**Exhibit10.3**

 

EXECUTIONCOPY

 

**AVENTINERENEWABLE ENERGY HOLDINGS, INC.**

**2010EQUITY INCENTIVE PLAN**

 

# 1.                                       *Purpose*.  The purpose of theAventine Renewable Energy Holdings, Inc. 2010 Equity Incentive Plan is toprovide a means through which the Company and its Affiliates may attract andretain key personnel and to provide a means whereby directors, officers,employees, consultants and advisors (and prospective directors, officers,employees, consultants and advisors) of the Company and its Affiliates canacquire and maintain an equity interest in the Company, or be paid incentivecompensation, which may (but need not) be measured by reference to the value ofCommon Shares, thereby strengthening their commitment to the welfare of theCompany and its Affiliates and aligning their interests with those of theCompany’s shareholders.

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# 2.                                       *Definitions*.  The followingdefinitions shall be applicable throughout the Plan:

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## (a)                                  “*Affiliate*”means (i) any person or entity that directly or indirectly controls, iscontrolled by or is under common control with the Company and/or (ii) tothe extent provided by the Committee, any person or entity in which the Companyhas a significant interest.  The term “control”(including, with correlative meaning, the terms “controlled by” and “undercommon control with”), as applied to any person or entity, means thepossession, directly or indirectly, of the power to direct or cause thedirection of the management and policies of such person or entity, whetherthrough the ownership of voting or other securities, by contract or otherwise.

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## (b)                                 “*Award*”means, individually or collectively, any Incentive Stock Option, NonqualifiedStock Option, Stock Appreciation Right, Restricted Stock, Restricted StockUnit, Stock Bonus Award, and Performance Compensation Award granted under thePlan.

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## (c)                                  “*Board*”means the Board of Directors of the Company.

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## (d)                                 “*BusinessCombination*” has the meaning given such term in the definitionof “Change in Control.”

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## (e)                                  “*Cause*”means, in the case of a particular Award, unless the applicable Award agreementstates otherwise, (i) the Company or an Affiliate having “cause” toterminate a Participant’s employment or service, as defined in any employmentor consulting agreement between the Participant and the Company or an Affiliatein effect at the time of such termination or (ii) in the absence of anysuch employment or consulting agreement (or the absence of any definition of “Cause”contained therein), (A) the Participant’s commission of, conviction for,plea of guilty or *nolo contendere*to a felony or a crime involving moral turpitude, or other material act oromission involving dishonesty or fraud, (B) the Participant’s conduct thatresults in or is reasonably likely to result in harm to the reputation orbusiness of the Company or any of its Affiliates in any material way, (C) theParticipant’s failure to perform duties as reasonably directed by the Companyor the Participant’s material violation of any rule, regulation, policy or planfor the conduct of any service provider to the Company or its Affiliates or itsor their business (which, if curable, is not cured within 10 days after noticethereof is provided to the Participant) or (D) the Participant’s grossnegligence, willful malfeasance or material act of 

 

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## disloyalty with respect tothe Company or its Affiliates (which, if curable, is not cured within 10 daysafter notice thereof is provided to the Participant).  Any determination of whether Cause existsshall be made by the Committee in its sole discretion.

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## (f)                                    “*Change inControl*” shall, in the case of a particular Award, unless theapplicable Award agreement states otherwise or contains a different definitionof “Change in Control,” be deemed to occur upon:

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(i)                                     Anysale, lease, exchange or other transfer (in one or a series of relatedtransactions) of all or substantially all of the assets of the Company;

 

(ii)                                  Any “person”as such term is used in Section 13(d) and Section 14(d) ofthe Securities Exchange Act of 1934, as amended (the **“ExchangeAct”**) is or becomes, directly or indirectly, the “beneficial owner”as defined in Rule 13d-3 under the Exchange Act of securities of theCompany that represent more than 50% of the combined voting power of theCompany’s then outstanding voting securities (the **“OutstandingCompany Voting Securities”**); provided, however,that, for purposes of this Section 2(f), the following acquisitions shallnot constitute a Change in Control:  (I) anyacquisition directly from the Company, (II) any acquisition by theCompany, (III) any acquisition by any employee benefit plan (or relatedtrust) sponsored or maintained by the Company or any Affiliate, (IV) anyacquisition by any corporation pursuant to a transaction that complies withSections 2(f)(iv)(A) and 2(f)(iv)(B), (V) any acquisition involvingbeneficial ownership of less than 50% of the then-outstanding Common Shares(the **“Outstanding Company Common Shares”**) orthe Outstanding Company Voting Securities that is determined by the Board,based on review of public disclosure by the acquiring Person with respect toits passive investment intent, not to have a purpose or effect of changing orinfluencing the control of the Company; provided, however, thatfor purposes of this clause (V), any such acquisition in connection with (x) anactual or threatened election contest with respect to the election or removalof directors or other actual or threatened solicitation of proxies or consentsor (y) any “Business Combination” (as defined below) shall be presumed tobe for the purpose or with the effect of changing or influencing the control ofthe Company;

 

(iii)                               During any period of two (2) consecutiveyears, the individuals who at the beginning of such period constituted theBoard together with any individuals subsequently elected to the Board whosenomination by the shareholders of the Company was approved by a vote of thethen incumbent Board (i.e. those members of the Board who either have beendirectors from the beginning of such two-year period or whose election ornomination for election was previously approved by the Board as provided inthis Section 2(f)(iii)) cease for any reason to constitute a majority ofthe Board;

 

(iv)                              TheBoard or the shareholders of the Company approve and consummate a merger,amalgamation or consolidation (a **“Business Combination”**)of the Company with any other corporation, unless, following suchBusiness Combination, (A) all or substantially all of the individuals andentities that were the beneficial owners of the Outstanding Company CommonShares and the Outstanding Company Voting Securities immediately prior to suchBusiness Combination beneficially own, directly or indirectly, more than 50% ofthe then-outstanding shares of common stock (or, for a non-corporate entity,equivalent securities) and the

 

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combined voting power of thethen-outstanding voting securities entitled to vote generally in the electionof directors (or, for a non-corporate entity, equivalent governing body), asthe case may be, of the entity resulting from such Business Combination(including, without limitation, an entity that, as a result of suchtransaction, owns the Company or all or substantially all of the Company’sassets either directly or through one or more subsidiaries) in substantiallythe same proportions as their ownership immediately prior to such BusinessCombination of the Outstanding Company Common Shares and the OutstandingCompany Voting Securities, as the case may be, and (B) at least a majorityof the members of the board of directors (or, for a non-corporate entity,equivalent governing body) of the entity resulting from such BusinessCombination were members of the incumbent Board at the time of the execution ofthe initial agreement or of the action of the Board providing for such BusinessCombination;

 

(v)                                 The date whichis 10 business days prior to the consummation of complete liquidation of theCompany.

 

## (g)                                 “*Code*”means the Internal Revenue Code of 1986, as amended, and any successorthereto.  Reference in the Plan to anysection of the Code shall be deemed to include any regulations or otherinterpretative guidance under such section, and any amendments or successorprovisions to such section, regulations or guidance.

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## (h)                                 “*Committee*”means a committee of at least two people as the Board may appoint to administerthe Plan or, if no such committee has been appointed by the Board, the Board.

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## (i)                                     “*Common Shares*”means the common shares, par value $0.001 per share, of the Company (and anystock or other securities into which such common shares may be converted orinto which they may be exchanged).

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## (j)                                     “*Company*”means Aventine Renewable Energy Holdings, Inc.

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## (k)                                  “*Confidential**Information*” means any and all confidential and/or proprietary trade secrets,knowledge, data, or information of the Company including, without limitation,any: (A) drawings, inventions, methodologies, mask works, ideas,processes, formulas, source and object codes, data, programs, software sourcedocuments, works of authorship, know-how, improvements, discoveries,developments, designs and techniques, and all other work product of theCompany, whether or not patentable or registrable under trademark, copyright,patent or similar laws; (B) information regarding plans for research,development, new service offerings and/or products, marketing, advertising andselling, distribution, business plans and strategies, business forecasts,budgets and unpublished financial statements, licenses, prices and costs,suppliers, customers, customer history, customer preferences, or distributionarrangements; (C) any information regarding the skills or compensation ofemployees, suppliers, agents, and/or independent contractors of the Company; (D) conceptsand ideas relating to the development and distribution of content in any mediumor to the current, future and proposed products or services of the Company; (E) informationabout the Company’s investment program, trading methodology, or portfolioholdings; or (F) any other information, data or the like that is labeledconfidential or described as confidential.

 

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## (l)                                     “*Date of Grant*”means the date on which the granting of an Award is authorized, or such otherdate as may be specified in such authorization.

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## (m)                               “*Effective Date*”means the date as of which this Plan is adopted by the Board.

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## (n)                                 “*EligibleDirector*” means a person who is (i) a “non-employeedirector” within the meaning of Rule 16b-3 under the Exchange Act, and (ii) an“outside director” within the meaning of Section 162(m) of the Code.

