exv10w5






Exhibit 10.5




Community Health Systems, Inc.

2009 STOCK OPTION AND AWARD PLAN

(As Adopted March 24, 2009)




     1. Purpose.



          The purpose of this Plan is to strengthen Community Health Systems, Inc., a Delaware
corporation (the “Company”), and its Subsidiaries by providing an incentive to its and their
employees, officers, consultants and directors and thereby encouraging them to devote their
abilities and industry to the success of the Company’s and its Subsidiaries’ business enterprises.
It is intended that this purpose be achieved by extending to employees (including future employees
who have received a formal written offer of employment), officers, consultants and directors of the
Company and its Subsidiaries an added long-term incentive for high levels of performance and
unusual efforts through the grant of Incentive Stock Options, Nonqualified Stock Options, Stock
Appreciation Rights, Performance Units, Performance Shares, Share Awards, Restricted Stock and
Restricted Stock Units (as each term is herein defined).




     2. Definitions.



          For purposes of the Plan:




          2.1 “2000 Stock Option and Award Plan” means the Community Health Systems, Inc. 2000 Stock
Option and Award Plan, as amended and restated March 24, 2009.




          2.2 “Affiliate” means any entity, directly or indirectly, controlled by, controlling or under
common control with the Company or any corporation or other entity acquiring, directly or
indirectly, all or substantially all the assets and business of the Company, whether by operation
of law or otherwise.




          2.3 “Agreement” means the written agreement between the Company and an Optionee or Grantee
evidencing the grant of an Option or Award and setting forth the terms and conditions thereof.




          2.4 “Award” means a grant of Restricted Stock, Restricted Stock Units, a Stock Appreciation
Right, a Performance Award, a Share Award or any or all of them.




          2.5 “Board” means the Board of Directors of the Company.




          2.6 “Cause” means, except as otherwise set forth herein,




               (a) in the case of an Optionee or Grantee whose employment with the Company or a Subsidiary is
subject to the terms of an employment agreement between such Optionee or Grantee and the Company or
Subsidiary, which employment agreement includes a definition of “Cause”, the term “Cause” as used
in this Plan or any Agreement shall have the meaning set forth in such employment agreement during
the period that such employment agreement remains in effect; and



               (b) in all other cases, (i) intentional failure to perform reasonably assigned duties, (ii)
dishonesty or willful misconduct in the performance of duties, (iii) involvement in a transaction
in connection with the performance of duties to the Company or any of its Subsidiaries which
transaction is adverse to the interests of the Company or any of its Subsidiaries and which is
engaged in for personal profit or (iv) willful violation of any law, rule or



 









 




regulation in connection with the performance of duties (other than traffic violations or
similar offenses); provided, however, that following a Change in Control clause (i) of this Section
2.6(b) shall not constitute “Cause.”




          2.7 “Change in Capitalization” means any increase or reduction in the number of Shares, or any
change (including, but not limited to, in the case of a spin-off, dividend or other distribution in
respect of Shares, a change in value) in the Shares or exchange of Shares for a different number or
kind of shares or other securities of the Company or another corporation, by reason of a
reclassification, recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or reverse stock split,
cash dividend, property dividend, combination or exchange of shares, repurchase of shares, change
in corporate structure or otherwise.




          2.8 A “Change in Control” shall mean the occurrence of any of the following:




               (a) An acquisition (other than directly from the Company) of any voting securities of the
Company (the “Voting Securities”) by any “Person” (as the term person is used for purposes of
Section 13(d) or 14(d) of the Exchange Act), immediately after which such Person has “Beneficial
Ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty
percent (50%) of the then outstanding Shares or the combined voting power of the Company’s then
outstanding Voting Securities; provided, however, that in determining whether a Change in Control
has occurred pursuant to this Section 2.7(a), Shares or Voting Securities which are acquired in a
“Non-Control Acquisition” (as hereinafter defined) shall not constitute an acquisition which would
cause a Change in Control. A “Non-Control Acquisition” shall mean an acquisition by (i) an
employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any
corporation or other Person the majority of the voting power, voting equity securities or equity
interest of which is owned, directly or indirectly, by the Company (for purposes of this
definition, a “Related Entity”), (ii) the Company or any Related Entity, or (iii) any Person in
connection with a “Non-Control Transaction” (as hereinafter defined);



