

      (y)  “Participant”
        means a person
        who is selected by the Board to receive benefits under this Plan and who
        is at
        the time (i) a Director, officer or other employee of the Company or any
        one or
        more of its Subsidiaries, or who has agreed to commence serving in any of
        such
        capacities within 90 days of the Date of Grant, or (ii) a consultant or advisor
        (who is a natural person) to the Company or any one or more of its
        Subsidiaries.

       

      (z)  “Performance
        Period” means,
        in respect of a Performance Share or Performance Unit, a period of time
        established pursuant to Section 8 of this Plan within which the Management
        Objectives relating to such Performance Share or Performance Unit are to
        be
        achieved.

       

      (aa)  “Performance
        Share” means a
        bookkeeping entry that records the equivalent of one share of Common Stock
        awarded pursuant to Section 8 of this Plan.

       

      (bb)  “Performance
        Unit” means a
        bookkeeping entry awarded pursuant to Section 8 of this Plan that records
        a unit
        equivalent to $1.00 or such other value as is determined by the
        Board.

       

      (cc)  “Person”
        means any
        individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2)
        of the Exchange Act.

      


      
        
          
            
            

          

          
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      (dd)  “Plan”
        means the Verso
        Technologies, Inc. 2007 Stock Incentive Plan, as may be amended from time
        to
        time.

       

      (ee)  “Prior
        Stock Incentive Plan”
        means each of the 1999 Stock Incentive Plan, the Company’s 1995 Stock Incentive
        Plan, the Company’s 1997 Stock Incentive Plan and the Company’s 1998 Stock
        Incentive Plan.

       

      (ff)  “Restricted
        Stock” means
        shares of Common Stock granted or sold pursuant to Section 6 of this Plan
        as to
        which neither the substantial risk of forfeiture nor the prohibition on transfer
        has expired.

       

      (gg)  “Restriction
        Period” means
        the period of time during which Restricted Stock Units are subject to
        restrictions, as provided in Section 7 of this Plan.

       

      (hh)  “Restricted
        Stock Unit” means
        an award made pursuant to Section 7 of this Plan of the right to receive
        shares
        of Common Stock or cash at the end of a specified period.

       

      (ii)  “Retirement”
        means, with
        respect to any Participant, termination of employment or service pursuant
        to and
        in accordance with the regular (or, if approved by the Board for purposes
        of
        this Plan, early) retirement/pension plan or practice of the Company or any
        Subsidiary then covering the Participant; provided, however, that if the
        Participant is not covered by any such plan or practice, then the Participant
        will be deemed to be covered by the Company’s plan or practice for purposes of
        this determination.

       

      (jj)  “Securities
        Act” means the Securities Act of 1933, as amended, and the rules and regulations
        thereunder, as such law, rules and regulations may be amended from time to
        time.

       

      (kk)  “Subsidiary”
        means a
        corporation, company or other entity (i) at least 50% of whose outstanding
        shares or securities (representing the right to vote for the election of
        directors or other managing authority) are, or (ii) which does not have
        outstanding shares or securities (as may be the case in a partnership, joint
        venture or unincorporated association), but at least 50% of whose ownership
        interest representing the right generally to make decisions for such other
        entity is, now or hereafter, owned or controlled, directly or indirectly,
        by the
        Company except that (A) for purposes of determining whether a Participant
        may
        receive a grant of Incentive Stock Options, “Subsidiary” means any corporation
        in which at the time the Company owns or controls, directly or indirectly,
        at
        least 50% of the total combined voting power represented by all classes of
        stock
        issued by such corporation, and (B) for purposes of determining whether a
        Participant may receive a grant of any other Option Rights, “Subsidiary” means
        any member of the Company’s controlled group described in Section 16(b) of this
        Plan.

       

      (ll)  “Surviving
        Incumbent
        Directors” means (i) the individuals who were Incumbent Directors
        immediately prior to the effective date of a merger or consolidation to which
        the Company is a party, or the effective date of a share exchange in which
        the
        Company exchanges the Company’s shares for shares of another corporation, which
        does not constitute a Change of Control as a result of Section 12(d) of this
        Plan and who constitute immediately after such effective date at least a
        majority of the board of directors of the surviving corporation resulting
        from
        such merger or consolidation, and (ii) any individual becoming a director
        of
        such surviving corporation whose election, nomination for election by such
        surviving corporation’s shareholders, or appointment, was approved by a vote of
        at least a majority of the then Surviving Incumbent Directors (either by
        a
        specific vote or by approval of the proxy statement of such surviving
        corporation in which such individual is named as a nominee for director,
        without
        objection to such nomination); provided, however, that an
        individual shall not be a Surviving Incumbent Director if such individual’s
        election or appointment to the board of directors of such surviving corporation
        occurs as a result of an actual or threatened election contest (as described
        in
        Rule 14a-12(c) promulgated under the Exchange Act) with respect to the election
        or removal of directors of such surviving corporation or other actual or
        threatened solicitation of proxies or consents by or on behalf of a Person
        other
        than the board of directors of such surviving corporation.

       

      (mm)  “Voting
        Securities” means, at
        any time, (i) the securities entitled to vote generally in the election of
        Directors in the case of the Company, or (ii) the securities entitled to
        vote
        generally in the election of members of the board of directors or similar
        body
        in the case of another legal entity.

       

      3.  Successor
        to
        Prior Plan. This Plan was adopted by the Board on October 24, 2007. This
        Plan is intended as the successor to the 1999 Stock Incentive Plan. As of
        the
        Effective Date, no additional awards shall be granted under the 1999 Stock
        Incentive Plan. Any shares of Common Stock remaining available for issuance
        under the 1999 Stock
        Incentive Plan as of the Effective Date shall be included in the number of
        shares of Common Stock that may be issued pursuant to this Plan as provided
        in
        Section 4(a)(i) of this Plan and shall be available for issuance pursuant
        to
        grants of Option Rights, Performance Shares, Performance Units, or grants
        or
        sales of Restricted Stock or Restricted Stock Units, under this Plan.
        Outstanding awards granted under any Prior Stock Incentive Plan shall remain
        subject to the terms of such Prior Stock Incentive Plan, except that the
        Board
        may elect to extend one or more of the features of this Plan to awards granted
        under any Prior Stock Incentive Plan. Any shares of Common Stock subject
        to
        outstanding awards granted under any Prior Stock Incentive Plan that expire
        or
        are forfeited or are cancelled after the Effective Date shall be added to
        the
        maximum number of shares available under this Plan as provided in Section
        4(a)(i) of this Plan and shall become available for the grant of Option Rights,
        Performance Shares, Performance Units, or the grant or sale of Restricted
        Stock
        or Restricted Stock Units, under this Plan. All grants of Option Rights,
        Performance Shares, Performance Units, or grants or sales of Restricted Stock
        or
        Restricted Stock Units, under this Plan subsequent to the Effective Date
        shall
        be subject to the terms of this Plan.