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## (o)                                 “*Eligible Person*”means any (i) individual employed by the Company or an Affiliate; provided, however,that no such employee covered by a collective bargaining agreement shall be anEligible Person unless and to the extent that such eligibility is set forth insuch collective bargaining agreement or in an agreement or instrument relatingthereto; (ii) director of the Company or an Affiliate; (iii) consultantor advisor to the Company or an Affiliate, provided that if the Securities Actapplies such persons must be eligible to be offered securities registrable on Form S-8under the Securities Act; or (iv) prospective employees, directors,officers, consultants or advisors who have accepted offers of employment orconsultancy from the Company or its Affiliates (and would satisfy theprovisions of clauses (i) through (iii) above once he or she beginsemployment with or begins providing services to the Company or its Affiliates).

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## (p)                                 “*Exchange Act*”has the meaning given such term in the definition of “Change in Control,” andany reference in the Plan to any section of (or rule promulgated under)the Exchange Act shall be deemed to include any rules, regulations or otherinterpretative guidance under such section or rule, and any amendments orsuccessor provisions to such section, rules, regulations or guidance.

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## (q)                                 “*Exercise Price*”has the meaning given such term in Section 7(b) of the Plan.

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## (r)                                    “*Fair MarketValue*” means, as of any date, thevalue of Common Shares determined as follows:

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### (i)                                     If theCommon Shares are listed on any established stock exchange or a national marketsystem will be the closing sales price for such shares (or the closing bid, ifno sales were reported) as quoted on such exchange or system on the day of determination,as reported in*The Wall Street Journal*or such other source as the Committee deems reliable;

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### (ii)                                  If the Common Shares are regularly quoted by a recognized securitiesdealer but selling prices are not reported, the Fair Market Value of a CommonShare will be the mean between the high bid and low asked prices for the CommonShares on the day of determination, as reported in*The Wall Street Journal* or such other source as theCommittee deems reliable; or

 

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(iii)                               In theabsence of an established market for the Common Shares, the Fair Market Valuewill be determined in good faith by the Committee in accordance with Section 409Aof the Code.

 

## (s)                                  “*ImmediateFamily Members*” shall have the meaning set forth in Section 16(b).

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## (t)                                    “*Incentive StockOption*” means an Option that is designated by the Committee asan incentive stock option as described in Section 422 of the Code andotherwise meets the requirements set forth in the Plan.

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## (u)                                 “*IndemnifiablePerson*” shall have the meaning set forth in Section 4(e) ofthe Plan.

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## (v)                                 “*Intellectual Property Products*” shallhave the meaning set forth in Section 15(c) of the Plan.

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## (w)                               *“MatureShares*” means Common Shares owned by a Participant thatare not subject to any pledge or security interest and that have been eitherpreviously acquired by the Participant on the open market or meet such otherrequirements, if any, as the Committee may determine are necessary in order toavoid an accounting earnings charge on account of the use of such shares to paythe Exercise Price or satisfy a withholding obligation of the Participant.

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## (x)                                   “*NegativeDiscretion*” shall mean the discretion authorized by the Plan tobe applied by the Committee to eliminate or reduce the size of a PerformanceCompensation Award consistent with Section 162(m) of the Code.

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## (y)                                 “*NonqualifiedStock Option*” means an Option that is not designated by theCommittee as an Incentive Stock Option.

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## (z)                                   “*Option*”means an Award granted under Section 7 of the Plan.

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## (aa)                            “*Option Period*”has the meaning given such term in Section 7(c) of the Plan.

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## (bb)                          “*OutstandingCompany Common Shares*” has the meaning given such term in thedefinition of “Change in Control.”

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## (cc)                            “*Outstanding *Company Voting Securities**”has the meaning given such term in the definition of “Change in Control.”

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## (dd)                          “*Participant*”means an Eligible Person who has been selected by the Committee to participatein the Plan and to receive an Award pursuant to Section 6 of the Plan.

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## (ee)                            “*PerformanceCompensation Award*” shall mean any Award designated by theCommittee as a Performance Compensation Award pursuant to Section 11 ofthe Plan.

 

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## (ff)                                “*PerformanceCriteria*” shall mean the criterion or criteria that theCommittee shall select for purposes of establishing the Performance Goal(s) fora Performance Period with respect to any Performance Compensation Award underthe Plan.

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## (gg)                          “*PerformanceFormula*” shall mean, for a Performance Period, the one or moreobjective formulae applied against the relevant Performance Goal to determine,with regard to the Performance Compensation Award of a particular Participant,whether all, some portion but less than all, or none of the PerformanceCompensation Award has been earned for the Performance Period.

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## (hh)                          “*PerformanceGoals*” shall mean, for a Performance Period, the one or moregoals established by the Committee for the Performance Period based upon thePerformance Criteria.

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## (ii)                                  “*PerformancePeriod*” shall mean the one or more periods of time, as theCommittee may select, over which the attainment of one or more PerformanceGoals will be measured for the purpose of determining a Participant’s right to,and the payment of, a Performance Compensation Award.

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## (jj)                                  “*PermittedTransferee*” shall have the meaning set forth in Section 16(b) ofthe Plan.

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## (kk)                            “*Person*”has the meaning given such term in the definition of “Change in Control.”

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## (ll)                                  “*Plan*”means this Aventine Renewable Energy Holdings, Inc. 2010 Equity IncentivePlan.

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## (mm)                      “*RestrictedPeriod*” means the period of time determined by the Committeeduring which an Award is subject to restrictions or, as applicable, the periodof time within which performance is measured for purposes of determiningwhether an Award has been earned.

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## (nn)                          “*RestrictedStock Unit*” means an unfunded and unsecured promise to deliverCommon Shares, cash, other securities or other property, subject to certainrestrictions (including, without limitation, a requirement that the Participantremain continuously employed or provide continuous services for a specifiedperiod of time), granted under Section 9 of the Plan.

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## (oo)                          “*RestrictedStock*” means Common Shares, subject to certain specifiedrestrictions (including, without limitation, a requirement that the Participantremain continuously employed or provide continuous services for a specifiedperiod of time), granted under Section 9 of the Plan.

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## (pp)                          “*SAR Period*”has the meaning given such term in Section 8(b) of the Plan.

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## (qq)                          “*Securities Act*”means the Securities Act of 1933, as amended, and any successor thereto.  Reference in the Plan to any section of theSecurities Act shall be deemed to 

 

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## include any rules,regulations or other interpretative guidance under such section, and anyamendments or successor provisions to such section, rules, regulations orguidance.

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## (rr)                                “*StockAppreciation Right*” or *“SAR”* means an Award granted under Section 8of the Plan.

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## (ss)                            “*Stock BonusAward*” means an Award granted under Section 10 of the Plan.

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## (tt)                                “*Strike Price*”means, except as otherwise provided by the Committee in the case of SubstituteAwards, (i) in the case of a SAR granted in tandem with an Option, theExercise Price of the related Option, or (ii) in the case of a SAR grantedindependent of an Option, the Fair Market Value on the Date of Grant.

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## (uu)                          “*Subsidiary*”means, with respect to any specified Person:

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#### (1)                                  anycorporation, association or other business entity of which more than 50% of thetotal voting power of shares of Outstanding Company Voting Securities (withoutregard to the occurrence of any contingency and after giving effect to anyvoting agreement or shareholders’ agreement that effectively transfers votingpower) is at the time owned or controlled, directly or indirectly, by thatPerson or one or more of the other Subsidiaries of that Person (or acombination thereof); and

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#### (2)                                  any partnership(or any comparable foreign entity (a) the sole general partner (orfunctional equivalent thereof) or the managing general partner of which is suchPerson or Subsidiary of such Person or (b) the only general partners (orfunctional equivalents thereof) of which are that Person or one or moreSubsidiaries of that Person (or any combination thereof).

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## (vv)                          “*SubstituteAward*” has the meaning given such term in Section 5(e).

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# 3.                                       *EffectiveDate; Duration*.  The Plan shall be effective as of theEffective Date.  The expiration date ofthe Plan, on and after which date no Awards may be granted hereunder, shall bethe tenth anniversary of the Effective Date; provided,however, that such expiration shall notaffect Awards then outstanding, and the terms and conditions of the Plan shallcontinue to apply to such Awards.

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# 4.                                       *Administration*.  (a) TheCommittee shall administer the Plan.  Tothe extent required to comply with the provisions of Rule 16b-3promulgated under the Exchange Act (if the Board is not acting as the Committeeunder the Plan) or necessary to obtain the exception for performance-basedcompensation under Section 162(m) of the Code, as applicable, it isintended that each member of the Committee shall, at the time he takes anyaction with respect to an Award under the Plan, be an Eligible Director.  However, the fact that a Committee membershall fail to qualify as an Eligible Director shall not invalidate any Awardgranted by the Committee that is otherwise validly granted under the Plan.  The acts of a majority of the members presentat any meeting at which a quorum is present or acts approved in writing by amajority of the Committee shall be deemed the acts of the Committee.  Whether a quorum is present shall bedetermined based on the Committee’s charter as approved by the Board.