               (b) The individuals who, as of March 24, 2009, are members of the Board (the “Incumbent
Board”), cease for any reason to constitute at least a majority of the members of the Board or,
following a Merger (as hereinafter defined) which results in a Parent Corporation (as hereinafter
defined), the board of directors of the ultimate Parent Corporation; provided, however, that if the
election, or nomination for election by the Company’s common stockholders, of any new director was
approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for
purposes of this Plan, be considered a member of the Incumbent Board; provided further, however,
that no individual shall be considered a member of the Incumbent Board if such individual initially
assumed office as a result of the actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a “Proxy Contest”) including by reason of any agreement
intended to avoid or settle any Proxy Contest; or



               (c) The consummation of:



                    (i) A merger, consolidation or reorganization with or into the Company or in which securities
of the Company are issued (a “Merger”), unless such Merger is a “Non-Control Transaction.” A
“Non-Control Transaction” shall mean a Merger where:



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                         (A) the stockholders of the Company immediately before such Merger own directly or indirectly
immediately following such Merger at least fifty percent (50%) of the combined voting power of the
outstanding voting securities of (x) the corporation resulting from such Merger (the “Surviving
Corporation”), if fifty percent (50%) or more of the combined voting power of the then outstanding
voting securities of the Surviving Corporation is not Beneficially Owned, directly or indirectly,
by another Person (a “Parent Corporation”), or (y) if there is one or more than one Parent
Corporation, the ultimate Parent Corporation; and



                         (B) the individuals who were members of the Incumbent Board immediately prior to the execution
of the agreement providing for such Merger constitute at least a majority of the members of the
board of directors of (x) the Surviving Corporation, if there is no Parent Corporation, or (y) if
there is one or more than one Parent Corporation, the ultimate Parent Corporation;



                    (ii) A complete liquidation or dissolution of the Company; or



                    (iii) The sale or other disposition of all or substantially all of the assets of the Company
to any Person (other than a transfer to a Related Entity or under conditions that would constitute
a Non-Control Transaction with the disposition of assets being regarded as a Merger for this
purpose or the distribution to the Company’s stockholders of the stock of a Related Entity or any
other assets).



          Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because
any Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amount
of the then outstanding Shares or Voting Securities as a result of the acquisition of Shares or
Voting Securities by the Company which, by reducing the number of Shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons,
provided that if a Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Shares or Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional
Shares or Voting Securities which increases the percentage of the then outstanding Shares or Voting
Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur.




          If an Eligible Individual’s employment is terminated by the Company without Cause prior to the
date of a Change in Control but the Eligible Individual reasonably demonstrates that the
termination (A) was at the request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a change in control or (B) otherwise arose in connection with, or
in anticipation of, a Change in Control which has been threatened or proposed, such termination
shall be deemed to have occurred after a Change in Control for purposes of this Plan provided a
Change in Control shall actually have occurred.




          2.9 “Code” means the Internal Revenue Code of 1986, as amended.




          2.10 “Committee” means a committee, as described in Section 3.1, appointed by the Board from
time to time to administer the Plan and to perform the functions set forth herein.




          2.11 “Company” means Community Health Systems, Inc.




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          2.12 “Director” means a director of the Company.




