**Exhibit 10.37****FX REAL ESTATE AND ENTERTAINMENT INC.****2007 EXECUTIVE EQUITY INCENTIVE PLAN**
 

 
**2007 EXECUTIVE EQUITY INCENTIVE PLAN**     1. ***Purpose***  1      2. *Definitions*  1      3. *Administration*  5      4. *Shares Subject to Plan*  6      5. *Eligibility; Per-Person Limitations*  6      6. *Specific Terms of Options*  7      7. *Certain Provisions Applicable to Options*  8      8. *Change in Control*  10      9. *General Provisions*  12 
 

 
**2007 EXECUTIVE EQUITY INCENTIVE PLAN**     1. ***Purpose***. The purpose of this 2007 EXECUTIVE EQUITY INCENTIVE PLAN (the “Plan”) is to assist FX RealEstate and Entertainment Inc., a Delaware corporation (the “Company”) and its Related Entities (ashereinafter defined) in attracting, motivating, retaining and rewarding high-quality executives andother employees, officers, directors, consultants and other persons who provide services to theCompany or its Related Entities by enabling such persons to acquire or increase a proprietaryinterest in the Company in order to strengthen the mutuality of interests between such persons andthe Company’s shareholders, and providing such persons with long term performance incentives toexpend their maximum efforts in the creation of shareholder value.     2. ***Definitions***. For purposes of the Plan, the following terms shall be defined as set forth below, inaddition to such terms defined in Section 1 hereof and elsewhere herein.          (a) “***Beneficiary” and “Beneficial Ownership”***means the person, persons, trust or trusts thathave been designated by an Optionee in his or her most recent written beneficiary designation filedwith the Committee to receive the benefits specified under the Plan upon such Optionee’s death orto which Options or other rights are transferred if and to the extent permitted under Section 9(b)hereof. If, upon an Optionee’s death, there is no designated Beneficiary or surviving designatedBeneficiary, then the term Beneficiary means the person, persons, trust or trusts entitled by willor the laws of descent and distribution to receive such benefits.          (b) “***Beneficial Owner***” shall have the meaning ascribed to such term in Rule 13d-3 under theExchange Act and any successor to such Rule.          (c) “***Board***” means the Company’s Board of Directors.          (d) “***Cause***” shall, with respect to any Optionee, have the meaning specified in the OptionAgreement. In the absence of any definition in the Option Agreement, “Cause” shall have theequivalent meaning or the same meaning as “cause” or “for cause” set forth in any employment,consulting, or other agreement for the performance of services between the Optionee and the Companyor a Related Entity or, in the absence of any such agreement or any such definition in suchagreement, such term shall mean (i) the failure by the Optionee to perform, in a reasonable manner,his or her duties as assigned by the Company or a Related Entity, (ii) any violation or breach bythe Optionee of his or her employment, consulting or other similar agreement with the Company or aRelated Entity, if any, (iii) any violation or breach by the Optionee of any non-competition,non-solicitation, non-disclosure and/or other similar agreement with the Company or a RelatedEntity, (iv) any act by the Optionee of dishonesty or bad faith with respect to the Company or aRelated Entity, (v) use of alcohol, drugs or other similar substances in a manner that adversely affects the Optionee’s work performance, or (vi)the commission by the Optionee of any act, misdemeanor, or crime reflecting unfavorably upon theOptionee or the Company or any Related Entity. The good faith determination by the
 

 
Committee of whether the Optionee’s Continuous Service was terminated by the Company for “Cause” shall be finaland binding for all purposes hereunder.          (e) “***Change in Control***” means a Change in Control as defined in Section 8(b) of the Plan.          (f) “***Code***” means the Internal Revenue Code of 1986, as amended from time to time, includingregulations thereunder and successor provisions and regulations thereto.          (g) “***Committee***” means the Compensation Committee of the Board; provided, however, that if atany time, there shall fail to be a sitting Compensation Committee or if there are no longer anymembers on the Compensation Committee, then the Board shall serve as the Committee. The Committeeshall consist of at least two directors, and each member of the Committee shall be (i) a“non-employee director” within the meaning of Rule 16b-3 (or any successor rule) under theExchange Act, unless administration of the Plan by “non-employee directors” is not then required inorder for exemptions under Rule 16b-3 to apply to transactions under the Plan, (ii) an “outsidedirector” within the meaning of Section 162(m) of the Code, and (iii) “Independent”.          (h) “***Consultant***” means any person (other than an Employee or a Director, solely with respectto rendering services in such person’s capacity as a director) who is engaged by the Company or anyRelated Entity to render consulting or advisory services to the Company or such Related Entity.          (i) “***Continuous Service***” means the uninterrupted provision of services to the Company or anyRelated Entity in any capacity of Employee, Director, Consultant or other service provider.Continuous Service shall not be considered to be interrupted in the case of (i) any approved leaveof absence, (ii) transfers among the Company, any Related Entities, or any successor entities, inany capacity of Employee, Director, Consultant or other service provider, or (iii) any change instatus as long as the individual remains in the service of the Company or a Related Entity in anycapacity of Employee, Director, Consultant or other service provider (except as otherwise providedin the Option Agreement). An approved leave of absence shall include sick leave, military leave,or any other authorized personal leave.          (j) “***Covered Employee”***means the Person who, as of the end of the taxable year, either is theprincipal executive officer of the Company or is serving as the acting principal executive officerof the Company, and each other Person whose compensation is required to be disclosed in theCompany’s filings with the Securities and Exchange Commission by reason of that person being amongthe three highest compensated officers of the Company as of the end of a taxable year, or suchother person as shall be considered a “covered employee” for purposes of Section 162(m) of theCode.          (k) “***Director***” means a member of the Board or the board of directors of any Related Entity.          (l) “***Disability***” means a permanent and total disability (within the meaning of Section 22(e)of the Code), as determined by a medical doctor satisfactory to the Committee.