 

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## (b)                                 Subject to theprovisions of the Plan and applicable law, the Committee shall have the soleand plenary authority, in addition to other express powers and authorizationsconferred on the Committee by the Plan, to: (i) designate Participants; (ii) determine the type or typesof Awards to be granted to a Participant; (iii) determine the number ofCommon Shares to be covered by, or with respect to which payments, rights, orother matters are to be calculated in connection with, Awards; (iv) determinethe terms and conditions of any Award; (v) determine whether, to whatextent, and under what circumstances Awards may be settled or exercised incash, Common Shares, other securities, other Awards or other property, orcanceled, forfeited, or suspended and the method or methods by which Awards maybe settled, exercised, canceled, forfeited, or suspended; (vi) determinewhether, to what extent, and under what circumstances the delivery of cash,Common Shares, other securities, other Awards or other property and otheramounts payable with respect to an Award shall be deferred either automaticallyor at the election of the Participant or of the Committee; (vii) interpret,administer, reconcile any inconsistency in, correct any defect in and/or supplyany omission in the Plan and any instrument or agreement relating to, or Awardgranted under, the Plan; (viii) establish, amend, suspend, or waive any rules andregulations and appoint such agents as the Committee shall deem appropriate forthe proper administration of the Plan; (ix) accelerate the vesting orexercisability of, payment for or lapse of restrictions on, Awards; and (x) makeany other determination and take any other action that the Committee deemsnecessary or desirable for the administration of the Plan.

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## (c)                                  The Committeemay delegate to one or more officers of the Company or any Affiliate theauthority to act on behalf of the Committee with respect to any matter, right,obligation, or election that is the responsibility of or that is allocated tothe Committee herein, and that may be so delegated as a matter of law, exceptfor grants of Awards to persons (i) subject to Section 16 of theExchange Act or (ii) who are, or who are reasonably expected to be, “coveredemployees” for purposes of Section 162(m) of the Code.

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## (d)                                 Unlessotherwise expressly provided in the Plan, all designations, determinations,interpretations, and other decisions under or with respect to the Plan or anyAward or any documents evidencing Awards granted pursuant to the Plan shall bewithin the sole discretion of the Committee, may be made at any time and shallbe final, conclusive and binding upon all persons or entities, including,without limitation, the Company, any Affiliate, any Participant, any holder orbeneficiary of any Award, and any shareholder of the Company.

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## (e)                                  No member ofthe Board, the Committee, delegate of the Committee or any employee or agent ofthe Company (each such person, an “**IndemnifiablePerson**”) shall be liable for any action taken or omitted tobe taken or any determination made in good faith with respect to the Plan orany Award hereunder.  Each IndemnifiablePerson shall be indemnified and held harmless by the Company against and fromany loss, cost, liability, or expense (including attorneys’ fees) that may beimposed upon or incurred by such Indemnifiable Person in connection with orresulting from any action, suit or proceeding to which such IndemnifiablePerson may be a party or in which such Indemnifiable Person may be involved byreason of any action taken or omitted to be taken under the Plan or any Awardagreement and against and from any and all amounts paid by such IndemnifiablePerson with the Company’s approval, in settlement thereof, or paid by suchIndemnifiable Person in satisfaction of any judgment in any such action, suitor proceeding against such Indemnifiable Person, provided, that theCompany shall have the right, at its own expense, to assume and defend any suchaction, suit or proceeding 

 

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## and once the Company givesnotice of its intent to assume the defense, the Company shall have sole controlover such defense with counsel of the Company’s choice.  The foregoing right of indemnification shallnot be available to an Indemnifiable Person to the extent that a final judgmentor other final adjudication (in either case not subject to further appeal)binding upon such Indemnifiable Person determines that the acts or omissions ofsuch Indemnifiable Person giving rise to the indemnification claim resultedfrom such Indemnifiable Person’s bad faith, fraud or willful criminal act oromission or that such right of indemnification is otherwise prohibited by lawor by the Company’s Certificate of Incorporation or Bylaws.  The foregoing right of indemnification shallnot be exclusive of any other rights of indemnification to which suchIndemnifiable Persons may be entitled under the Company’s Certificate ofIncorporation or Bylaws, as a matter of law, or otherwise, or any other powerthat the Company may have to indemnify such Indemnifiable Persons or hold themharmless.

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## (f)                                    Notwithstandinganything to the contrary contained in the Plan, the Board may, in its solediscretion, at any time and from time to time, grant Awards and administer thePlan with respect to such Awards.  In anysuch case, the Board shall have all the authority granted to the Committeeunder the Plan.

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# 5.                                       *Grantof Awards; Shares Subject to the Plan; Limitations*.  (a) TheCommittee may, from time to time, grant Options, Stock Appreciation Rights,Restricted Stock, Restricted Stock Units, Stock Bonus Awards and/or PerformanceCompensation Awards to one or more Eligible Persons.

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## (b)                                 Awards grantedunder the Plan shall be subject to the following limitations:  (i) subject to Section 12 of thePlan, the Committee is authorized to deliver under the Plan 855,000 CommonShares.

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## (c)                                  Use of CommonShares to pay the required Exercise Price or tax obligations, or that are usedor withheld to satisfy tax obligations of the Participant shall,notwithstanding anything herein to the contrary, not be available again forother Awards under the Plan.  Sharesunderlying Awards under this Plan that are forfeited, cancelled, expireunexercised, or are settled in cash are available again for Awards under thePlan.

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## (d)                                 Common Sharesdelivered by the Company in settlement of Awards may be authorized and unissuedshares, shares held in the treasury of the Company, shares purchased on theopen market or by private purchase, or a combination of the foregoing.

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## (e)                                  Awards may, inthe sole discretion of the Committee, be granted under the Plan in assumptionof, or in substitution for, outstanding awards previously granted by an entityacquired by the Company or with which the Company combines (“**Substitute Awards**”).  The number of Common Shares underlying anySubstitute Awards shall be counted against the aggregate number of CommonShares available for Awards under the Plan.

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# 6.                                       *Eligibility*.  Participation shallbe limited to Eligible Persons who have entered into an Award agreement or whohave received written notification from the Committee, or from a persondesignated by the Committee, that they have been selected to participate in thePlan.

 

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# 7.                                       *Options*.  (a) *Generally*.  Each Option granted under the Plan shall beevidenced by an Award agreement (whether in paper or electronic medium(including email or the posting on a web site maintained by the Company or athird party under contract with the Company)). Each Option so granted shall be subject to the conditions set forth inthis Section 7, and to such other conditions not inconsistent with thePlan as may be reflected in the applicable Award agreement.  All Options granted under the Plan shall beNonqualified Stock Options unless the applicable Award agreement expresslystates that the Option is intended to be an Incentive Stock Option.  Incentive Stock Options shall be granted onlyto Eligible Persons who are employees of the Company and its Affiliates, and noIncentive Stock Option shall be granted to any Eligible Person who isineligible to receive an Incentive Stock Option under the Code.  No Option shall be treated as an IncentiveStock Option unless the Plan has been approved by the shareholders of the Companyin a manner intended to comply with the stockholder approval requirements of Section 422(b)(1) ofthe Code, provided that any Option intended to be an Incentive Stock Optionshall not fail to be effective solely on account of a failure to obtain such approval,but rather such Option shall be treated as a Nonqualified Stock Option unlessand until such approval is obtained.  Inthe case of an Incentive Stock Option, the terms and conditions of such grantshall be subject to and comply with such rules as may be prescribed by Section 422of the Code.  If for any reason an Optionintended to be an Incentive Stock Option (or any portion thereof) shall notqualify as an Incentive Stock Option, then, to the extent of suchnonqualification, such Option or portion thereof shall be regarded as aNonqualified Stock Option appropriately granted under the Plan.

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## (b)                                 *Exercise Price*.  The exercise price (“**ExercisePrice**”) per Common Share for each Option shall not be lessthan 100% of the Fair Market Value of such share determined as of the Date ofGrant; provided, however, that in the case of an Incentive StockOption granted to an employee who, at the time of the grant of such Option,owns shares representing more than 10% of the voting power of all classes ofshares of the Company or any Affiliate, the Exercise Price per share shall notbe less than 110% of the Fair Market Value per share on the Date of Grant andprovided further that, notwithstanding any provision herein to the contrary,the Exercise Price shall not be less than the par value per Common Share.

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## (c)                                  *Vesting and Expiration*.  Options shall vest and become exercisable insuch manner and on such date or dates determined by the Committee and shallexpire after such period, not to exceed ten years, as may be determined by theCommittee (the “**Option Period**”); provided, however,that the Option Period shall not exceed five years from the Date of Grant inthe case of an Incentive Stock Option granted to a Participant who on the Dateof Grant owns shares representing more than 10% of the voting power of allclasses of shares of the Company or any Affiliate; provided,further, that notwithstanding any vestingdates set by the Committee, the Committee may, in its sole discretion,accelerate the exercisability of any Option, which acceleration shall notaffect the terms and conditions of such Option other than with respect toexercisability.  Unless otherwiseprovided by the Committee in an Award agreement:  (i) an Option shall vest and becomeexercisable with respect to 100% of the Common Shares subject to such Option onthe third anniversary of the Date of Grant; (ii) the unvested portion ofan Option shall expire upon termination of employment or service of theParticipant granted the Option, and the vested portion of such Option shallremain exercisable for (A) one year following termination of employment orservice by reason of such Participant’s death or disability (as determined bythe Committee), but not later than the expiration of the Option Period or (B) 90

 

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## days following terminationof employment or service for any reason other than such Participant’s death ordisability, and other than such Participant’s termination of employment orservice for Cause, but not later than the expiration of the Option Period; and (iii) boththe unvested and the vested portion of an Option shall expire upon thetermination of the Participant’s employment or service by the Company forCause.