      


      
        
          
            
            

          

          
            6

            
              

            

          

          
            
            

          

        

      

       

      4.  Shares
        Subject to this
        Plan.

       

      (a)  Maximum
        Shares
        Available Under this Plan.

       

      (i)  Subject
        to adjustment as provided in Section 11 of this Plan, the number of shares
        of
        Common Stock that may be issued or transferred (A) upon the exercise of Option
        Rights; (B) as Restricted Stock and released from substantial risks of
        forfeiture thereof; (C) in payment of Restricted Stock Units; (D) in payment
        of
        Performance Shares or Performance Units that have been earned; or (E) in
        payment
        of dividend equivalents paid with respect to awards made under this Plan
        will
        not exceed in the aggregate 10,000,000 shares of Common Stock, plus (1) any
        shares of Common Stock remaining available for issuance under the 1999 Stock
        Incentive Plan as of the Effective Date and (2) any shares of Common Stock
        subject to outstanding awards granted under any Prior Stock Incentive Plan
        which
        subsequently expire or are forfeited or are cancelled after the Effective
        Date.
        Such shares may be shares of original issuance or treasury shares or a
        combination of the foregoing.

       

      (ii)  Shares
        of Common Stock subject to an award granted under this Plan shall not be
        counted
        as used unless and until they are actually issued and delivered to a
        Participant. Without limiting the generality of the foregoing, (A) upon payment
        in cash of all or any portion of the benefit provided by any award granted under
        this Plan (including, without limitation, any cash utilized by the Company
        to
        satisfy any tax withholding requirement with respect to such award), any
        unissued shares of Common Stock that otherwise would have been issued pursuant
        to that award will be available for issue or transfer under this Plan and
        (B)
        any shares of Common Stock subject to awards granted under this Plan that
        expire
        or are forfeited or are cancelled will be available for issue or transfer
        under
        this Plan. Notwithstanding anything to the contrary contained herein: (1)
        shares
        of Common Stock tendered in payment of the Option Price of an Option Right
        shall
        not be added to the aggregate plan limit described above; (2) shares of
        outstanding Common Stock withheld from the Participant and redeemed by the
        Company or sold on the Participant’s behalf to satisfy any tax withholding
        obligation shall not be added to the aggregate plan limit described above;
        and
        (3) shares of Common Stock that are repurchased by the Company with Option
        Right
        proceeds shall not be added to the aggregate plan limit described
        above.

       

      (b)  Life-of-Plan
        Limits. Notwithstanding anything in this Section 4, or elsewhere in this
        Plan, to the contrary and subject to adjustment pursuant to Section 11 of
        this
        Plan:

       

      (i)  The
        aggregate number of shares of Common Stock actually issued or transferred
        by the
        Company upon the exercise of Incentive Stock Options shall not exceed
        10,000,000.

       

      (ii)  The
        aggregate number of shares of Common Stock issued as Restricted Stock (and
        released from substantial risks of forfeiture), Restricted Stock Units,
        Performance Shares or Performance Units shall not exceed
        10,000,000.

       

      (c)  Individual
        Participant Limits. Notwithstanding anything in this Section 4, or
        elsewhere in this Plan, to the contrary and subject to adjustment pursuant
        to
        Section 11 of this Plan:

       

      (i)  No
        Participant shall be granted Option Rights, in the aggregate, for more than
        2,000,000 shares of Common Stock during any calendar year.

       

      
        
          
            
            

          

          
            7

            
              

            

          

          
            
            

          

        

      

       

      (ii)  No
        Participant will be granted Restricted Stock or Restricted Stock Units that
        specify Management Objectives or Performance Shares, in the aggregate, for
        more
        than 2,000,000 shares of Common Stock during any calendar year.

       

      (iii)  Notwithstanding
        any other provision of this Plan to the contrary, in no event will any
        Participant in any calendar year receive an award of Performance Units having
        an
        aggregate maximum value as of their respective Dates of Grant in excess of
        $2,000,000.

       

      5.  Option
        Rights. The Board may, from time to time and upon such terms and
        conditions as it may determine, authorize the granting to Participants of
        options to purchase shares of Common Stock. Each such grant will be subject
        to
        all of the requirements contained in the following provisions:

       

      (a)  Each
        grant of Option Rights will specify the number of shares of Common Stock
        to
        which it pertains subject to the limitations set forth in Section 4 of this
        Plan.

       

      (b)  Each
        grant of Option Rights will specify an Option Price per share, which may
        not be
        less than the Market Value Per Share on the Date of Grant.

       

      (c)  Each
        grant of Option Rights will specify whether the Option Price will be payable
        (i)
        in cash or by check acceptable to the Company or by wire transfer of immediately
        available funds, (ii) by the actual or constructive transfer to the Company
        of
        shares of Common Stock owned by the Optionee having a value at the time of
        exercise equal to the total Option Price, (iii) by a combination of such
        methods
        of payment, or (iv) by such other methods as may be approved by the
        Board.

       

      (d)  To
        the extent permitted by law, any grant of Option Rights may provide for deferred
        payment of the Option Price from the proceeds of sale through a bank or broker
        on a date satisfactory to the Company of some or all of the shares to which
        such
        exercise relates.

       

      (e)  Successive
        grants of Option Rights may be made to the same Participant whether or not
        any
        Option Rights previously granted to such Participant remain
        unexercised.

       

      (f)  Each
        grant of Option Rights will specify the period or periods (if any) of continuous
        service by the Optionee with the Company or any Subsidiary that is necessary
        before the Option Rights or installments thereof will become exercisable.
        A
        grant of Option Rights may provide for the earlier exercise of such Option
        Rights as provided in Section 9 of this Plan or, subject to Section 17 of
        this
        Plan, in the event of a Change of Control.

       

      (g)  Any
        grant of Option Rights may specify Management Objectives that must be achieved
        as a condition to the exercise of such rights. The grant of such Option Rights
        will specify that, before the exercise of such rights, the Board must determine
        that the Management Objectives have been satisfied.