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          (m) “***Effective Date***” means the effective date of the Plan, which shall be December 17, 2007,subject to approval within twelve (12) months by the stockholders of the shares entitled to votethereon.          (n) “***Eligible Person***” means each officer, Director, Employee, Consultant and other person whoprovides services to the Company or any Related Entity. The foregoing notwithstanding, onlyemployees of the Company, or any parent corporation or subsidiary corporation of the Company (asthose terms are defined in Sections 424(e) and (f) of the Code, respectively), shall be EligiblePersons for purposes of receiving any Incentive Stock Options. An Employee on leave of absence maybe considered as still in the employ of the Company or a Related Entity for purposes of eligibilityfor participation in the Plan.          (o) “***Employee***” means any person, including an officer or Director, who is an employee of theCompany or any Related Entity. The payment of a director’s fee by the Company or a Related Entityshall not be sufficient to constitute “employment” by the Company.          (p) “***Exchange Act***” means the Securities Exchange Act of 1934, as amended from time to time,including rules thereunder and successor provisions and rules thereto.          (q) “***Fair Market Value***” means the fair market value of Shares, Options or other property asdetermined by the Committee, or under procedures established by the Committee. Unless otherwisedetermined by the Committee, the Fair Market Value of a Share as of any given date shall be theclosing sale price per Share reported on a consolidated basis for stock listed on the principalstock exchange or market on which Shares are traded on the date immediately preceding the date asof which such value is being determined or, if there is no sale on that date, then on the lastprevious day on which a sale was reported.          (r) “***Good Reason***” shall, with respect to any Optionee, have the meaning specified in theOption Agreement. In the absence of any definition in the Option Agreement, “Good Reason” shallhave the equivalent meaning or the same meaning as “good reason” or “for good reason” set forth inany employment, consulting or other agreement for the performance of services between the Optioneeand the Company or a Related Entity or, in the absence of any such agreement or any such definitionin such agreement, such term shall mean (i) the assignment to the Optionee of any dutiesinconsistent in any material respect with the Optionee’s position (including status, offices,titles and reporting requirements), authority, duties or responsibilities as assigned by theCompany or a Related Entity, or any other action by the Company or a Related Entity which resultsin a material diminution in such position, authority, duties or responsibilities, excluding forthis purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which isremedied by the Company or a Related Entity promptly after receipt of notice thereof given by theOptionee; or (ii) any material failure by the Company or a Related Entity to comply with itsobligations to the Optionee as agreed upon, other than an isolated, insubstantial and inadvertentfailure not occurring in bad faith and which is remedied by the Company or a Related Entitypromptly after receipt of notice thereof given by the Optionee.
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          (s) “***Incentive Stock Option***” means any Option intended to be designated as an incentive stockoption within the meaning of Section 422 of the Code or any successor provision thereto.          (t) “***Independent***”, when referring to either the Board or members of the Committee, shall havethe same meaning as used in the rules of the NASDAQ Global Market or any national securitiesexchange on which any securities of the Company are listed for trading, and if not listed fortrading, by the rules of the Nasdaq National Market.          (u) “***Incumbent Board***” means the Incumbent Board as defined in Section 8(b)(ii) of the Plan.          (v) “***Option***” means a right granted to an Optionee under Section 6(b) hereof, to purchaseShares at a specified price during specified time periods.          (w) “***Option Agreement***” means any written agreement, contract or other instrument or documentevidencing any Option granted by the Committee hereunder.          (x) “***Optionee***” means a person to whom an Option is granted under this Plan or any person whosucceeds to the rights of such person under this Plan.          (y) “***Person***” shall have the meaning ascribed to such term in Section 3(a)(9) of the ExchangeAct and used in Sections 13(d) and 14(d) thereof, and shall include a “group” as defined in Section13(d) thereof.          (z) “***Related Entity***” means any Subsidiary, and any business, corporation, partnership, limitedliability company or other entity designated by the Board, in which the Company or a Subsidiaryholds a substantial ownership interest, directly or indirectly.          (aa) “***Rule 16b-3***” means Rule 16b-3, as from time to time in effect and applicable to the Planand Optionees, promulgated by the Securities and Exchange Commission under Section 16 of theExchange Act.          (bb) “***Shares***” means the shares of common stock of the Company, par value $.01 per share, andsuch other securities as may be substituted (or resubstituted) for Shares pursuant to Section 9(c)hereof.          (cc) “***Subsidiary***” means any corporation or other entity in which the Company has a direct orindirect ownership interest of 50% or more of the total combined voting power of the thenoutstanding securities or interests of such corporation or other entity entitled to vote generallyin the election of directors or in which the Company has the right to receive 50% or more of thedistribution of profits or 50% or more of the assets on liquidation or dissolution.          (dd) “***Substitute Options***” means options or other awards granted by the Company in assumptionof, or in substitution or exchange for, Options previously granted, or the right or obligation tomake future grants or awards, by a company acquired by the Company or any Related Entity or withwhich the Company or any Related Entity combines.