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## (d)                                 *Method of Exercise and Form of Payment*.  No Common Shares shall be delivered pursuantto any exercise of an Option until payment in full of the Exercise Pricetherefor is received by the Company and the Participant has paid to the Companyan amount equal to any federal, state, local and non-U.S. income and employmenttaxes required to be withheld.  Optionsthat have become exercisable may be exercised by delivery of written orelectronic notice of exercise to the Company in accordance with the terms ofthe Option accompanied by payment of the Exercise Price.  The Exercise Price shall be payable (i) incash, check, cash equivalent and/or Common Shares valued at the fair marketvalue at the time the Option is exercised (including, pursuant to proceduresapproved by the Committee, by means of attestation of ownership of a sufficientnumber of Common Shares in lieu of actual delivery of such shares to theCompany); provided, that such Common Sharesare not subject to any pledge or other security interest and are Mature Sharesand; (ii) by such other method as the Committee may permit in accordancewith applicable law, in its sole discretion, including without limitation:  (A) in other property having a fairmarket value on the date of exercise equal to the Exercise Price or (B) ifthere is a public market for the Common Shares at such time, by means of abroker-assisted “cashless exercise” pursuant to which the Company is delivereda copy of irrevocable instructions to a stockbroker to sell the Common Sharesotherwise deliverable upon the exercise of the Option and to deliver promptlyto the Company an amount equal to the Exercise Price or (C) by a “netexercise” method whereby the Company withholds from the delivery of the CommonShares for which the Option was exercised that number of Common Shares having afair market value equal to the aggregate Exercise Price for the Common Sharesfor which the Option was exercised.  Anyfractional Common Shares shall be settled in cash.

##  

## (e)                                  *Notification upon Disqualifying Disposition of anIncentive Stock Option*.  Each Participant awarded an Incentive Stock Optionunder the Plan shall notify the Company in writing immediately after the datehe makes a disqualifying disposition of any Common Shares acquired pursuant tothe exercise of such Incentive Stock Option. A disqualifying disposition is any disposition (including, withoutlimitation, any sale) of such Common Shares before the later of (A) twoyears after the Date of Grant of the Incentive Stock Option or (B) oneyear after the date of exercise of the Incentive Stock Option.  The Company may, if determined by theCommittee and in accordance with procedures established by the Committee,retain possession of any Common Shares acquired pursuant to the exercise of anIncentive Stock Option as agent for the applicable Participant until the end ofthe period described in the preceding sentence.

##  

## (f)                                    *Compliance With Laws, etc*.  Notwithstanding the foregoing, in no eventshall a Participant be permitted to exercise an Option in a manner that theCommittee determines would violate the Sarbanes-Oxley Act of 2002, ifapplicable, or any other applicable law or the applicable rules andregulations of the Securities and Exchange Commission or the applicable rules andregulations of any securities exchange or inter-dealer quotation system onwhich the securities of the Company are listed or traded.

 

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#  

# 8.                                       *StockAppreciation Rights*.  (a) *Generally*.  Each SAR granted under the Plan shall beevidenced by an Award agreement (whether in paper or electronic medium(including email or the posting on a web site maintained by the Company or athird party under contract with the Company)). Each SAR so granted shall be subject to the conditions set forth in thisSection 8, and to such other conditions not inconsistent with the Plan asmay be reflected in the applicable Award agreement.  Any Option granted under the Plan may includetandem SARs.  The Committee also mayaward SARs to Eligible Persons independent of any Option.

#  

## *(b)**                                **Exercise Price**. *The Exercise Price perCommon Share for each Option shall not be less than 100% of the Fair MarketValue of such share determined as of the Date of Grant

##  

## (c)                                  *Vesting and Expiration*.  A SAR granted in connection with an Optionshall become exercisable and shall expire according to the same vestingschedule and expiration provisions as the corresponding Option.  A SAR granted independent of an Option shallvest and become exercisable and shall expire in such manner and on such date ordates determined by the Committee and shall expire after such period, not toexceed ten years, as may be determined by the Committee (the “**SAR Period**”); provided, however,that notwithstanding any vesting dates set by the Committee, the Committee may,in its sole discretion, accelerate the exercisability of any SAR, whichacceleration shall not affect the terms and conditions of such SAR other thanwith respect to exercisability.  Unlessotherwise provided by the Committee in an Award agreement:  (i) a SAR shall vest and becomeexercisable with respect to 100% of the Common Shares subject to such SAR onthe third anniversary of the Date of Grant; (ii) the unvested portion of aSAR shall expire upon termination of employment or service of the Participantgranted the SAR, and the vested portion of such SAR shall remain exercisablefor (A) one year following termination of employment or service by reasonof such Participant’s death or disability (as determined by the Committee), butnot later than the expiration of the SAR Period or (B) 90 days followingtermination of employment or service for any reason other than such Participant’sdeath or disability, and other than such Participant’s termination ofemployment or service for Cause, but not later than the expiration of the SARPeriod; and (iii) both the unvested and the vested portion of a SAR shallexpire upon the termination of the Participant’s employment or service by theCompany for Cause.

##  

## (d)                                 *Method of Exercise*.  SARs that have become exercisable may beexercised by delivery of written or electronic notice of exercise to theCompany in accordance with the terms of the Award, specifying the number ofSARs to be exercised and the date on which such SARs were awarded.  Notwithstanding the foregoing, if on the lastday of the Option Period (or in the case of a SAR independent of an option, theSAR Period), the fair market value exceeds the Strike Price, the Participanthas not exercised the SAR or the corresponding Option (if applicable), andneither the SAR nor the corresponding Option (if applicable) has expired, suchSAR shall be deemed to have been exercised by the Participant on such last dayand the Company shall make the appropriate payment therefor.

##  

## (e)                                  *Payment*.  Upon the exercise of a SAR, the Company shallpay to the Participant an amount equal to the number of shares subject to theSAR that are being exercised multiplied by the excess, if any, of the fairmarket value of one Common Share on the exercise date over the Strike Price,less an amount equal to any federal, state, local and non-U.S. income 

 

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##  

## and employment taxesrequired to be withheld.  The Companyshall pay such amount in cash, in Common Shares valued at fair market value, orany combination thereof, as determined by the Committee.  Any fractional Common Share shall be settledin cash.

##  

# 9.                                       *RestrictedStock and Restricted Stock Units*.  (a) Generally.  Each grant of Restricted Stock and RestrictedStock Units shall be evidenced by an Award agreement (whether in paper orelectronic medium (including email or the posting on a web site maintained bythe Company or a third party under contract with the Company)).  Each such grant shall be subject to theconditions set forth in this Section 9, and to such other conditions notinconsistent with the Plan as may be reflected in the applicable Awardagreement.

#  

## (b)                                 *Restricted Accounts; Escrow or Similar Arrangement*.  Upon the grant of Restricted Stock, a bookentry in a restricted account shall be established in the Participant’s name atthe Company’s transfer agent and, if the Committee determines that theRestricted Stock shall be held by the Company or in escrow rather than held insuch restricted account pending the release of the applicable restrictions, theCommittee may require the Participant to additionally execute and deliver tothe Company (i) an escrow agreement satisfactory to the Committee, ifapplicable, and (ii) the appropriate share power (endorsed in blank) withrespect to the Restricted Stock covered by such agreement.  If a Participant shall fail to execute anagreement evidencing an Award of Restricted Stock and, if applicable, an escrowagreement and blank share power within the amount of time specified by theCommittee, the Award shall be null and void. Subject to the restrictions set forth in this Section 9 and theapplicable Award agreement, the Participant generally shall have the rights andprivileges of a shareholder as to such Restricted Stock, including withoutlimitation the right to vote such Restricted Stock and the right to receivedividends, if applicable.  To the extentshares of Restricted Stock are forfeited, any share certificates issued to theParticipant evidencing such shares shall be returned to the Company, and allrights of the Participant to such shares and as a shareholder with respectthereto shall terminate without further obligation on the part of the Company.

##  

## (c)                                  *Vesting; Acceleration of Lapse of Restrictions*.  Unless otherwise provided by the Committee inan Award agreement:  (i) theRestricted Period shall lapse with respect to 100% of the Restricted Stock andRestricted Stock Units on the third anniversary of the Date of Grant; and (ii) theunvested portion of Restricted Stock and Restricted Stock Units shall terminateand be forfeited upon termination of employment or service of the Participantgranted the applicable Award.