       

      (h)  Option
        Rights granted under this Plan may be (i) options, including, without
        limitation, Incentive Stock Options that are intended to qualify under
        particular provisions of the Code, (ii) options that are not intended so
        to
        qualify or (iii) combinations of the foregoing.

       

      (i)  No
        Option Right will be exercisable more than 10 years from the Date of
        Grant.

       

      (j)  Each
        grant of Option Rights will be evidenced by an Evidence of Award. Each Evidence
        of Award shall be subject to this Plan and shall contain such terms and
        provisions, consistent with this Plan, as the Board may approve.

       

      6.  Restricted
        Stock. The Board may also authorize the grant or sale of Restricted Stock
        to Participants. Each such grant or sale will be subject to all of the
        requirements contained in the following provisions:

       

      (a)  Each
        grant or sale of Restricted Stock will constitute an immediate transfer of
        the
        ownership of shares of Common Stock to the Participant in consideration of
        the
        performance of services, entitling such Participant to voting, dividend and
        other ownership rights, but subject to the substantial risk of forfeiture
        and
        restrictions on transfer hereinafter referred to.

       

      (b)  Each
        grant or sale of Restricted Stock may be made without additional consideration
        or in consideration of a payment by such Participant that is less than the
        Market Value Per Share at the Date of Grant.

      


      
        
          
            
            

          

          
            8

            
              

            

          

          
            
            

          

        

      

       

      (c)  Each
        such grant or sale of Restricted Stock may provide that the Restricted Stock
        covered by such grant or sale vest upon the passage of time, subject to a
        “substantial risk of forfeiture” within the meaning of Section 83 of the Code
        for a period of time as determined by the Board at the Date of Grant, and
        may
        provide for the earlier lapse of such substantial risk of forfeiture as provided
        in Sections 6(e) or 9 of this Plan or, subject to Section 17 of this Plan,
        in
        the event of a Change of Control.

       

      (d)  Each
        grant or sale of Restricted Stock will provide that during the period for
        which
        any such substantial risk of forfeiture is to continue, the transferability
        of
        the Restricted Stock will be prohibited or restricted in the manner and to
        the
        extent prescribed by the Board at the Date of Grant (which restrictions may
        include, without limitation, rights of repurchase or first refusal in the
        Company or provisions subjecting the Restricted Stock to a continuing
        substantial risk of forfeiture in the hands of any transferee).

       

      (e)  Any
        grant or sale of Restricted Stock may specify Management Objectives that,
        if
        achieved, will result in termination or early termination of the restrictions
        applicable to such Restricted Stock and, in addition, may provide for the
        earlier termination of these restrictions as provided in Section 9 of this
        Plan
        or, subject to Section 17 of this Plan, in the event of a Change of Control.
        Each grant may specify in respect of such Management Objectives a minimum
        acceptable level of achievement and may set forth a formula for determining
        the
        number of shares of Restricted Stock on which restrictions will terminate
        if
        performance is at or above the minimum level, but falls short of full
        achievement of the specified Management Objectives. The grant of Restricted
        Stock will specify that, before the termination or early termination of the
        restrictions applicable to such Restricted Stock, the Board must determine
        that
        the Management Objectives have been satisfied.

       

      (f)  Any
        grant or sale of Restricted Stock may require that any or all dividends or
        other
        distributions paid thereon during the period of such restrictions be
        automatically deferred and reinvested in additional shares of Restricted
        Stock,
        which may be subject to the same restrictions as the underlying
        award.

       

      (g)  Each
        grant or sale of Restricted Stock will be evidenced by an Evidence of Award
        and
        will contain such terms and provisions, consistent with this Plan, as the
        Board
        may approve. Unless otherwise directed by the Board, all certificates
        representing shares of Restricted Stock will be held in custody by the Company
        until all restrictions thereon will have lapsed, together with a stock power
        or
        powers executed by the Participant in whose name such certificates are
        registered, endorsed in blank and covering such Shares.

       

      (h)  Without
        limiting the generality of the foregoing, if and to the extent that the Board
        determines that any award of Restricted Stock to be granted or sold to a
        Covered
        Employee should qualify as “performance-based compensation” for purposes of
        Section 162(m) of the Code, then (i) the grant or sale of such award shall
        specify, and the payment and/or settlement of such award shall be contingent
        upon the achievement of, Management Objectives; and (ii) such Restricted
        Stock
        shall otherwise be subject to such other terms and conditions as are necessary
        for the award thereof to comply with Section 162(m) of the Code.

       

      7.  Restricted
        Stock
        Units. The Board may also authorize the granting or sale of Restricted
        Stock Units to Participants. Each such grant or sale will be subject to all
        of
        the requirements contained in the following provisions:

       

      (a)  Each
        grant or sale of Restricted Stock Units will constitute the agreement by
        the
        Company to deliver shares of Common Stock, cash or any combination thereof,
        as
        determined by the Board, to the Participant in the future in consideration
        of
        the performance of services, but subject to the fulfillment of such conditions
        (which may include the achievement of Management Objectives) during the
        Restriction Period as the Board may specify. Each grant of Restricted Stock
        Units may specify in respect of such Management Objectives a minimum acceptable
        level of achievement and may set forth a formula for determining the number
        of
        shares of Restricted Stock Units on which restrictions will terminate if
        performance is at or above the minimum level, but falls short of full
        achievement of the specified Management Objectives. The grant of such Restricted
        Stock Units will specify that, before the termination or early termination
        of
        the restrictions applicable to such Restricted Stock Units, the Board must
        determine that the Management Objectives have been satisfied.

       

      (b)  Each
        grant or sale of Restricted Stock Units may be made without additional
        consideration or in consideration of a payment by such Participant that is
        less
        than the Market Value Per Share at the Date of Grant.

       

      (c)  The
        duration of the Restriction Period applicable to each grant or sale of
        Restricted Stock Units shall be determined by the Board at the Date of Grant
        and
        may provide for the earlier lapse or other modification of such Restriction
        Period as provided in Section 9 of this Plan or, subject to Section 17 of
        this
        Plan, in the event of a Change of Control.

       

      
        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        

      

       

      (d)  During
        the Restriction Period, the Participant will have no right to transfer any
        rights under the Participant’s award and will have no rights of ownership in the
        Restricted Stock Units and will have no right to vote them, but the Board
        may,
        at the Date of Grant, authorize the payment of dividend equivalents on such
        Restricted Stock Units on either a current, deferred or contingent basis,
        either
        in cash or in additional shares of Common Stock.