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     3. ***Administration*****.**          (a) ***Authority of the Committee***. The Plan shall be administered by the Committee except to the extent the Board elects toadminister the Plan, in which case the Plan shall be administered by only those directors who areIndependent Directors, in which case references herein to the “Committee” shall be deemed toinclude references to the Independent members of the Board. The Committee shall have full andfinal authority, subject to and consistent with the provisions of the Plan, to select EligiblePersons to become Optionees, grant Options, determine the type, number and other terms andconditions of, and all other matters relating to, Options, prescribe Option Agreements (which neednot be identical for each Optionee) and rules and regulations for the administration of the Plan,construe and interpret the Plan and Option Agreements and correct defects, supply omissions orreconcile inconsistencies therein, and to make all other decisions and determinations as theCommittee may deem necessary or advisable for the administration of the Plan. In exercising anydiscretion granted to the Committee under the Plan or pursuant to any Option Agreement, theCommittee shall not be required to follow past practices, act in a manner consistent with pastpractices, or treat any Eligible Person or Optionee in a manner consistent with the treatment ofother Eligible Persons or Optionees.          (b) ***Manner of Exercise of Committee Authority.***: The Committee, and not the Board, shall exercise sole and exclusive discretion on any matterrelating to an Optionee then subject to Section 16 of the Exchange Act with respect to the Companyto the extent necessary in order that transactions by such Optionee shall be exempt under Rule16b-3 under the Exchange Act. Any action of the Committee shall be final, conclusive and bindingon all persons, including the Company, its Related Entities, Eligible Persons, Optionees,Beneficiaries, transferees under Section 9(b) hereof or other persons claiming rights from orthrough an Optionee, and shareholders. The express grant of any specific power to the Committee,and the taking of any action by the Committee, shall not be construed as limiting any power orauthority of the Committee. The Committee may delegate to officers or managers of the Company orany Related Entity, or committees thereof, the authority, subject to such terms as the Committeeshall determine, to perform such functions, including administrative functions as the Committee maydetermine to the extent that such delegation will not result in the loss of an exemption under Rule16b-3(d)(1) for Options granted to Optionees subject to Section 16 of the Exchange Act in respectof the Company and will not cause Options intended to qualify as “performance-based compensation”under Code Section 162(m) to fail to so qualify. The Committee may appoint agents to assist it inadministering the Plan.          (c) ***Limitation of Liability***. The Committee and the Board, and each member thereof, shall be entitled to, in good faith,rely or act upon any report or other information furnished to him or her by any officer orEmployee, the Company’s independent auditors, Consultants or any other agents assisting in theadministration of the Plan. Members of the Committee and the Board, and any officer or Employeeacting at the direction or on behalf of the Committee or the Board, shall not be personally liablefor any action or determination taken or made in good faith with respect to thePlan, and shall, to the extent permitted by law, be fully indemnified and protected by theCompany with respect to any such action or determination.
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     4. ***Shares Subject to Plan*****.**          (a) ***Limitation on Overall Number of Shares Available for Delivery Under Plan***. Subject to adjustment as provided in Section 9(c) hereof, the total number of Sharesreserved and available for delivery under the Plan shall be twelve million five-hundred thousand(12,500,000) Shares. Any Shares delivered under the Plan may consist, in whole or in part, ofauthorized and unissued shares or treasury shares.          (b) ***Application of Limitation to Grants of Option.***. No Option may be granted if the number of Shares to be delivered in connection with such anOption exceeds the number of Shares remaining available for delivery under the Plan, minus thenumber of Shares deliverable in settlement of or relating to then outstanding Options. TheCommittee may adopt reasonable counting procedures to ensure appropriate counting, avoid doublecounting (as, for example, in the case Substitute Options) and make adjustments if the number ofShares actually delivered differs from the number of Shares previously counted in connection withan Option.          (c) ***Availability of Shares Not Delivered under Options and Adjustments to Limits.***          (i) If any Shares subject to an Option are forfeited, expire or otherwise terminate withoutissuance of such Shares or otherwise does not result in the issuance of all or a portion of theShares subject to such Option, the Shares shall, to the extent of such forfeiture, expiration,termination, cash settlement or non-issuance, again be available for Options under the Plan.          (ii) Substitute Options shall not reduce the Shares authorized for grant under the Plan orauthorized for grant to an Optionee in any period. Additionally, in the event that a companyacquired by the Company or any Related Entity or with which the Company or any Related Entitycombines has shares available under a pre-existing plan approved by shareholders and not adopted incontemplation of such acquisition or combination, the shares available for delivery pursuant to theterms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratioor other adjustment or valuation ratio or formula used in such acquisition or combination todetermine the consideration payable to the holders of common stock of the entities party to suchacquisition or combination) may be used for Options under the Plan and shall not reduce the Sharesauthorized for delivery under the Plan; provided that Options using such available shares shall notbe made after the date Options or grants could have been made under the terms of the pre-existingplan, absent the acquisition or combination, and shall only be made to individuals who were notEmployees or Directors prior to such acquisition or combination.          (iii) Notwithstanding anything in this Section 4(c) to the contrary but subject to adjustmentas provided in Section 9(c) hereof, the maximum aggregate number of Shares that may be issued underthe Plan as a result of the exercise of the Incentive Stock Options shall be twelve millionfive-hundred thousand (12,500,000) Shares shares.     5. ***Eligibility; Per-Person Limitations***. Options may be granted under the Plan only to Eligible Persons. Subject to adjustment asprovided in Section 9(c), in any fiscal year of the