##  

## (d)                                 *Delivery of Restricted Stock and Settlement ofRestricted Stock Units*.  (i) Upon the expiration of theRestricted Period with respect to any shares of Restricted Stock, therestrictions set forth in the applicable Award agreement shall be of no furtherforce or effect with respect to such shares, except as set forth in theapplicable Award agreement.  If an escrowarrangement is used, upon such expiration, the Company shall deliver to theParticipant, or his beneficiary, without charge, the share certificateevidencing the shares of Restricted Stock that have not then been forfeited andwith respect to which the Restricted Period has expired (rounded down to thenearest full share).** **Dividends, if any, that may havebeen withheld by the Committee and attributable to any particular share ofRestricted Stock shall be distributed to the Committee and attributable to anyparticular share of Restricted Stock shall be distributed to the Participant incash or, at the sole discretion of the Committee, in shares of Common Stockhaving 

 

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##  

## a fair market value equal tothe amount of such dividends, upon the release of restrictions on such shareand, if such share is forfeited, the Participant shall have no right to suchdividends (except as otherwise set forth by the Committee in the applicableAward agreement).

##  

### (ii)                                  Unlessotherwise provided by the Committee in an Award agreement, upon the expiration ofthe Restricted Period with respect to any outstanding Restricted Stock Units,the Company shall deliver to the Participant, or his beneficiary, withoutcharge, one Common Share for each such outstanding Restricted Stock Unit; provided, however,that the Committee may, in its sole discretion, elect to (i) pay cash orpart cash and part Common Share in lieu of delivering only Common Shares inrespect of such Restricted Stock Units or (ii) defer the delivery ofCommon Shares (or cash or part Common Shares and part cash, as the case may be)beyond the expiration of the Restricted Period if such delivery would result ina violation of applicable law until such time as is no longer the case.  If a cash payment is made in lieu ofdelivering Common Shares, the amount of such payment shall be equal to the fairmarket value of the Common Shares as of the date on which the Restricted Periodlapsed with respect to such Restricted Stock Units, less an amount equal to anyfederal, state, local and non-U.S. income and employment taxes required to bewithheld.

###  

# 10.                                 *StockBonus Awards*.  The Committee may issue unrestricted CommonShares, or other Awards denominated in Common Shares, under the Plan toEligible Persons, either alone or in tandem with other awards, in such amountsas the Committee shall from time to time in its sole discretion determine.  Each Stock Bonus Award granted under the Planshall be evidenced by an Award agreement (whether in paper or electronic medium(including email or the posting on a web site maintained by the Company or athird party under contract with the Company)). Each Stock Bonus Award so granted shall be subject to such conditionsnot inconsistent with the Plan as may be reflected in the applicable Awardagreement.

#  

# 11.                                 *PerformanceCompensation Awards*.  (a) Generally.  The Committee shall have the authority, atthe time of grant of any Award described in Sections 7 through 10 of thePlan, to designate such Award as a Performance Compensation Award intended toqualify as “performance-based compensation” under Section 162(m) ofthe Code.  The Committee shall have theauthority to make an award of a cash bonus to any Participant and designatesuch Award as a Performance Compensation Award intended to qualify as “performance-basedcompensation” under Section 162(m) of the Code.

#  

## (b)                                 *Discretion of Committee with Respect to PerformanceCompensation Awards*.  With regard to a particular PerformancePeriod, the Committee shall have sole discretion to select the length of suchPerformance Period, the type(s) of Performance Compensation Awards to beissued, the Performance Criteria that will be used to establish the PerformanceGoal(s), the kind(s) and/or level(s) of the Performance Goals(s) thatis (are) to apply and the Performance Formula. Within the first 90 days of a Performance Period (or, if longer orshorter, within the maximum period allowed under Section 162(m) ofthe Code, if applicable), the Committee shall, with regard to the PerformanceCompensation Awards to be issued for such Performance Period, exercise itsdiscretion with respect to each of the matters enumerated in the immediatelypreceding sentence and record the same in writing.

 

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##  

## (c)                                  *Performance Criteria*.  The Performance Criteria that will be used toestablish the Performance Goal(s) shall be based on the attainment ofspecific levels of performance of the Company (and/or one or more Affiliates,divisions or operational units, or any combination of the foregoing) and shallinclude the following:  (i) netearnings or net income (before or after taxes); (ii) basic or dilutedearnings per share (before or after taxes); (iii) net revenue or revenuegrowth; (iv) gross profit or gross profit growth; (v) operatingprofit (before or after taxes); (vi) return measures (including, but notlimited to, return on assets, capital, invested capital, equity, or sales); (vii) cashflow (including, but not limited to, operating cash flow, free cash flow, andcash flow return on capital); (viii) earnings before or after taxes,interest, depreciation and/or amortization; (ix) gross or operatingmargins; (x) productivity ratios; (xi) share price (including, butnot limited to, growth measures and total shareholder return);(xii) expense targets; (xiii) margins; (xiv) operatingefficiency; (xv) objective measures of customer satisfaction;(xvi) working capital targets; (xvii) measures of economic valueadded; (xviii) inventory control; (xix) enterprise value;(xx) sales; (xxi) debt levels and net debt; (xxii) combined ratio;(xxiii) timely launch of new facilities; (xxiv) client retention;(xxv) employee retention; (xxvi) timely completion of new productrollouts; and (xxvii)  objective measures of personal targets, goalsor completion of projects.  Any one ormore of the Performance Criteria may be used on an absolute or relative basisto measure the performance of the Company and/or one or more Affiliates as awhole or any business unit(s) of the Company and/or one or more Affiliatesor any combination thereof, as the Committee may deem appropriate, or any ofthe above Performance Criteria may be compared to the performance of a selectedgroup of comparison companies, or a published or special index that theCommittee, in its sole discretion, deems appropriate, or as compared to variousstock market indices.  The Committee alsohas the authority to provide for accelerated vesting of any Award based on theachievement of Performance Goals pursuant to the Performance Criteria specifiedin this paragraph.  To the extentrequired under Section 162(m) of the Code, the Committee shall,within the first 90 days of a Performance Period (or, if longer or shorter,within the maximum period allowed under Section 162(m) of the Code),define in an objective fashion the manner of calculating the PerformanceCriteria it selects to use for such Performance Period and thereafter promptlycommunicate such Performance Criteria to the Participant.

##  

## (d)                                 *Modification of Performance Goal(s)*.  In the event that applicable tax and/or securitieslaws change to permit Committee discretion to alter the governing PerformanceCriteria without obtaining shareholder approval of such alterations, theCommittee shall have sole discretion to make such alterations without obtainingshareholder approval.  The Committee isauthorized at any time during the first 90 days of a Performance Period (or, iflonger or shorter, within the maximum period allowed under Section 162(m) ofthe Code, if applicable), or at any time thereafter to the extent the exerciseof such authority at such time would not cause the Performance CompensationAwards granted to any Participant for such Performance Period to fail toqualify as “performance-based compensation” under Section 162(m) ofthe Code, in its sole discretion, to adjust or modify the calculation of aPerformance Goal for such Performance Period, based on and in order toappropriately reflect the following events: (i) asset write-downs; (ii) litigation or claim judgments orsettlements; (iii) the effect of changes in tax laws, accountingprinciples, or other laws or regulatory rules affecting reported results; (iv) anyreorganization and restructuring programs; (v) extraordinary nonrecurringitems as described in Accounting Principles Board Opinion No. 30 (or any successorpronouncement thereto) and/or in management’s discussion and analysis offinancial condition and results of operations appearing 

 

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##  

## in the Company’s annualreport to shareholders for the applicable year; (vi) acquisitions ordivestitures; (vii) any other specific unusual or nonrecurring events, orobjectively determinable category thereof; (viii) foreign exchange gainsand losses; and (ix) a change in the Company’s fiscal year.

##  

## (e)                                  *Payment of Performance Compensation Awards*.  (i) Conditionto Receipt of Payment.  Unlessotherwise provided in the applicable Award agreement, a Participant must beemployed by the Company on the last day of a Performance Period to be eligiblefor payment in respect of a Performance Compensation Award for such PerformancePeriod.

##  

### (ii)                                  *Limitation*.  A Participant shall be eligible to receivepayment in respect of a Performance Compensation Award only to the extentthat:  (A) the Performance Goals forsuch period are achieved; and (B) all or some of the portion of suchParticipant’s Performance Compensation Award has been earned for thePerformance Period based on the application of the Performance Formula to suchachieved Performance Goals.

###  

### (iii)                               *Certification*.  Following the completion of a PerformancePeriod, the Committee shall review and certify in writing whether, and to whatextent, the Performance Goals for the Performance Period have been achievedand, if so, calculate and certify in writing that amount of the PerformanceCompensation Awards earned for the period based upon the PerformanceFormula.  The Committee shall thendetermine the amount of each Participant’s Performance Compensation Awardactually payable for the Performance Period and, in so doing, may applyNegative Discretion.

###  

### (iv)                              *Use of Negative Discretion*.  In determining the actual amount of anindividual Participant’s Performance Compensation Award for a PerformancePeriod, the Committee may reduce or eliminate the amount of the PerformanceCompensation Award earned under the Performance Formula in the PerformancePeriod through the use of Negative Discretion if, in its sole judgment, suchreduction or elimination is appropriate. The Committee shall not have the discretion, except as is otherwise providedin the Plan, to (A) grant or provide payment in respect of PerformanceCompensation Awards for a Performance Period if the Performance Goals for suchPerformance Period have not been attained; or (B) increase a PerformanceCompensation Award above the applicable limitations set forth in Section 5of the Plan.