       

      (e)  Each
        grant or sale of Restricted Stock Units will specify the time and manner
        of
        payment of Restricted Stock Units that have been earned. Any grant or sale
        may
        specify that the amount payable with respect thereto may be paid by the Company
        in cash, in shares of Common Stock or in any combination thereof and may
        either
        grant to the Participant or retain in the Board the right to elect among
        those
        alternatives.

       

      (f)  Each
        grant or sale of Restricted Stock Units will be evidenced by an Evidence
        of
        Award and will contain such terms and provisions, consistent with this Plan,
        as
        the Board may approve.

       

      (g)  Without
        limiting the generality of the foregoing, if and to the extent that the Board
        determines that any award of Restricted Stock Units to be granted or sold
        to a
        Covered Employee should qualify as “performance-based compensation” for purposes
        of Section 162(m) of the Code, then (i) the grant or sale of such award shall
        specify, and the payment and/or settlement of such award shall be contingent
        upon the achievement of, Management Objectives; and (ii) such Restricted
        Stock
        Units shall otherwise be subject to such other terms and conditions as are
        necessary for the award thereof to comply with such section.

       

      8.  Performance
        Shares and Performance Units. The Board may also authorize the granting
        of Performance Shares and Performance Units that will become payable to a
        Participant upon achievement of specified Management Objectives during the
        Performance Period. Each such grant will be subject to all of the requirements
        contained in the following provisions:

       

      (a)  Each
        grant will specify the number of Performance Shares or Performance Units
        to
        which it pertains, which number may be subject to adjustment to reflect changes
        in compensation or other factors; provided, however,
        that no such
        adjustment will be made in the case of a Covered Employee where such action
        would result in the loss of the otherwise available exemption of the award under
        Section 162(m) of the Code and the Board intends that such award should qualify
        as “performance-based compensation” for purposes of Section 162(m) of the
        Code.

       

      (b)  The
        Performance Period with respect to each Performance Share or Performance
        Unit
        will be such period of time (not less than one year), commencing with the
        Date
        of Grant as will be determined by the Board at the time of grant which may
        be
        subject to earlier lapse or other modification as provided in Section 9 of
        this
        Plan or, subject to Section 17 of this Plan, in the event of a Change of
        Control.

       

      (c)  Any
        grant of Performance Shares or Performance Units will specify Management
        Objectives which, if achieved, will result in payment or early payment of
        the
        award, and each grant may specify in respect of such specified Management
        Objectives level or levels of achievement and will set forth a formula for
        determining the number of Performance Shares or Performance Units that will
        be
        earned if performance is at or above the level(s), but falls short of full
        achievement of the specified Management Objectives. The grant of Performance
        Shares or Performance Units will specify that, before the Performance Shares
        or
        Performance Units will be earned and paid, the Board must determine that
        the
        Management Objectives have been satisfied; provided, however
        the Board may
        provide for the earlier termination of these restrictions as provided in
        Section
        9 of this Plan or, subject to Section 17 of this Plan, in the event of a
        Change
        of Control.

       

      (d)  Each
        grant will specify the time and manner of payment of Performance Shares or
        Performance Units that have been earned. Any grant may specify that the amount
        payable with respect thereto may be paid by the Company in cash, in shares
        of
        Common Stock or in any combination thereof and may either grant to the
        Participant or retain in the Board the right to elect among those
        alternatives.

       

      (e)  Any
        grant of Performance Shares may specify that the amount payable with respect
        thereto may not exceed a maximum specified by the Board at the Date of Grant.
        Any grant of Performance Units may specify that the amount payable or the
        number
        of shares of Common Stock issued with respect thereto may not exceed maximums
        specified by the Board at the Date of Grant.

       

      
        
          
            
            

          

          
            10

            
              

            

          

          
            
            

          

        

      

       

      (f)  The
        Board may, at the Date of Grant of Performance Shares, provide for the payment
        of dividend equivalents to the holder thereof on either a current, deferred
        or
        contingent basis, either in cash or in additional shares of Common
        Stock.

       

      (g)  Each
        grant of Performance Shares or Performance Units will be evidenced by an
        Evidence of Award and will contain such other terms and provisions, consistent
        with this Plan, as the Board may approve.

       

      (h)  Without
        limiting the generality of the foregoing, if and to the extent that the Board
        determines that any award of Performance Shares or Performance Units to be
        granted to a Covered Employee should qualify as “performance-based compensation”
for purposes of Section 162(m) of the Code, then (i) the grant of such award
        shall specify, and the payment and/or settlement of such award shall be
        contingent upon the achievement of, Management Objectives; and (ii) such
        Performance Shares or Performance Units shall otherwise be subject to such
        other
        terms and conditions as are necessary for the award thereof to comply with
        Section 162(m) of the Code.

       

      9.  Effect
        of
        Termination of Employment or Other Service. The Board shall determine the
        effect on an award granted under this Plan of the death, Disability, Retirement,
        termination of employment or service or other change in the employment or
        other
        status of a Participant. Unless otherwise provided in the applicable Evidence
        of
        Award:

       

      (a)  In
        the event a Participant’s employment or other service with the Company and all
        Subsidiaries is terminated by reason of death or Disability: (i) all Option
        Rights held by the Participant will become immediately exercisable in full
        and
        will remain exercisable for a period of one year after such termination (but
        in
        no event after the expiration date of any such Option Right); (ii) all
        restrictions applicable to Restricted Stock held by the Participant will
        be
        deemed fully satisfied upon such termination; (iii) all restrictions and
        the
        Restriction Period applicable to Restricted Stock Units held by the Participant
        will be deemed fully satisfied and will lapse, respectively, upon such
        termination; and (iv) the Management Objectives and the Performance Period
        applicable to Performance Shares or Performance Units held by the Participant
        will be deemed satisfied and will lapse, respectively, upon such
        termination.

       

      (b)  In
        the event a Participant’s employment or other service with the Company and all
        Subsidiaries is terminated by reason of Retirement: (i) all Option Rights
        which
        are not Incentive Stock Options held by the Participant will become immediately
        exercisable in full and will remain exercisable for a period of one year
        after
        such termination (but in no event after the expiration date of any such Option
        Right); (ii) all Option Rights which are Incentive Stock Options held by
        the
        Participant will become immediately exercisable in full and will remain
        exercisable for a period of three months after such termination (but in no
        event
        after the expiration date of any such Option Right); (iii) all restrictions
        applicable to Restricted Stock held by the Participant will be deemed fully
        satisfied upon such termination; (iv) all restrictions and the Restriction
        Period applicable to Restricted Stock Units held by the Participant will
        be
        deemed fully satisfied and will lapse, respectively, upon such termination;
        and
        (v) the Management Objectives and the Performance Period applicable to
        Performance Shares or Performance Units held by the Participant will be deemed
        satisfied and will lapse, respectively, upon such termination.