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Company during any part of which the Plan is ineffect, no Optionee may be granted Options with respect to more than twelve million five-hundredthousand (12,500,000) Shares. The maximum number of Shares that may be granted to any one Optioneeover the life of the Plan is twelve million five-hundred thousand (12,500,000) Shares.     6. ***Specific Terms of Options*****.**          (a) ***General***. Options may be granted on the terms and conditions set forth in this Section 6. Inaddition, the Committee may impose on any Option or the exercise thereof, at the date of grant orthereafter (subject to Section 9(e)), such additional terms and conditions, not inconsistent withthe provisions of the Plan, as the Committee shall determine, including terms requiring forfeitureof Options in the event of termination of the Optionee’s Continuous Service and terms permitting anOptionee to make elections relating to his or her Option. The Committee shall retain full powerand discretion to accelerate, waive or modify, at any time, any term or condition of an Option thatis not mandatory under the Plan. Except in cases in which the Committee is authorized to requireother forms of consideration under the Plan, or to the extent other forms of consideration must bepaid to satisfy the requirements of Delaware law, no consideration other than services may berequired for the grant (as opposed to the exercise) of any Option.          (b) ***Grant of Options***. The Committee is authorized to grant Options to any Eligible Person on the following termsand conditions:               (i) ***Exercise Price***. Other than in connection with Substitute Options, the exercise price perShare purchasable under an Option shall be determined by the Committee, provided that such exerciseprice shall not be less than one hundred percent (100%) of the Fair Market Value of a Share on thedate of grant of the Option and shall not, in any event, be less than the par value of a Share onthe date of grant of the Option. If an Employee owns or is deemed to own (by reason of theattribution rules applicable under Section 424(d) of the Code) more than 10% of the combined votingpower of all classes of stock of the Company (or any parent corporation or subsidiary corporationof the Company, as those terms are defined in Sections 424(e) and (f) of the Code, respectively)and an Incentive Stock Option is granted to such employee, the exercise price of such IncentiveStock Option (to the extent required by the Code at the time of grant) shall be no less than 110%of the Fair Market Value of a Share on the date such Incentive Stock Option is granted. Other thanpursuant to Section 9(c), the Committee shall not be permitted to (A) lower the exercise price per Share of an Option after it isgranted, (B) cancel an Option when the exercise price per Share exceeds the Fair Market Value ofthe underlying Shares in exchange for another Option (other than in connection with SubstituteOptions), or (C) take any other action with respect to an Option that may be treated as arepricing, without approval of the Company’s shareholders.               (ii) ***Time and Method of Exercise***. The Committee shall determine the time or times at which orthe circumstances under which an Option may be exercised in whole or in part (including based onachievement of performance goals and/or future service requirements), the time or times at whichOptions shall cease to be or become exercisable following termination of Continuous Service or uponother conditions, the methods by which the exercise price may be paid or deemed to be paid(including in the discretion of the Committee a
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cashless exercise procedure), the form of suchpayment, including, without limitation, cash, Shares (including without limitation the withholdingof Shares otherwise deliverable pursuant to the grant), other options or other awards granted underother plans of the Company or a Related Entity, or other property (including notes or othercontractual obligations of Optionees to make payment on a deferred basis provided that suchdeferred payments are not in violation of the Sarbanes-Oxley Act of 2002, or any rule or regulationadopted thereunder or any other applicable law), and the methods by or forms in which Shares willbe delivered or deemed to be delivered to Optionees.               (iii) ***Incentive Stock Options***. The terms of any Incentive Stock Option granted under the Planshall comply in all respects with the provisions of Section 422 of the Code. Anything in the Planto the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options shall beinterpreted, amended or altered, nor shall any discretion or authority granted under the Plan beexercised, so as to disqualify either the Plan or any Incentive Stock Option under Section 422 ofthe Code, unless the Optionee has first requested, or consents to, the change that will result insuch disqualification. Thus, if and to the extent required to comply with Section 422 of the Code,Options granted as Incentive Stock Options shall be subject to the following special terms andconditions:                    (A) the Option shall not be exercisable for more than ten years after the date such IncentiveStock Option is granted; provided, however, that if an Optionee owns or is deemed to own (by reasonof the attribution rules of Section 424(d) of the Code) more than 10% of the combined voting powerof all classes of stock of the Company (or any parent corporation or subsidiary corporation of theCompany, as those terms are defined in Sections 424(e) and (f) of the Code, respectively) and theIncentive Stock Option is granted to such Optionee, the term of the Incentive Stock Option shall be(to the extent required by the Code at the time of the grant) for no more than five years from thedate of grant; and                    (B) The aggregate Fair Market Value (determined as of the date the Incentive Stock Option isgranted) of the Shares with respect to which Incentive Stock Options granted under the Plan and allother option plans of the Company (and any parent corporation or subsidiary corporation of theCompany, as those terms are defined in Sections 424(e) and (f) of the Code, respectively) thatbecome exercisable for the first time by the Optionee during any calendar year shall not (to theextent required by the Code at the time of the grant) exceed $100,000.     7. ***Certain Provisions Applicable to Options*****.**         (a) ***Stand-Alone, Additional, and Substitute Options***Options granted under the Plan may, in the discretion of the Committee, be granted eitheralone or in addition to or in substitution or exchange for, any other Option or any award grantedunder another plan of the Company, any Related Entity, or any business entity to be acquired by theCompany or a Related Entity, or any other right of an Optionee to receive payment from the Companyor any Related Entity. Such additional, substitute or exchange Options may be granted at any time.If an Option is granted in substitution or exchange for another Option or award granted underanother plan, the Committee shall require the surrender of such other Option or other award inconsideration for the grant of the new Option. In addition, Options may be granted in lieu of