###  

## (f)                                    *Timing of Award Payments*.  Performance Compensation Awards granted for aPerformance Period shall be paid to Participants as soon as administrativelypracticable following completion of the certifications required by this Section 11,but in no event later than two-and-one-half months following the end of thefiscal year during which the Performance Period is completed.

##  

# 12.                                 *Changesin Capital Structure and Similar Events*.  In the event of (a) any dividend orother distribution (whether in the form of cash, Common Shares, othersecurities or other property), recapitalization, stock split, reverse stocksplit, reorganization, merger, amalgamation, consolidation, split-up,split-off, combination, repurchase or exchange of Common Shares or othersecurities of the Company, issuance of warrants or other rights to acquireCommon Shares or other securities of the Company, or other similar corporatetransaction or event (including, 

 

16

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#  

# withoutlimitation, a Change in Control) that affects the Common Shares, or (b) unusualor nonrecurring events (including, without limitation, a Change in Control)affecting the Company, any Affiliate, or the financial statements of theCompany or any Affiliate, or changes in applicable rules, rulings, regulationsor other requirements of any governmental body or securities exchange orinter-dealer quotation system, accounting principles or law, such that ineither case an adjustment is determined by the Committee in its sole discretionto be necessary or appropriate, then the Committee shall make any suchadjustments in such manner as it may deem equitable, including withoutlimitation any or all of the following:

#  

### (i)                                     adjusting anyor all of (A) the number of Common Shares or other securities of theCompany (or number and kind of other securities or other property) that may bedelivered in respect of Awards or with respect to which Awards may be grantedunder the Plan (including, without limitation, adjusting any or all of thelimitations under Section 5 of the Plan) and (B) the terms of anyoutstanding Award, including, without limitation, (1) the number of CommonShares or other securities of the Company (or number and kind of othersecurities or other property) subject to outstanding Awards or to whichoutstanding Awards relate, (2) the Exercise Price or Strike Price withrespect to any Award or (3) any applicable performance measures(including, without limitation, Performance Criteria and Performance Goals);

###  

### (ii)                                  providing for asubstitution or assumption of Awards, accelerating the exercisability of, lapseof restrictions on, or termination of, Awards or providing for a period of timefor exercise prior to the occurrence of such event; and

###  

### (iii)                               canceling anyone or more outstanding Awards and causing to be paid to the holders thereof,in cash, Common Shares, other securities or other property, or any combinationthereof, the value of such Awards, if any, as determined by the Committee(which if applicable may be based upon the price per Common Share received orto be received by other shareholders of the Company in such event), includingwithout limitation, in the case of an outstanding Option or SAR, a cash paymentin an amount equal to the excess, if any, of the fair market value (as of adate specified by the Committee) of the Common Shares subject to such Option orSAR over the aggregate Exercise Price or Strike Price of such Option or SAR,respectively (it being understood that, in such event, any Option or SAR havinga per share Exercise Price or Strike Price equal to, or in excess of, the fairmarket value of a Common Share subject thereto may be canceled and terminatedwithout any payment or consideration therefor);

###  

provided, however, that in the case of any “equityrestructuring” (within the meaning of the Financial Accounting Standards BoardStatement of Financial Accounting Standards No. 123 (revised 2004)), theCommittee shall make an equitable or proportionate adjustment to outstandingAwards to reflect such equity restructuring. Any adjustment in Incentive Stock Options under this Section 12(other than any cancellation of Incentive Stock Options) shall be made only tothe extent not constituting a “modification” within the meaning of Section 424(h)(3) ofthe Code, and any adjustments under this Section 12 shall be made in amanner that does not adversely affect the exemption provided pursuant to Rule 16b-3under the Exchange Act.  The Companyshall give each Participant notice of an adjustment hereunder and, upon notice,such adjustment shall be conclusive and binding for all purposes.

 

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# *13.**                                **Effectof Change in Control**.  Except to theextent otherwise provided in an Award agreement, in the event of a Change inControl, notwithstanding any provision of the Plan to the contrary, theCommittee may provide that, with respect to all or any portion of a particularoutstanding Award or Awards:*

#  

## *(a)**                                 **the then outstanding Options and SARs shall become immediatelyexercisable as of a time prior to the Change in Control;*

##  

## *(b)**                                **the Restricted Period shall expire as of a time prior to the Change inControl (including without limitation a waiver of any applicable PerformanceGoals);*

##  

## *(c)**                                 **Performance Periods in effect on the date the Change in Control occursshall end on such date, and the Committee shall (i) determine the extentto which Performance Goals with respect to each such Performance Period havebeen met based upon such audited or unaudited financial information or otherinformation then available as it deems relevant and (ii) cause theParticipant to receive partial or full payment of Awards for each suchPerformance Period based upon the Committee’s determination of the degree ofattainment of the Performance Goals, or assuming that the applicable “target”levels of performance have been attained or on such other basis determined bythe Committee.*

##  

*To theextent practicable, any actions taken by the Committee under the immediatelypreceding clauses (a) through (c) shall occur in a manner and at atime which allows affected Participants the ability to participate in theChange in Control transactions with respect to the Common Shares subject totheir Awards.*

 

# 14.                                 *Amendmentsand Termination*.  (a) *Amendment and Termination of the Plan*.  The Board may amend, alter, suspend,discontinue, or terminate the Plan or any portion thereof at any time; provided, that (i) no amendment to Section 11(c) orSection 14(b) (to the extent required by the proviso in such Section 14(b))shall be made without shareholder approval and (ii) no such amendment,alteration, suspension, discontinuation or termination shall be made withoutshareholder approval if such approval is necessary to comply with any tax orregulatory requirement applicable to the Plan (including, without limitation,as necessary to comply with any rules or requirements of any securitiesexchange or inter-dealer quotation system on which the Common Shares may belisted or quoted or to prevent the Company from being denied a tax deductionunder Section 162(m) of the Code); provided,further, that any such amendment,alteration, suspension, discontinuance or termination that would materially andadversely affect the rights of any Participant or any holder or beneficiary ofany Award theretofore granted shall not to that extent be effective without theconsent of the affected Participant, holder or beneficiary.

#  

## (b)                                 *Amendment of Award Agreements*.  The Committee may, to the extent consistentwith the terms of any applicable Award agreement, waive any conditions orrights under, amend any terms of, or alter, suspend, discontinue, cancel orterminate, any Award theretofore granted or the associated Award agreement,prospectively or retroactively; providedthat any such waiver, amendment, alteration, suspension, discontinuance,cancellation or termination that would materially and adversely affect therights of any Participant with respect to any Award theretofore granted shallnot to that extent be effective without the consent of the 

 

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##  

## affected Participant; provided, further,that without shareholder approval, except as otherwise permitted under Section 12of the Plan, (i) no amendment or modification may reduce the ExercisePrice of any Option or the Strike Price of any SAR, (ii) the Committee maynot cancel any outstanding Option or SAR and replace it with a new Option orSAR, another Award or cash and (iii) the Committee may not take any otheraction that is considered a “repricing” for purposes of the shareholderapproval rules of the applicable securities exchange or inter-dealerquotation system on which the Common Shares are listed or quoted.

##  

# 15.                                 *RestrictiveCovenants**.  (a) **Confidentiality**. *By accepting an Award under the Plan, and as a conditionthereof, each Participant agrees not to, at any time, either during theiremployment or thereafter, divulge, use, publish or in any other manner reveal,directly or indirectly, to any person, firm, corporation or any other form ofbusiness organization or arrangement, and to keep in the strictest confidenceany Confidential Information, except (i) as may be necessary to theperformance of the Participant’s duties to the Company, (ii) with theCompany’s express written consent, (iii) to the extent that any suchinformation is in or becomes in the public domain other than as a result of theParticipant’s breach of any of his or her obligations under this Section 15(a),or (iv) where required to be disclosed by court order, subpoena or othergovernment process and in such event, the Participant shall cooperate with theCompany in attempting to keep such information confidential to the maximumextent possible.  Upon the request of theCompany or an Affiliate, the Participant agrees to promptly deliver to theCompany the originals and all copies, in whatever medium, of all such ConfidentialInformation.

#  

# (b)                                 *Non-Disparagement*.  By accepting anAward under the Plan, and as a condition thereof, the Participant acknowledgesand agrees that he or she will not defame or publicly criticize the services,business, integrity, veracity or personal or professional reputation of theCompany, including its officers, directors, partners, executives or agents, ineither a professional or personal manner at any time during or following his orher employment.