          2.13 “Disability” means:




               (a) in the case of an Optionee or Grantee whose employment with the Company or a Subsidiary is
subject to the terms of an employment agreement between such Optionee or Grantee and the Company or
Subsidiary, which employment agreement includes a definition of “Disability”, the term “Disability”
as used in this Plan or any Agreement shall have the meaning set forth in such employment agreement
during the period that such employment agreement remains in effect;



               (b) in the case of an Optionee or Grantee to whom Section 2.12(a) does not apply and who
participates in the Company’s long-term disability plan, if any, the term “Disability” as used in
such plan; or



               (c) in all other cases, a physical or mental infirmity which impairs the Optionee’s or
Grantee’s ability to perform substantially all his or her duties for a period of ninety-one (91)
consecutive days.



          2.14 “Division” means any of the operating units or divisions of the Company designated as a
Division by the Committee.




          2.15 “Dividend Equivalent Right” means a right to receive all or some portion of the cash
dividends that are or would be payable with respect to Shares.




          2.16 “Eligible Individual” means any of the following individuals who is designated by the
Committee as eligible to receive Options or Awards subject to the conditions set forth herein: (a)
any director, officer or employee of the Company or a Subsidiary, (b) any individual to whom the
Company or a Subsidiary has extended a formal, written offer of employment, or (c) any consultant
or advisor of the Company or a Subsidiary.




          2.17 “Exchange Act” means the Securities Exchange Act of 1934, as amended.




          2.18 “Fair Market Value” on any date means the closing sales prices of the Shares on such date
on the principal national securities exchange on which such Shares are listed or admitted to
trading, or, if such Shares are not so listed or admitted to trading, the closing sales prices of
the Shares as reported by The Nasdaq Stock Market at the close of the primary trading session on
such dates and, in either case, if the Shares were not traded on such date, on the next preceding
day on which the Shares were traded. In the event that Fair Market Value cannot be determined in a
manner described above, the Fair Market Value shall be the value established by the Board in good
faith and, in the case of an Incentive Stock Option, in accordance with Section 422 of the Code.




          2.19 “Grantee” means a person to whom an Award has been granted under the Plan.




          2.20 “Incentive Stock Option” means an Option satisfying the requirements of Section 422 of
the Code and designated by the Committee as an Incentive Stock Option.




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          2.21 “Non-employee Director” means a director of the Company who is a “non-employee director”
within the meaning of Rule 16b-3 promulgated under the Exchange Act.




          2.22 “Nonqualified Stock Option” means an Option which is not an Incentive Stock Option.




          2.23 “Option” means a Nonqualified Stock Option, an Incentive Stock Option or either or both
of them.




          2.24 “Optionee” means a person to whom an Option has been granted under the Plan.




          2.25 “Outside Director” means a director of the Company who is an “outside director” within
the meaning of Section 162(m) of the Code and the regulations promulgated thereunder.




          2.26 “Parent” means any corporation which is a parent corporation within the meaning of
Section 424(e) of the Code with respect to the Company.




          2.27 “Performance Awards” means Performance Units, Performance Shares or either or both of
them.




          2.28 “Performance-Based Compensation” means any Option or Award that is intended to constitute
“performance based compensation” within the meaning of Section 162(m)(4)(C) of the Code and the
regulations promulgated thereunder.




          2.29 “Performance Cycle” means the time period specified by the Committee at the time
Performance Awards are granted during which the performance of the Company, a Subsidiary or a
Division will be measured.




          2.30 “Performance Objectives” has the meaning set forth in Section 9.




          2.31 “Performance Shares” means Shares issued or transferred to an Eligible Individual under
Section 9.




          2.32 “Performance Units” means performance units granted to an Eligible Individual under
Section 9.




          2.33 “Plan” means Community Health Systems, Inc. 2009 Stock Option and Award Plan, as amended
and restated from time to time.




          2.34 “Restricted Stock” means Shares issued or transferred to an Eligible Individual pursuant
to Section 8.1.




          2.35 “Restricted Stock Unit” means rights granted to an Eligible Individual under Section 8.2
representing a number of hypothetical Shares.




          2.36 “Share Award” means an Award of Shares granted pursuant to Section 10.




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          2.37 “Shares” means shares of the Common Stock of the Company, par value $.01 per share, and
any other securities into which such shares are changed or for which such shares are exchanged.