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cash compensation, including in lieu of cash amounts payable under other plans of the Company or anyRelated Entity, in which the value of Stock subject to the Option is equivalent in value to thecash compensation, or in which the exercise price, grant price or purchase price of the Option inthe nature of a right that may be exercised is equal to the Fair Market Value of the underlyingStock minus the value of the cash compensation surrendered (for example, Options granted with anexercise price or grant price “discounted” by the amount of the cash compensation surrendered).     (b) ***Term of Options***. The term of each Option shall be for such period as may be determined by the Committee;provided that in no event shall the term of any Option exceed a period of ten years (or in the caseof an Incentive Stock Option such shorter term as may be required under Section 422 of the Code).     (c) ***Form and Timing of Payment***. Subject to the terms of the Plan and any applicable Option Agreement, payments to be madeby the Company or a Related Entity upon the exercise of an Option or settlement of an Option may bemade in such forms as the Committee shall determine, including, without limitation, cash, Shares,other Options or other property, and may be made in a single payment or transfer, in installments,or on a deferred basis. Any installment or deferral provided for in the preceding sentence shall,however, be subject to the Company’s compliance with the provisions of the Sarbanes-Oxley Act of2002, the rules and regulations adopted by the Securities and Exchange Commission thereunder, andall applicable rules of the NASDAQ Global Market or any national securities exchange on which theCompany’s securities are listed or quoted for trading and, if not listed or quoted for trading oneither the NASDAQ Global Market or a national securities exchange, then the rules of the NASDAQGlobal Market. The settlement of any Option may be accelerated, and cash paid in lieu of Shares inconnection with such settlement, in the discretion of the Committee or upon occurrence of one ormore specified events (in addition to a Change in Control). Installment or deferred payments maybe required by the Committee (subject to Section 9(e) of the Plan, including the consent provisionsthereof in the case of any deferral of an outstanding Option not provided for in the originalOption Agreement) or permitted at the election of the Optionee on terms and conditions establishedby the Committee. The Committee may, without limitation, make provision for the payment or crediting of a reasonable interest rate on installment or deferred payments or the grant orother amounts in respect of installment or deferred payments denominated in Shares.     (d) ***Exemptions from******Section 16(b)******Liability.***: It is the intent of the Company that the grant of any Options to or other transaction by anOptionee who is subject to Section 16 of the Exchange Act shall be exempt from Section 16 pursuantto an applicable exemption (except for transactions acknowledged in writing to be non-exempt bysuch Optionee). Accordingly, if any provision of this Plan or any Option Agreement does not complywith the requirements of Rule 16b-3 then applicable to any such transaction, such provision shallbe construed or deemed amended to the extent necessary to conform to the applicable requirements ofRule 16b-3 so that such Optionee shall avoid liability under Section 16(b).
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     (e) ***Code Section 409A.***               (i) If any Option constitutes a “nonqualified deferred compensation plan” under Section 409Aof the Code (a “Section 409A Plan”), then the Option shall be subject to the following additionalrequirements, if and to the extent required to comply with Section 409A of the Code:                    (A) Payments under the Section 409A Plan may not be made earlier than (u) the Optionee’sseparation from service, (v) the date the Optionee becomes disabled, (w) the Optionee’s death, (x)a specified time (or pursuant to a fixed schedule) specified in the Option Agreement at the date ofthe deferral of such compensation, (y) a change in the ownership or effective control of thecorporation, or in the ownership of a substantial portion of the assets of the corporation, or (z)the occurrence of an unforeseeble emergency;                    (B) The time or schedule for any payment of the deferred compensation may not be accelerated,except to the extent provided in applicable Treasury Regulations or other applicable guidanceissued by the Internal Revenue Service;                    (C) Any elections with respect to the deferral of such compensation or the time and form ofdistribution of such deferred compensation shall comply with the requirements of Section 409A(a)(4)of the Code; and                    (D) In the case of any Optionee who is specified employee, a distribution on account of aseparation from service may not be made before the date which is six months after the date of theOptionee’s separation from service (or, if earlier, the date of the Optionee’s death).For purposes of the foregoing, the terms “separation from service”, “disabled”, and “specifiedemployee”, all shall be defined in the same manner as those terms are defined for purposes ofSection 409A of the Code, and the limitations set forth herein shall be applied in such manner (andonly to the extent) as shall be necessary to comply with any requirements of Section 409A of theCode that are applicable to the Option.               (ii) The Option Agreement for any Option that the Committee reasonably determines toconstitute a Section 409A Plan, and the provisions of the Plan applicable to that Option, shall beconstrued in a manner consistent with the applicable requirements of Section 409A of the Code, andthe Committee, in its sole discretion and without the consent of any Optionee, may amend any OptionAgreement (and the provisions of the Plan applicable thereto) if and to the extent that theCommittee determines that such amendment is necessary or appropriate to comply with therequirements of Section 409A of the Code. No Option Agreements shall be adjusted, modified orsubstituted for without the consent of the Optionee if any such adjustments, modifications orsubstitutions would cause the Option Agreement to violate the requirements of Section 409A of theCode.     8. ***Change in Control*****.**          (a) ***Effect of “Change in Control.”***Subject to Section 8(a)(iii), and if and only to the extent provided in the Option Agreement,or to the extent otherwise determined by the Committee, upon the occurrence of a “Change inControl,” as defined in Section 8(b):