#  

# (c)                                  *Post-Employment Property*.  By accepting anAward under the Plan, and as a condition thereof, the Participant agrees thatany work of authorship, invention, design, discovery, development, technique,improvement, source code, hardware, device, data, apparatus, practice, process,method or other work product whatever (whether patentable or subject tocopyright, or not, and hereinafter collectively called “discovery”) related tothe business of the Company that the Participant, either solely or incollaboration with others, has made or may make, discover, invent, develop,perfect, or reduce to practice during his or her employment, whether or notduring regular business hours and created, conceived or prepared on the Company’spremises or otherwise shall be the sole and complete property of theCompany.  More particularly, and withoutlimiting the foregoing, the Participant agrees that all of the foregoing andany (i) inventions (whether patentable or not, and without regard towhether any patent therefor is ever sought), (ii) marks, names, or logos(whether or not registrable as trade or service marks, and without regard towhether registration therefor is ever sought), (iii) works of authorship(without regard to whether any claim of copyright therein is ever registered),and (iv) trade secrets, ideas, and concepts ((i) — (iv) collectively,**“Intellectual Property Products”**)created, conceived, or prepared on the Company’s premises or otherwise, whetheror not during normal business hours, shall perpetually and throughout the worldbe the exclusive property of the Company, as shall all tangible media(including, but not limited to, papers, 

 

19

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#  

# computermedia of all types, and models) in which such Intellectual Property Productsshall be recorded or otherwise fixed. The Participant further agrees promptly to disclose in writing anddeliver to the Company all Intellectual Property Products created during his orher engagement by the Company, whether or not during normal businesshours.  The Participant agrees that allworks of authorship created by the Participant during his or her engagement bythe Company shall be works made for hire of which the Company is the author andowner of copyright.  To the extent thatany competent decision-making authority should ever determine that any work of authorshipcreated by the Participant during his or her engagement by the Company is not awork made for hire, by accepting an Award, the Participant assigns all right,title and interest in the copyright therein, in perpetuity and throughout theworld, to the Company.  To the extentthat this Plan does not otherwise serve to grant or otherwise vest in theCompany all rights in any Intellectual Property Product created by theParticipant during his or her engagement by the Company, by accepting an Award,the Participant assigns all right, title and interest therein, in perpetuityand throughout the world, to the Company. The Participant agrees to execute, immediately upon the Company’sreasonable request and without charge, any further assignments, applications,conveyances or other instruments, at any time, whether or not the Participantis engaged by the Company at the time such request is made, in order to permitthe Company and/or its respective assigns to protect, perfect, register,record, maintain, or enhance their rights in any Intellectual Property Product;provided, that, the Company shall bear the cost of any suchassignments, applications or consequences. Upon termination of the Participant’s employment by the Company for anyreason whatsoever, and at any earlier time the Company so requests, theParticipant will immediately deliver to the custody of the person designated bythe Company all originals and copies of any documents and other property of theCompany in the Participant’s possession, under the Participant’s control or towhich he or she may have access.

#  

# Forpurposes of this Section 15, the term “Company” shall include theCompany and its Affiliates*.*

#  

# 16.                                 *General*.  (a) *Award Agreements*.  Each Award under the Plan shall be evidencedby an Award agreement, which shall be delivered to the Participant (whether inpaper or electronic medium (including email or the posting on a web sitemaintained by the Company or a third party under contract with the Company))and shall specify the terms and conditions of the Award and any rules applicablethereto, including without limitation, the effect on such Award of the death,disability or termination of employment or service of a Participant, or of suchother events as may be determined by the Committee.

#  

## (b)                                 *Nontransferability*.  (i) Each Award shall be exercisable onlyby a Participant during the Participant’s lifetime, or, if permissible underapplicable law, by the Participant’s legal guardian or representative.  No Award may be assigned, alienated, pledged,attached, sold or otherwise transferred or encumbered by a Participant otherthan by will or by the laws of descent and distribution and any such purportedassignment, alienation, pledge, attachment, sale, transfer or encumbrance shallbe void and unenforceable against the Company or an Affiliate; provided thatthe designation of a beneficiary shall not constitute an assignment,alienation, pledge, attachment, sale, transfer or encumbrance.

##  

### (ii)                                  Notwithstandingthe foregoing, the Committee may, in its sole discretion, permit Awards (otherthan Incentive Stock Options) to be transferred by a Participant, 

 

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### without consideration,subject to such rules as the Committee may adopt consistent with any applicableAward agreement to preserve the purposes of the Plan, to:  (A) any person who is a “family member”of the Participant, as such term is used in the instructions to Form S-8under the Securities Act (collectively, the “**ImmediateFamily Members**”); (B) a trust solely for the benefit ofthe Participant and his or her Immediate Family Members; or (C) apartnership or limited liability company whose only partners or stockholdersare the Participant and his or her Immediate Family Members; or (D) anyother transferee as may be approved either (I) by the Board or theCommittee in its sole discretion, or (II) as provided in the applicableAward agreement. (each transferee described in clauses (A), (B) (C) and(D) above is hereinafter referred to as a “**PermittedTransferee**”); provided,that the Participant gives the Committee advance written notice describing theterms and conditions of the proposed transfer and the Committee notifies theParticipant in writing that such a transfer would comply with the requirementsof the Plan.

###  

### (iii)                               The terms ofany Award transferred in accordance with the immediately preceding sentenceshall apply to the Permitted Transferee and any reference in the Plan, or inany applicable Award agreement, to a Participant shall be deemed to refer tothe Permitted Transferee, except that (A) Permitted Transferees shall notbe entitled to transfer any Award, other than by will or the laws of descentand distribution; (B) Permitted Transferees shall not be entitled toexercise any transferred Option unless there shall be in effect a registrationstatement on an appropriate form covering the Common Shares to be acquiredpursuant to the exercise of such Option if the Committee determines, consistentwith any applicable Award agreement, that such a registration statement isnecessary or appropriate; (C) the Committee or the Company shall not berequired to provide any notice to a Permitted Transferee, whether or not suchnotice is or would otherwise have been required to be given to the Participantunder the Plan or otherwise; and (D) the consequences of the terminationof the Participant’s employment by, or services to, the Company or an Affiliateunder the terms of the Plan and the applicable Award agreement shall continueto be applied with respect to the Participant, including, without limitation,that an Option shall be exercisable by the Permitted Transferee only to theextent, and for the periods, specified in the Plan and the applicable Awardagreement.

###  

## (c)                                  *Tax Withholding*.  (i) A Participant shall be required topay to the Company or any Affiliate, and the Company or any Affiliate shallhave the right and is hereby authorized to withhold, from any cash, CommonShares, other securities or other property deliverable under any Award or fromany compensation or other amounts owing to a Participant, the amount (in cash,Common Shares, other securities or other property) of any required withholdingtaxes in respect of an Award, its exercise, or any payment or transfer under anAward or under the Plan and to take such other action as may be necessary inthe opinion of the Committee or the Company to satisfy all obligations for thepayment of such withholding and taxes.

##  

### (ii)                                  Withoutlimiting the generality of clause (i) above, the Committee may, in itssole discretion, permit a Participant to satisfy, in whole or in part, theforegoing withholding liability by (A) the delivery of Common Shares(which are not subject to any pledge or other security interest and are MatureShares) owned by the Participant having a fair market value equal to suchwithholding liability or (B) having the Company withhold from the numberof Common Shares otherwise issuable or deliverable pursuant to the exercise orsettlement of the 

 

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### Award a number of shareswith a fair market value equal to such withholding liability (but no more thanthe minimum required statutory withholding liability).

###  

## (d)                                 *No Claim to Awards; No Rights to ContinuedEmployment; Waiver*.  No employee of the Company or an Affiliate,or other person, shall have any claim or right to be granted an Award under thePlan or, having been selected for the grant of an Award, to be selected for agrant of any other Award.  There is noobligation for uniformity of treatment of Participants or holders orbeneficiaries of Awards.  The terms andconditions of Awards and the Committee’s determinations and interpretationswith respect thereto need not be the same with respect to each Participant andmay be made selectively among Participants, whether or not such Participantsare similarly situated.  Neither the Plannor any action taken hereunder shall be construed as giving any Participant anyright to be retained in the employ or service of the Company or an Affiliate, norshall it be construed as giving any Participant any rights to continued serviceon the Board.  The Company or any of itsAffiliates may at any time dismiss a Participant from employment or discontinueany consulting relationship, free from any liability or any claim under thePlan, unless otherwise expressly provided in the Plan or any Awardagreement.  By accepting an Award underthe Plan, a Participant shall thereby be deemed to have waived any claim tocontinued exercise or vesting of an Award or to damages or severanceentitlement related to non-continuation of the Award beyond the period providedunder the Plan or any Award agreement, notwithstanding any provision to thecontrary in any written employment contract or other agreement between the Companyand its Affiliates and the Participant, whether any such agreement is executedbefore, on or after the Date of Grant.

##  

## (e)                                  *International Participants*.  With respect to Participants who reside orwork outside of the United States of America, the Committee may in its solediscretion amend the terms of the Plan or outstanding Awards with respect tosuch Participants in order to conform such terms with the requirements of locallaw or to obtain more favorable tax or other treatment for a Participant, the Companyor its Affiliates.

##  

## (f)                                    *Designation and Change of Beneficiary*.  Each Participant may file with the Committeea written designation of one or more persons as the beneficiary(ies) who shallbe entitled to receive the amounts payable with respect to an Award, if any,due under the Plan upon his death.  AParticipant may, from time to time, revoke or change his beneficiarydesignation without the consent of any prior beneficiary by filing a newdesignation with the Committee.  The lastsuch designation received by the Committee shall be controlling; provided, however,that no designation, or change or revocation thereof, shall be effective unlessreceived by the Committee prior to the Participant’s death, and in no eventshall it be effective as of a date prior to such receipt.  If no beneficiary designation is filed by aParticipant, the beneficiary shall be deemed to be his or her spouse or, if theParticipant is unmarried at the time of death, his or her estate.