       

      (c)  Subject
        to the second sentence of this Section 9(c) with respect to Option Rights,
        in
        the event a Participant’s employment or other service is terminated with the
        Company and all Subsidiaries for any reason other than death, Disability
        or
        Retirement, or a Participant is in the employ or service of a Subsidiary
        and the
        Subsidiary ceases to be a Subsidiary of the Company (unless the Participant
        continues in the employ or service of the Company or another Subsidiary):
        (i)
        all rights of the Participant under this Plan and any Evidence of Award will
        immediately terminate without notice of any kind; (ii) any Option Rights
        held by
        the Participant will be terminated; (iii) any Restricted Stock held by the
        Participant will be forfeited; (iv) any Restricted Stock Units held by the
        Participant which are subject to restrictions that have not been satisfied
        or to
        a Restriction Period which has not lapsed will be forfeited; and (v) any
        Performance Shares or Performance Units held by the Participant which have
        not
        become payable to the Participant will be forfeited. However, (i) if the
        termination of the Participant’s employment or other service is due to any
        reason other than termination by the Company or any Subsidiary for Cause,
        then
        all Option Rights held by the Participant will remain exercisable to the
        extent
        exercisable as of such termination for a period of three months after such
        termination (but in no event after the expiration date of any such Option
        Rights), and (ii) if such termination is due to termination by the Company
        or
        any Subsidiary for Cause, then Option Rights held by the Participant will
        remain
        exercisable as of such termination for a period of one month after such
        termination (but in no event after the expiration date of any such Option
        Rights).

      


      
        
          
            
            

          

          
            11

            
              

            

          

          
            
            

          

        

      

       

      10.  Administration
        of this
        Plan.

       

      (a)  This
        Plan will be administered by the Board, which may from time to time delegate
        all
        or any part of its authority under this Plan to the Compensation Committee
        of
        the Board or any other committee of the Board (or a subcommittee thereof),
        as
        constituted from time to time. To the extent of any such delegation, references
        in this Plan to the Board will be deemed to be references to such committee
        or
        subcommittee.


      (b)  The
        interpretation and construction by the Board of any provision of this Plan
        or of
        any agreement, notification or document evidencing the grant of Option Rights,
        Restricted Stock, Restricted Stock Units, Performance Shares or Performance
        Units and any determination by the Board pursuant to any provision of this
        Plan
        or of any such agreement, notification or document will be final and conclusive.
        The Board may correct any defect, supply any omission or reconcile any
        inconsistency in this Plan or any agreement, notification or document evidencing
        the grant of Option Rights, Restricted Stock, Restricted Stock Units,
        Performance Shares or Performance Units in the manner and to the extent the
        Board shall deem expedient to carry this Plan into effect.

       

      (c)  To
        the extent permitted by applicable law, the Board may delegate to one or
        more
        officers of the Company the power to grant Option Rights, Restricted Stock,
        Restricted Stock Units, Performance Shares or Performance Units (subject
        to any
        limitations under this Plan) to employees or officers of the Company or any
        of
        its present or future Subsidiaries and to exercise such other powers under
        this
        Plan as the Board may determine; provided, however,
        that (i) the
        Board shall fix the maximum number of shares subject to any Option Rights,
        Restricted Stock, Restricted Stock Units, Performance Shares or Performance
        Units that the officers may grant and (ii) no officer shall be authorized
        to
        grant any awards under this Plan to any “executive officer” of the Company (as
        defined by Rule 3b-7 promulgated under the Exchange Act) , any “officer” of the
        Company (as defined by Rule 16a-1 promulgated under the Exchange Act) or
        any
        other Covered Employee.

       

      (d)  No
        Director or officer of the Company acting pursuant to the authority delegated
        to
        a committee of the Board (or a subcommittee thereof) or to such officer by
        the
        Board pursuant to this Section 9 shall be liable for any action or determination
        relating to or under this Plan made in good faith.

       

      11.  Adjustments.
        The Board shall make or provide for such adjustments in the numbers of shares
        of
        Common Stock covered by outstanding Option Rights, Restricted Stock Units,
        Performance Shares and Performance Units granted under this Plan, in the
        Option
        Price, and in the kind of shares covered thereby, as the Board, in its sole
        discretion, may determine is equitably required to prevent dilution or
        enlargement of the rights of Participants or Optionees that otherwise would
        result from (i) any stock dividend, stock split, combination of shares,
        recapitalization or other change in the capital structure of the Company
        or (ii)
        any merger, consolidation, spin-off, split- off, spin-out, split-up,
        reorganization, partial or complete liquidation or other distribution of
        assets,
        issuance of rights or warrants to purchase securities or (iii) any other
        corporate transaction or event having an effect similar to any of the foregoing.
        Moreover, in the event of any such transaction or event, the Board, in its
        discretion, may provide in substitution for any or all outstanding awards
        under
        this Plan such alternative consideration (including cash), if any, as it
        may
        determine to be equitable in the circumstances and may require in connection
        therewith the surrender of all awards so replaced. The Board may also make
        or
        provide for such adjustments in the numbers of shares specified in Section
        4 of
        this Plan as the Board in its sole discretion may determine is appropriate
        to
        reflect any transaction or event described in this Section 11; provided, however, that any
        such adjustment to the number specified in Section 4(b)(i) of this Plan will
        be
        made only if and to the extent that such adjustment would not cause any option
        intended to qualify as an Incentive Stock Option to fail so to
        qualify.