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               (i) Any Option that was not previously vested and exercisable as of the time of the Change inControl, shall become immediately vested and exercisable, subject to applicable restrictions setforth in Section 9(a) hereof.               (ii) With respect to any outstanding Option subject to achievement of performance goals andconditions under the Plan, the Committee may, in its discretion, deem such performance goals andconditions as having been met as of the date of the Change in Control.               (iii) Notwithstanding the foregoing or any provision in any Option Agreement to the contrary,if in the event of a Change in Control the successor company assumes or substitutes for an Option,then each such outstanding Option shall not be accelerated as described in Sections 8(a)(i) and(ii). For the purposes of this Section 8(a)(iii), an Option shall be considered assumed orsubstituted for if following the Change in Control the Option confers the right to purchase orreceive, for each Share subject to the Option immediately prior to the Change in Control, theconsideration (whether stock, cash or other securities or property) received in the transactionconstituting a Change in Control by holders of Shares for each Share held on the effective date ofsuch transaction (and if holders were offered a choice of consideration, the type of considerationchosen by the holders of a majority of the outstanding shares); provided, however, that if suchconsideration received in the transaction constituting a Change in Control is not solely commonstock of the successor company or its parent or subsidiary, the Committee may, with the consent ofthe successor company or its parent or subsidiary, provide that the consideration to be receivedupon the exercise of an Option for each Share subject thereto, will be solely common stock of thesuccessor company or its parent or subsidiary substantially equal in fair market value to the pershare consideration received by holders of Shares in the transaction constituting a Change inControl. The determination of such substantial equality of value of consideration shall be made bythe Committee in its sole discretion and its determination shall be conclusive and binding.          (b) ***Definition of “Change in Control"***. Unless otherwise specified in an Option Agreement, a “Change in Control” shall mean theoccurrence of any of the following:               (i) The acquisition by any Person of Beneficial Ownership (within the meaning of Rule 13d-3promulgated under the Exchange Act) of more than fifty percent (50%) of either (A) the thenoutstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B)the combined voting power of the then outstanding voting securities of the Company entitled to votegenerally in the election of directors (the “Outstanding Company Voting Securities) (the foregoingBeneficial Ownership hereinafter being referred to as a “Controlling Interest”); provided, however,that for purposes of this Section 8(b), the following acquisitions shall not constitute or resultin a Change in Control: (v) any acquisition directly from the Company; (w) any acquisition by theCompany; (x) any acquisition by any Person that as of the Effective Date owns Beneficial Ownershipof a Controlling Interest; (y) any acquisition by any employee benefit plan (or related trust)sponsored or maintained by the Company or any Related Entity; or (z) any acquisition by any entitypursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) below;or
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               (ii) During any period of two (2) consecutive years (not including any period prior to theEffective Date) individuals who constitute the Board on the Effective Date (the “Incumbent Board”)cease for any reason to constitute at least a majority of the Board; provided, however, that anyindividual becoming a director subsequent to the Effective Date whose election, or nomination forelection by the Company’s shareholders, was approved by a vote of at least a majority of thedirectors then comprising the Incumbent Board shall be considered as though such individual were amember of the Incumbent Board, but excluding, for this purpose, any such individual whose initialassumption of office occurs as a result of an actual or threatened election contest with respect tothe election or removal of directors or other actual or threatened solicitation of proxies orconsents by or on behalf of a Person other than the Board; or               (iii) Consummation of a reorganization, merger, statutory share exchange or consolidation orsimilar transaction involving the Company or any of its Related Entities, a sale or otherdisposition of all or substantially all of the assets of the Company, or the acquisition of assetsor equity of another entity by the Company or any of its Related Entities (each a “BusinessCombination”), in each case, unless, following such Business Combination, (A) all or substantiallyall of the individuals and entities who were the Beneficial Owners, respectively, of theOutstanding Company Common Stock and Outstanding Company Voting Securities immediately prior tosuch Business Combination beneficially own, directly or indirectly, more than fifty percent (50%)of the value of the then outstanding equity securities and the combined voting power of the thenoutstanding voting securities entitled to vote generally in the election of members of the board ofdirectors (or comparable governing body of an entity that does not have such a board), as the casemay be, of the entity resulting from such Business Combination (including, without limitation, anentity which as a result of such transaction owns the Company or all or substantially all of theCompany’s assets either directly or through one or more subsidiaries) in substantially the sameproportions as their ownership, immediately prior to such Business Combination of the OutstandingCompany Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding anyemployee benefit plan (or related trust) of the Company or such entity resulting from such BusinessCombination or any Person that as of the Effective Date owns Beneficial Ownership of a ControllingInterest) beneficially owns, directly or indirectly, fifty percent (50%) or more of the value ofthe then outstanding equity securities of the entity resulting from such Business Combination orthe combined voting power of the then outstanding voting securities of such entity except to theextent that such ownership existed prior to the Business Combination and (C) at least a majority ofthe members of the Board of Directors or other governing body of the entity resulting from suchBusiness Combination were members of the Incumbent Board at the time of the execution of theinitial agreement, or of the action of the Board, providing for such Business Combination; or               (iv) Approval by the shareholders of the Company of a complete liquidation or dissolution ofthe Company.     9. ***General Provisions*****.**          (a) ***Compliance With Legal and Other Requirements***. The Company may, to the extent deemed necessary or advisable by the Committee, postpone theissuance or delivery of