##  

## (g)                                 *Termination of Employment/Service*.  Unless determined otherwise by the Committeeat any point following such event:  (i) neithera temporary absence from employment or service due to illness, vacation orleave of absence nor a transfer from employment or service with the Company toemployment or service with an Affiliate (or vice-versa) shall be considered atermination of employment or service with the Company or an Affiliate; and (ii) ifa Participant’s employment with the Company and its Affiliates terminates, butsuch Participant 

 

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## continues to provideservices to the Company and its Affiliates in a non-employee capacity (orvice-versa), such change in status shall not be considered a termination ofemployment with the Company or an Affiliate.

##  

## (h)                                 *No Rights as a Stockholder*.  Except as otherwise specifically provided inthe Plan or any Award agreement, no person shall be entitled to the privilegesof ownership in respect of Common Shares that are subject to Awards hereunderuntil such shares have been issued or delivered to that person.

##  

## (i)                                     *Government and Other Regulations*.  (i) The obligation of the Company tosettle Awards in Common Shares or other consideration shall be subject to allapplicable laws, rules, and regulations, and to such approvals by governmentalagencies as may be required. Notwithstanding any terms or conditions of any Award to the contrary,the Company shall be under no obligation to offer to sell or to sell, and shallbe prohibited from offering to sell or selling, any Common Shares pursuant toan Award unless such shares have been properly registered for sale pursuant tothe Securities Act with the Securities and Exchange Commission or unless theCompany has received an opinion of counsel, satisfactory to the Company, thatsuch shares may be offered or sold without such registration pursuant to anavailable exemption therefrom and the terms and conditions of such exemptionhave been fully complied with.  TheCompany shall be under no obligation to register for sale under the SecuritiesAct any of the Common Shares to be offered or sold under the Plan.  The Committee shall have the authority toprovide that all certificates for Common Shares or other securities of theCompany or any Affiliate delivered under the Plan shall be subject to such stoptransfer orders and other restrictions as the Committee may deem advisableunder the Plan, the applicable Award agreement, the federal securities laws, orthe rules, regulations and other requirements of the Securities and ExchangeCommission, any securities exchange or inter-dealer quotation system upon whichsuch shares or other securities are then listed or quoted and any otherapplicable federal, state, local or non-U.S. laws, and, without limiting thegenerality of Section 9 of the Plan, the Committee may cause a legend orlegends to be put on any such certificates to make appropriate reference tosuch restrictions.  Notwithstanding anyprovision in the Plan to the contrary, the Committee reserves the right to addany additional terms or provisions to any Award granted under the Plan that itin its sole discretion deems necessary or advisable in order that such Awardcomplies with the legal requirements of any governmental entity to whosejurisdiction the Award is subject.

##  

### (ii)                                  The Committeemay cancel an Award or any portion thereof if it determines, in its solediscretion, that legal or contractual restrictions and/or blockage and/or othermarket considerations would make the Company’s acquisition of Common Sharesfrom the public markets, the Company’s issuance of Common Shares to theParticipant, the Participant’s acquisition of Common Shares from the Companyand/or the Participant’s sale of Common Shares to the public markets, illegal,impracticable or inadvisable.  If the Committeedetermines to cancel all or any portion of an Award in accordance with theforegoing, the Company shall pay to the Participant an amount equal to theexcess of (A) the aggregate fair market value of the Common Shares subjectto such Award or portion thereof canceled (determined as of the applicableexercise date, or the date that the shares would have been vested or delivered,as applicable), over (B) the aggregate Exercise Price or Strike Price (inthe case of an Option or SAR, respectively) or any amount payable as acondition of delivery of Common Shares (in the 

 

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### case of any otherAward).  Such amount shall be deliveredto the Participant as soon as practicable following the cancellation of suchAward or portion thereof.

###  

## (j)                                     *Payments to Persons Other Than Participants*.  If the Committee shall find that any personto whom any amount is payable under the Plan is unable to care for his affairsbecause of illness or accident, or is a minor, or has died, then any paymentdue to such person or his estate (unless a prior claim therefor has been madeby a duly appointed legal representative) may, if the Committee so directs theCompany, be paid to his spouse, child, relative, an institution maintaining orhaving custody of such person, or any other person deemed by the Committee tobe a proper recipient on behalf of such person otherwise entitled topayment.  Any such payment shall be acomplete discharge of the liability of the Committee and the Company therefor.

##  

## (k)                                  *Nonexclusivity of the Plan*.  Neither the adoption of this Plan by theBoard nor the submission of this Plan to the shareholders of the Company forapproval shall be construed as creating any limitations on the power of theBoard to adopt such other incentive arrangements as it may deem desirable,including, without limitation, the granting of stock options or otherequity-based awards otherwise than under this Plan, and such arrangements maybe either applicable generally or only in specific cases.

##  

## (l)                                     *No Trust or Fund Created*.  Neither the Plan nor any Award shall createor be construed to create a trust or separate fund of any kind or a fiduciaryrelationship between the Company or any Affiliate, on the one hand, and aParticipant or other person or entity, on the other hand.  No provision of the Plan or any Award shallrequire the Company, for the purpose of satisfying any obligations under thePlan, to purchase assets or place any assets in a trust or other entity towhich contributions are made or otherwise to segregate any assets, nor shallthe Company maintain separate bank accounts, books, records or other evidenceof the existence of a segregated or separately maintained or administered fundfor such purposes.  Participants shallhave no rights under the Plan other than as unsecured general creditors of theCompany, except that insofar as they may have become entitled to payment ofadditional compensation by performance of services, they shall have the samerights as other employees under general law.

##  

## (m)                               *Reliance on Reports*.  Each member of the Committee and each memberof the Board shall be fully justified in acting or failing to act, as the casemay be, and shall not be liable for having so acted or failed to act in goodfaith, in reliance upon any report made by the independent public accountant ofthe Company and its Affiliates and/or any other information furnished inconnection with the Plan by any agent of the Company or the Committee or theBoard, other than himself.

##  

## (n)                                 *Relationship to Other Benefits*.  No payment under the Plan shall be taken intoaccount in determining any benefits under any pension, retirement, profitsharing, group insurance or other benefit plan of the Company except asotherwise specifically provided in such other plan.

##  

## (o)                                 *Governing Law*.  The Plan shall be governed by and construedin accordance with the internal laws of the State of New York applicable tocontracts made and 

 

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## performed wholly within theState of New York, without giving effect to the conflict of laws provisionsthereof.

##  

## (p)                                 *Severability*.  If any provision of the Plan or any Award orAward agreement is or becomes or is deemed to be invalid, illegal, orunenforceable in any jurisdiction or as to any person or entity or Award, orwould disqualify the Plan or any Award under any law deemed applicable by theCommittee, such provision shall be construed or deemed amended to conform tothe applicable laws, or if it cannot be construed or deemed amended without, inthe determination of the Committee, materially altering the intent of the Planor the Award, such provision shall be construed or deemed stricken as to suchjurisdiction, person or entity or Award and the remainder of the Plan and anysuch Award shall remain in full force and effect.

##  

## (q)                                 *Obligations Binding on Successors*.  The obligations of the Company under the Planshall be binding upon any successor corporation or organization resulting fromthe merger, amalgamation, consolidation or other reorganization of the Company,or upon any successor corporation or organization succeeding to substantiallyall of the assets and business of the Company.

##  

## (r)                                    *Code Section 162(m) Approval*.  If so determined by the Committee, theprovisions of the Plan regarding Performance Compensation Awards shall bedisclosed and reapproved by shareholders no later than the first shareholdermeeting that occurs in the fifth year following the year in which shareholderspreviously approved such provisions, in each case in order for certain Awardsgranted after such time to be exempt from the deduction limitations of Section 162(m) ofthe Code.  Nothing in this clause,however, shall affect the validity of Awards granted after such time if suchshareholder approval has not been obtained.

##  

## (s)                                  *Expenses; Gender; Titles and Headings*.  The expenses of administering the Plan shallbe borne by the Company and its Affiliates. Masculine pronouns and other words of masculine gender shall refer toboth men and women.  The titles andheadings of the sections in the Plan are for convenience of reference only, andin the event of any conflict, the text of the Plan, rather than such titles orheadings shall control.

##  

## (t)                                    *OtherAgreements*. Notwithstanding the above, the Committee may require, as a condition tothe grant of and/or the receipt of Common Shares under an Award, that theParticipant execute lock-up, shareholder or other agreements, as it maydetermine in its sole and absolute discretion.

##  

## (u)                                 *Payments**. *Participants shall berequired to pay, to the extent required by applicable law, any amounts requiredto receive Common Shares under any Award made under the Plan.

##  

*     *     *

 

As adopted by the Board of Directors of Aventine Renewable EnergyHoldings, Inc. on March 15, 2010.

 

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