       

      12.  Change
        of
        Control. For purposes of this Plan, except as may be otherwise defined in
        an individual Participant’s Evidence of Award, a “Change of Control” shall mean
        the occurrence of any of the following events:

       

      (a)  the
        sale, lease, exchange or other transfer, directly or indirectly, of
        substantially all of the assets of the Company (in one transaction or in
        a
        series of related transactions) to a Person that is not controlled by the
        Company;

       

      (b)  the
        approval by the shareholders of the Company of any plan or proposal for the
        liquidation or dissolution of the Company;

       

      (c)  any
        person becomes after the Effective Date the beneficial owner (within the
        meaning
        of Rule 13d-3 promulgated under the Exchange Act), directly or indirectly,
        of
        (i) 20% or more, but less than 50%, of the then-outstanding Voting Securities
        of
        the Company unless the transaction resulting in such ownership has been approved
        in advance by the Incumbent Directors, or (ii) 50% or more of the
        then-outstanding Voting Securities of the Company (regardless of any approval
        by
        the Incumbent Directors) other than as a result of a merger, consolidation
        or
        share exchange that would not constitute a Change of Control pursuant to
        Section
        12(d) of this Plan;

       

      
        
          
            
            

          

          
            12

            
              

            

          

          
            
            

          

        

      

       

      (d)  a
        merger or consolidation to which the Company is a party, or a share exchange
        in
        which the Company exchanges the Company’s shares for shares of another
        corporation, if the shareholders of the Company immediately prior to the
        effective date of such merger, consolidation or share exchange have beneficial
        ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
        Act),
        immediately following the effective date of such merger, consolidation or
        share
        exchange, of securities of the surviving corporation representing 50% or
        less of
        the then-outstanding Voting Securities of the surviving corporation (regardless
        of any approval by the Incumbent Directors) unless persons who are Incumbent
        Directors immediately prior to the effective date of such merger, consolidation
        or share exchange constitute a least a majority of the board of directors
        of the
        surviving corporation immediately after such effective date;

       

      (e)  the
        Incumbent Directors cease for any reason to constitute at least a majority
        of
        the Board;

       

      (f)  the
        Surviving Incumbent Directors cease for any reason to constitute at least
        a
        majority of the board of directors of the surviving corporation resulting
        from a
        merger or consolidation to which the Company is a party, or a share exchange
        in
        which the Company exchanges the Company’s shares for shares of another
        corporation, which does not constitute a Change of Control as a result of
        Section 12(d) of this Plan; or

       

      (g)  any
        other change in control of the Company of a nature that would be required
        to be
        reported pursuant to Section 13 or 15(d) of the Exchange Act, whether or
        not the
        Company is then subject to such reporting requirements.

       

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

       

      14.  Transferability.

       

      (a)  No
        Option Right granted under this Plan shall be transferable by the Participant
        except by will or the laws of descent and distribution. Except as otherwise
        determined by the Board, Option Rights will be exercisable during the
        Participant’s lifetime only by the Participant or, in the event of the
        Participant’s legal incapacity to do so, by the Participant’s guardian or legal
        representative acting on behalf of the Participant in a fiduciary capacity
        under
        state law and/or court supervision.

       

      (b)  The
        Board may specify at the Date of Grant that part or all of the shares of
        Common
        Stock that are (i) to be issued or transferred by the Company upon the exercise
        of Option Rights, upon the termination of the Restriction Period applicable
        to
        Restricted Stock Units or upon payment under any grant of Performance Shares
        or
        Performance Units or (ii) no longer subject to the substantial risk of
        forfeiture and restrictions on transfer referred to in Section 6 of this
        Plan,
        will be subject to further restrictions on transfer.

       

      15.  Withholding
        Taxes. The Participant must satisfy all applicable federal, state, and
        local or other income and employment tax withholding obligations before the
        Company will deliver stock certificates or otherwise recognize ownership
        of
        Common Stock under an award made under this Plan. The Company may satisfy
        the
        withholding obligations through additional withholding on salary or wages.
        If
        the Company elects not to or cannot withhold from other compensation, then
        the
        Participant must pay the Company the full amount, if any, required for
        withholding or have a broker tender to the Company cash equal to the withholding
        obligations. Payment of withholding obligations is due before the Company
        will
        issue any shares on exercise or release from forfeiture or otherwise in payment
        of any award granted under this Plan or, if the Company so requires, at the
        same
        time as the payment of the Option Price unless the Company determines otherwise.
        If provided for in an Evidence of Award or approved by the Board in its sole
        discretion, a Participant may satisfy such tax obligations in whole or in
        part
        by delivery of shares of Common Stock, including shares retained from the
        award
        made under this Plan creating the tax obligation, valued at their Market
        Value
        Per Share; provided,
        however, except as otherwise provided by the Board, that the total tax
        withholding where Common Stock is being used to satisfy such tax obligations
        cannot exceed the Company’s minimum statutory withholding obligations (based on
        minimum statutory withholding rates for federal and state tax purposes,
        including payroll taxes, that are applicable to such supplemental taxable
        income). Shares surrendered to satisfy tax withholding requirements cannot
        be
        subject to any repurchase, forfeiture, unfulfilled vesting or other similar
        requirements.

      


      
        
          
            
            

          

          
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      16.  Compliance
        with Section 409A of the
        Code.

       

      (a)  To
        the extent applicable, it is intended that this Plan and any grants made
        hereunder comply with the provisions of Section 409A of the Code. This Plan
        and
        any grants made hereunder shall be administrated in a manner consistent with
        this intent, and any provision that would cause this Plan or any grant made
        hereunder to fail to satisfy Section 409A of the Code shall have no force
        and
        effect until amended to comply with Section 409A of the Code (which amendment
        may be retroactive to the extent permitted by Section 409A of the Code and
        may
        be made by the Company without the consent of Participants). Any reference
        in
        this Plan to Section 409A of the Code will also include any regulations or
        any
        other guidance promulgated with respect to such Section by the U.S. Department
        of the Treasury or the Internal Revenue Service.

       

      (b)  In
        order to determine for purposes of Section 409A of the Code whether a
        Participant is employed by a member of the Company’s controlled group of
        corporations under Section 414(b) of the Code (or by a member of a group
        of
        trades or businesses under common control with the Company under Section
        414(c)
        of the Code) and, therefore, whether the shares of Common Stock that are
        or have
        been purchased by or awarded under this Plan to the Participant are shares
        of
“service recipient” stock within the meaning of Section 409A of the
        Code:

       

      (i)  In
        applying Code Section 1563(a)(1), (2) and (3) for purposes of determining
        the
        Company’s controlled group under Section 414(b) of the Code, the language “at
        least 50 percent” is to be used instead of “at least 80 percent” each place it
        appears in Code Section 1563(a)(1), (2) and (3); and

       

      (ii)  In
        applying Treasury Regulation Section 1.414(c)-2 for purposes of determining
        trades or businesses under common control with the Company for purposes of
        Section 414(c) of the Code, the language “at least 50 percent” is to be used
        instead of “at least 80 percent” each place it appears in Treasury Regulation
        Section 1.414(c)-2.