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Shares or payment of other benefits under any Option until completion ofsuch registration or qualification of such Shares or other required action under any federal orstate law, rule or regulation, listing or other required action with respect to any stock exchangeor automated quotation system upon which the Shares or other Company securities are listed orquoted, or compliance with any other obligation of the Company, as the Committee, may considerappropriate, and may require any Optionee to make such representations, furnish such informationand comply with or be subject to such other conditions as it may consider appropriate in connectionwith the issuance or delivery of Shares or payment of other benefits in compliance with applicablelaws, rules, and regulations, listing requirements, or other obligations.          (b) ***Limits on Transferability; Beneficiaries***. No Option granted under the Plan shall be pledged, hypothecated or otherwise encumberedor subject to any lien, obligation or liability of such Optionee to any party, or assigned ortransferred by such Optionee otherwise than by will or the laws of descent and distribution or to aBeneficiary upon the death of an Optionee, and such Options that may be exercisable shall beexercised during the lifetime of the Optionee only by the Optionee or his or her guardian or legalrepresentative, except that Options (other than Incentive Stock Options) may be transferred to oneor more Beneficiaries or other transferees during the lifetime of the Optionee, and may beexercised by such transferees in accordance with the terms of such Option, but only if and to theextent such transfers are permitted by the Committee pursuant to the express terms of an OptionAgreement (subject to any terms and conditions which the Committee may impose thereon). ABeneficiary, transferee, or other person claiming any rights under the Plan from or through anyOptionee shall be subject to all terms and conditions of the Plan and any Option Agreementapplicable to such Optionee, except as otherwise determined by the Committee, and to any additional terms and conditions deemed necessary or appropriate bythe Committee.          (c) ***Adjustments.***               (i) ***Adjustments to Options***. In the event that any extraordinary dividend or otherdistribution (whether in the form of cash, Shares, or other property), recapitalization, forward orreverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, shareexchange, liquidation, dissolution or other similar corporate transaction or event affects theShares and/or such other securities of the Company or any other issuer such that a substitution,exchange, or adjustment is determined by the Committee to be appropriate, then the Committee shall,in such manner as it may deem equitable, substitute, exchange or adjust any or all of (A) thenumber and kind of Shares which may be delivered in connection with Options granted thereafter, (B)the number and kind of Shares by which annual per-person Option limitations are measured underSection 5 hereof, (C) the number and kind of Shares subject to or deliverable in respect ofoutstanding Options, (D) the exercise price, grant price or purchase price relating to any Optionand/or make provision for payment of cash or other property in respect of any outstanding Option,and (E) any other aspect of any Option that the Committee determines to be appropriate.               (ii) ***Adjustments in Case of Certain Transactions***. In the event of any merger, consolidationor other reorganization in which the Company does not survive, or in the event of any Change inControl, any outstanding Options may be dealt with in accordance with
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any of the followingapproaches, as determined by the agreement effectuating the transaction or, if and to the extentnot so determined, as determined by the Committee: (a) the continuation of the outstanding Optionsby the Company, if the Company is a surviving entity, (b) the assumption or substitution for, asthose terms are defined in Section 8(b)(iii) hereof, the outstanding Options by the survivingentity or its parent or subsidiary, (c) full exercisability or vesting and accelerated expirationof the outstanding Options, or (d) settlement of the value of the outstanding Options in cash orcash equivalents or other property followed by cancellation of such Options (which value shall bemeasured by the amount, if any, by which the Fair Market Value of a Share exceeds the exercise orgrant price of the Option as of the effective date of the transaction). The Committee shall givewritten notice of any proposed transaction referred to in this Section 9(c)(ii) a reasonable periodof time prior to the closing date for such transaction (which notice may be given either before orafter the approval of such transaction), in order that Optionees may have a reasonable period oftime prior to the closing date of such transaction within which to exercise any Options that arethen exercisable (including any Options that may become exercisable upon the closing date of suchtransaction). An optionee may condition his exercise of any Options upon the consummation of thetransaction.               (iii) ***Other Adjustments***. The Committee (and the Board if and only to the extent suchauthority is not required to be exercised by the Committee to comply with Section 162(m) of theCode) is authorized to make adjustments in the terms and conditions of, and the criteria includedin, Options (including performance goals relating thereto) in recognition of unusual ornonrecurring events (including, without limitation, acquisitions and dispositions of businesses andassets) affecting the Company, any Related Entity or any business unit, or the financial statementsof the Company or any Related Entity, or in response to changes in applicable laws, regulations, accounting principles, tax rates and regulations or businessconditions or in view of the Committee’s assessment of the business strategy of the Company, anyRelated Entity or business unit thereof, performance of comparable organizations, economic andbusiness conditions, personal performance of an Optionee, and any other circumstances deemedrelevant; provided that no such adjustment shall be authorized or made if and to the extent thatsuch authority or the making of such adjustment would cause Options to Optionees designated by theCommittee as Covered Employees and intended to qualify as “performance-based compensation” underCode Section 162(m) and the regulations thereunder to otherwise fail to qualify as“performance-based compensation” under Code Section 162(m) and regulations thereunder.          (d) ***Taxes***. The Company and any Related Entity are authorized to withhold from any Option granted, anypayment relating to an Option under the Plan, including from a distribution of Shares, or anypayroll or other payment to an Optionee, amounts of withholding and other taxes due or potentiallypayable in connection with any transaction involving an Option, and to take such other action asthe Committee may deem advisable to enable the Company or any Related Entity and Optionees tosatisfy obligations for the payment of withholding taxes and other tax obligations relating to anyOption. This authority shall include authority to withhold or receive Shares or other property andto make cash payments in respect thereof in satisfaction of an Optionee’s tax obligations, eitheron a mandatory or elective basis in the discretion of the Committee.