       

      (c)  Notwithstanding
        any provision of this Plan to the contrary, to the extent an award shall
        be
        deemed to be vested or restrictions lapse, expire or terminate upon the
        occurrence of a Change of Control and such Change of Control does not constitute
        a “change in the ownership or effective control” or a “change in the ownership
        or a substantial portion of the assets” of the Company within the meaning of
        Section 409A(a)(2)(A)(v) of the Code, then even though such award may be
        deemed
        to be vested or restrictions lapse, expire or terminate upon the occurrence
        of
        the Change of Control or any other provision of this Plan, payment will be
        made,
        to the extent necessary to comply with the provisions of Section 409A of
        the
        Code, to the Participant upon the earliest to occur of (i) the Participant’s
“separation from service” with the Company (determined in accordance with
        Section 409A of the Code); provided, however, that if
        the Participant is a “specified employee” (within the meaning of Section 409A of
        the Code), then the payment date shall be the date that is six months after
        the
        date of the Participant’s separation from service with the Company, (ii) the
        date payment otherwise would have been made in the absence of any provisions
        in
        this Plan to the contrary (provided such date is permissible under Section
        409A
        of the Code), or (iii) the Participant’s death.

      


      
        
          
            
            

          

          
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      17.  Parachute
        Limitations. Notwithstanding any other provision of this Plan or of any
        other agreement, contract, or understanding heretofore or hereafter entered
        into
        by a Participant with the Company or any Subsidiary, except an Other Agreement,
        and notwithstanding any Benefit Arrangement, if the Participant is a
“disqualified individual,” as defined in Section 280G(c) of the Code, any Option
        Right, Restricted Stock, Restricted Stock Unit, Performance Share or Performance
        Unit held by that Participant and any right to receive any payment or other
        benefit under this Plan shall not become exercisable or vested (i) to the
        extent
        that such right to exercise, vesting, payment, or benefit, taking into account
        all other rights, payments, or benefits to or for the Participant under this
        Plan, all Other Agreements and all Benefit Arrangements, would cause any
        payment
        or benefit to the Participant under this Plan to be considered a Parachute
        Payment and (ii) if, as a result of receiving a Parachute Payment, the aggregate
        after-tax amounts received by the Participant from the Company under this
        Plan,
        all Other Agreements and all Benefit Arrangements would be less than the
        maximum
        after-tax amount that could be received by the Participant without causing
        any
        such payment or benefit to be considered a Parachute Payment. In the event
        that
        the receipt of any such right to exercise, vesting, payment or benefit under
        this Plan, in conjunction with all other rights, payments or benefits to
        or for
        the Participant under any Other Agreement or any Benefit Arrangement would
        cause
        the Participant to be considered to have received a Parachute Payment under
        this
        Plan that would have the effect of decreasing the after-tax amount received
        by
        the Participant as described in clause (ii) of the preceding sentence, then
        the
        Participant shall have the right, in the Participant’s sole discretion, to
        designate those rights, payments or benefits under this Plan, any Other
        Agreements and any Benefit Arrangements that should be reduced or eliminated
        so
        as to avoid having the payment or benefit to the Participant under this Plan
        be
        deemed to be a Parachute Payment.

       

      18.  Effective
        Date. This Plan will be effective as of the Effective Date.

       

      19.  Amendments.

       

      (a)  The
        Board may at any time and from time to time amend this Plan in whole or in
        part;
provided, however,
        that if an
        amendment to this Plan (i) would materially increase the benefits accruing
        to
        Participants under this Plan, (ii) would materially increase the number of
        securities which may be issued under this Plan, (iii) would materially modify
        the requirements for participation in this Plan or (iv) must otherwise be
        approved by the shareholders of the Company in order to comply with applicable
        law or the rules of the Nasdaq Stock Market LLC or, if the shares of Common
        Stock are not traded on the Nasdaq Capital Market, the principal national
        securities exchange upon which the shares of Common Stock are traded or quoted,
        then, such amendment will be subject to shareholder approval and will not
        be
        effective unless and until such approval has been obtained. In addition,
        if at
        any time the approval of the Company’s shareholders is required under Section
        422 of the Code in order to amend this Plan, then such amendment will also
        be
        subject to shareholder approval and will not be effective unless and until
        such
        approval has been obtained. Unless otherwise specified in the amendment,
        any
        amendment to this Plan adopted in accordance with this Section 19 shall apply
        to, and be binding on the holders of, all awards outstanding under this Plan
        at
        the time the amendment is adopted, provided the Board determines that such
        amendment does not materially or adversely affect the rights of
        Participants.

       

      (b)  The
        Board will not, without the further approval of the shareholders of the Company,
        authorize the amendment of any outstanding Option Right to reduce the Option
        Price. Furthermore, no Option Right will be cancelled and replaced with awards
        having a lower Option Price without further approval of the shareholders
        of the
        Company. This Section 19(b) is intended to prohibit the repricing of
“underwater” Option Rights and will not be construed to prohibit the adjustments
        provided for in Section 11 of this Plan or other adjustments necessary to
        continue compliance with Section 409A of the Code.

       

      (c)  If
        permitted by Section 409A of the Code, in case of termination of employment
        by
        reason of death, Disability or Retirement, or in the case of unforeseeable
        emergency or other special circumstances, of a Participant who holds an Option
        Right not immediately exercisable in full, or any shares of Restricted Stock
        as
        to which the substantial risk of forfeiture or the prohibition or restriction
        on
        transfer has not lapsed, or any Restricted Stock Units as to which the
        Restriction Period has not been completed, or any Performance Shares or
        Performance Units which have not been fully earned, or who holds shares of
        Common Stock subject to any transfer restriction imposed pursuant to Section
        14
        of this Plan, the Board may, in its sole discretion, accelerate the time
        at
        which such Option Right, or other award may be exercised or the time at which
        such substantial risk of forfeiture or prohibition or restriction on transfer
        will lapse or the time when such Restriction Period will end or the time
        at
        which such Performance Shares or Performance Units will be deemed to have
        been
        fully earned or the time when such transfer restriction will terminate or
        may
        waive any other limitation or requirement under any such award.

       

      (d)  Subject
        to Section 19(b) of this Plan, the Board may amend the terms of any award
        theretofore granted under this Plan prospectively or retroactively, except
        in
        the case of a Covered Employee where such action would result in the loss
        of the
        otherwise available exemption of the award under Section 162(m) of the Code
        and
        the Board intends that such award should qualify as “performance-based
        compensation” for purposes such section. In such case, the Board will not make
        any modification of the Management Objectives or the level or levels of
        achievement with respect to such Covered Employee. Subject to Section 11
        of this
        Plan, no such amendment shall impair the rights of any Participant without
        the
        Participant’s consent.