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          (e) ***Changes to the Plan and Options***. The Board may amend, alter, suspend, discontinue or terminate the Plan, or the Committee’sauthority to grant Options under the Plan, without the consent of shareholders or Optionees, exceptthat any amendment or alteration to the Plan shall be subject to the approval of the Company’sshareholders not later than the annual meeting next following such Board action if such shareholderapproval is required by any federal or state law or regulation (including, without limitation, Rule16b-3 or Code Section 162(m)) or the rules of any stock exchange or automated quotation system onwhich the Shares may then be listed or quoted, and the Board may otherwise, in its discretion,determine to submit other such changes to the Plan to shareholders for approval; provided that,without the consent of an affected Optionee, no such Board action may materially and adverselyaffect the rights of such Optionee under any previously granted and outstanding Option. TheCommittee may waive any conditions or rights under, or amend, alter, suspend, discontinue orterminate any Option theretofore granted and any Option Agreement relating thereto, except asotherwise provided in the Plan; provided that, without the consent of an affected Optionee, no suchCommittee or the Board action may materially and adversely affect the rights of such Optionee undersuch Option.          (f) ***Limitation on Rights Conferred Under Plan***. Neither the Plan nor any action taken hereunder or under any Option shall be construed as(i) giving any Eligible Person or Optionee the right to continue as an Eligible Person or Optioneeor in the employ or service of the Company or a Related Entity; (ii) interfering in any way with the right of the Company or a Related Entity to terminate anyEligible Person’s or Optionee’s Continuous Service at any time, (iii) giving an Eligible Person orOptionee any claim to be granted any Option under the Plan or to be treated uniformly with otherOptionees and Employees, or (iv) conferring on an Optionee any of the rights of a shareholder ofthe Company including, without limitation, any right to receive dividends or distributions, anyright to vote or act by written consent, any right to attend meetings of shareholders or any rightto receive any information concerning the Company’s business, financial condition, results ofoperation or prospects, unless and until such time as the Optionee is duly issued Shares on thestock books of the Company in accordance with the terms of an Option. None of the Company, itsofficers or its directors shall have any fiduciary obligation to the Optionee with respect to anyOptions unless and until the Optionee is duly issued Shares pursuant to the Option on the stockbooks of the Company in accordance with the terms of an Option. Neither the Company nor any of theCompany’s officers, directors, representatives or agents are granting any rights under the Plan tothe Optionee whatsoever, oral or written, express or implied, other than those rights expressly setforth in this Plan or the Option Agreement.          (g) ***Status of Options***. The Plan is intended to constitute an “unfunded” plan for incentive compensation. Withrespect to any payments not yet made to an Optionee or obligation to deliver Shares pursuant to anOption, nothing contained in the Plan or any Option shall give any such Optionee any rights thatare greater than those of a general creditor of the Company.          (h) ***Nonexclusivity of the Plan***. Neither the adoption of the Plan by the Board nor its submission to the shareholders of theCompany for approval shall be construed as creating any limitations on the power of the Board or acommittee thereof to adopt such other incentive arrangements as it may deem desirable includingincentive arrangements and Options which do not qualify under Section 162(m) of the Code.
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          (i) ***Payments in the Event of Forfeitures; Fractional Shares***. Unless otherwise determined by the Committee, in the event of a forfeiture of an Optionwith respect to which an Optionee paid cash or other consideration, the Optionee shall be repaidthe amount of such cash or other consideration. No fractional Shares shall be issued or deliveredpursuant to the Plan or any Option. The Committee shall determine whether cash, other Options orother property shall be issued or paid in lieu of such fractional shares or whether such fractionalshares or any rights thereto shall be forfeited or otherwise eliminated.          (j) ***Governing Law***. The validity, construction and effect of the Plan, any rules and regulations under thePlan, and any Option Agreement shall be determined in accordance with the laws of the State ofDelaware without giving effect to principles of conflict of laws, and applicable federal law.          (k) ***Non-U.S. Laws***. The Committee shall have the authority to adopt such modifications, procedures, andsubplans as may be necessary or desirable to comply with provisions of the laws of foreigncountries in which the Company or its Related Entities may operate to assure the viability of thebenefits from Options granted to Optionees performing services in such countries and to meet theobjectives of the Plan.          (l) ***Plan Effective Date and Shareholder Approval; Termination of Plan***. The Plan shall become effective on the Effective Date, subject to subsequent approval,within 12 months of its adoption by the Board, by shareholders of the Company eligible to vote inthe election of directors, by a vote sufficient to meet the requirements of Code Sections 162(m)(if applicable) and 422, Rule 16b-3 under the Exchange Act (if applicable), applicablerequirements under the rules of any stock exchange or automated quotation system on which theShares may be listed or quoted, and other laws, regulations, and obligations of the Companyapplicable to the Plan. Options may be granted subject to shareholder approval, but may not beexercised or otherwise settled in the event the shareholder approval is not obtained. The Planshall terminate at the earliest of (a) such time as no Shares remain available for issuance underthe Plan, (b) termination of this Plan by the Board, or (c) the tenth anniversary of the EffectiveDate. Options outstanding upon expiration of the Plan shall remain in effect until they have beenexercised or terminated, or have expired.
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