      


      
        
          
            
            

          

          
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      20.  Termination.
        The Board may, in its discretion, terminate this Plan at any time. Termination
        of this Plan will not affect the rights of Participants or their successors
        under any awards outstanding hereunder and not exercised in full on the date
        of
        termination. No grant will be made under this Plan more than 10 years after
        the
        date on which this Plan is first approved by the shareholders of the Company,
        but all grants made on or prior to such date will continue in effect thereafter
        subject to the terms thereof and of this Plan.

       

      21.  Requirements
        of
        Law.

       

      (a)  The
        Company shall not be required to sell or issue any shares of Common Stock
        under
        any award under this Plan if the sale or issuance of such shares would
        constitute a violation by the Participant, any other individual exercising
        an
        Option Right, or the Company of any provision of any law or regulation of
        any
        governmental authority, including, without limitation, any federal or state
        securities laws or regulations. If at any time the Company shall determine,
        in
        its discretion, that the listing, registration or qualification of any shares
        subject to an award under this Plan upon any securities exchange or under
        any
        governmental regulatory body is necessary or desirable as a condition of,
        or in
        connection with, the sale or issuance of shares under this Plan, no shares
        of
        Common Stock may be issued or sold to the Participant or any other individual
        exercising an Option Right pursuant to such award unless such listing,
        registration, qualification, consent or approval shall have been effected
        or
        obtained free of any conditions not acceptable to the Company, and any delay
        caused thereby shall in no way affect the date of termination of the award.
        Without limiting the generality of the foregoing, in connection with the
        Securities Act, upon the exercise of any Option Right or the delivery of
        any
        shares of Common Stock underlying an award under this Plan, unless a
        registration statement under the Securities Act is in effect with respect
        to the
        shares of Common Stock covered by such award, the Company shall not be required
        to sell or issue such shares unless the Board has received evidence satisfactory
        to it that the Participant or any other individual exercising an Option Right
        may acquire such shares pursuant to an exemption from registration under
        the
        Securities Act. Any determination in this connection by the Board shall be
        final, binding and conclusive. The Company may, but shall in no event be
        obligated to, register any securities covered by this Plan pursuant to the
        Securities Act. The Company shall not be obligated to take any affirmative
        action in order to cause the exercise of an Option Right or the issuance
        of
        shares of Common Stock pursuant to the Plan to comply with any law or regulation
        of any governmental authority. As to any jurisdiction that expressly imposes
        the
        requirement that an Option Right shall not be exercisable until the shares
        of
        Common Stock covered by such Option Right are registered or are exempt from
        registration, the exercise of such Option Right under circumstances in which
        the
        laws of such jurisdiction apply shall be deemed conditioned upon the
        effectiveness of such registration or the availability of such an
        exemption.

       

      (b)  With
        respect to Persons subject to Section 16 of the Exchange Act, transactions
        under
        this Plan are intended to comply with all applicable conditions of Rule 16b-3
        promulgated under the Exchange Act. To the extent any provision of this Plan
        or
        action by the Board fails to so comply, it shall be deemed modified so as
        to be
        in compliance with such rule or, if such modification is not possible, it
        shall
        be deemed to be null and void to the extent permitted by law and deemed
        advisable by the Board. In the event that Rule 16b-3 promulgated under the
        Exchange Act is revised or replaced, the Board may exercise its discretion
        to
        modify this Plan in any respect necessary to satisfy the requirements of,
        or to
        take advantage of any features of, the revised exemption or its
        replacement.

       

      22.  Governing
        Law. This Plan and all grants and awards and actions taken thereunder
        shall be governed by and construed in accordance with the internal substantive
        laws of the State of Minnesota.

       

      23.  Unfunded
        Plan. This Plan is intended to be an unfunded plan. Participants are and
        shall be at all times general creditors of the Company with respect to all
        awards granted under this Plan. If the Board or the Company chooses to set
        aside
        funds in a trust or otherwise for the payment of awards granted under this
        Plan,
        such funds shall at all times be subject to the claims of the creditors of
        the
        Company in the event of its bankruptcy or insolvency.

      


      
        
          
            
            

          

          
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      24.  Miscellaneous
        Provisions.

       

      (a)  The
        Company will not be required to issue any fractional shares of Common Stock
        pursuant to this Plan. The Board may provide for the elimination of fractions
        or
        for the settlement of fractions in cash.

       

      (b)  This
        Plan will not confer upon any Participant any right with respect to continuance
        of employment or other service with the Company or any Subsidiary, nor will
        it
        interfere in any way with any right the Company or any Subsidiary would
        otherwise have to terminate such Participant’s employment or other service at
        any time.

       

      (c)  To
        the extent that any provision of this Plan would prevent any Option Right
        that
        was intended to qualify as an Incentive Stock Option from qualifying as such,
        that provision will be null and void with respect to such Option Right. Such
        provision, however, will remain in effect for other Option Rights and there
        will
        be no further effect on any provision of this Plan.

       

      (d)  Absence
        on leave approved by a duly constituted officer of the Company or any of
        its
        Subsidiaries shall not be considered interruption or termination of service
        of
        any employee for any purposes of this Plan or awards granted hereunder, except
        that no awards may be granted to an employee while he or she is absent on
        leave.

       

      (e)  No
        Participant shall have any rights as a shareholder with respect to any shares
        subject to awards granted to such Participant under this Plan prior to the
        date
        as of which such Participant is actually recorded as the holder of such shares
        upon the stock records of the Company.

       

      (f)  The
        Board may condition the grant of any award or combination of awards authorized
        under this Plan on the surrender or deferral by the Participant of such
        Participant’s right to receive a cash bonus or other compensation otherwise
        payable by the Company or a Subsidiary to the Participant.

       

      (g)  Participants
        shall provide the Company with a written election form setting forth the
        name
        and contact information of the Person who will have beneficial ownership
        rights
        upon the death of the Participant.

       

      (h)  If
        any provision of this Plan is or becomes invalid, illegal or unenforceable
        in
        any jurisdiction, or would disqualify this Plan or any award under any law
        deemed applicable by the Board, such provision shall be construed or deemed
        amended or limited in scope to conform to applicable laws or, in the discretion
        of the Board, it shall be stricken and the remainder of this Plan shall remain
        in full force and effect.

       

       

      17