          2.38 “Stock Appreciation Right” means a right to receive all or some portion of the increase
in the value of the Shares as provided in Section 7 hereof.




          2.39 “Subsidiary” means (i) except as provided in subsection (ii) below, any corporation which
is a subsidiary corporation within the meaning of Section 424(f) of the Code with respect to the
Company, and (ii) in relation to the eligibility to receive Options or Awards other than Incentive
Stock Options and continued employment for purposes of Options and Awards (unless the Committee
determines otherwise), any entity, whether or not incorporated, in which the Company directly or
indirectly owns 50% or more of the outstanding equity or other ownership interests.




          2.40 “Successor Corporation” means a corporation, or a Parent or Subsidiary thereof within the
meaning of Section 424(a) of the Code, which issues or assumes a stock option in a transaction to
which Section 424(a) of the Code applies.




          2.41 “Ten-Percent Stockholder” means an Eligible Individual, who, at the time an Incentive
Stock Option is to be granted to him or her, owns (within the meaning of Section 422(b)(6) of the
Code) stock possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company, a Parent or a Subsidiary.




     3. Administration.



          3.1 The Plan shall be administered by the Committee, which shall hold meetings at such times
as may be necessary for the proper administration of the Plan. The Committee shall keep minutes of
its meetings. If the Committee consists of more than one (1) member, a quorum shall consist of not
fewer than two (2) members of the Committee and a majority of a quorum may authorize any action.
Any decision or determination reduced to writing and signed by a majority of all of the members of
the Committee shall be as fully effective as if made by a majority vote at a meeting duly called
and held. The Committee shall consist of at least one (1) Director and may consist of the entire
Board; provided, however, that (A) with respect to any Option or Award granted to an Eligible
Individual who is subject to Section 16 of the Exchange Act, the Committee shall consist of at
least two (2) Directors each of whom shall be a Non-employee Director and (B) to the extent
necessary for any Option or Award intended to qualify as Performance-Based Compensation to so
qualify, the Committee shall consist of at least two (2) Directors, each of whom shall be an
Outside Director. For purposes of the preceding sentence, if any member of the Committee is
neither a Non-employee Director nor an Outside Director but recuses himself or herself or abstains
from voting with respect to a particular action taken by the Committee, then the Committee, with
respect to that action, shall be deemed to consist only of the members of the Committee who have
not recused themselves or abstained from voting. Subject to applicable law, the Committee may
delegate its authority under the Plan to any other person or persons.




          3.2 No member of the Committee shall be liable for any action, failure to act, determination
or interpretation made in good faith with respect to this Plan or any transaction hereunder. The
Company hereby agrees to indemnify each member of the Committee for all costs and expenses and, to
the extent permitted by applicable law, any liability incurred in connection with defending
against, responding to, negotiating for the settlement of or otherwise dealing with any claim,
cause of action or dispute of any kind arising in connection with any




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actions in administering this Plan or in authorizing or denying authorization to any
transaction hereunder.




          3.3 Subject to the express terms and conditions set forth herein, the Committee shall have the
power from time to time to:




               (a) determine those Eligible Individuals to whom Options shall be granted under the Plan and
the number of such Options to be granted, prescribe the terms and conditions (which need not be
identical) of each such Option, including the exercise price per Share, the vesting schedule and
the duration of each Option, and make any amendment or modification to any Option Agreement
consistent with the terms of the Plan;



               (b) select those Eligible Individuals to whom Awards shall be granted under the Plan,
determine the number of Shares in respect of which each Award is granted, the terms and conditions
(which need not be identical) of each such Award, and make any amendment or modification to any
Award Agreement consistent with the terms of the Plan;



               (c) construe and interpret the Plan and the Options and Awards granted hereunder, establish,
amend and revoke rules and regulations for the administration of the Plan, including, but not
limited to, correcting any defect or supplying any omission, or reconciling any inconsistency in
the Plan or in any Agreement, in the manner and to the extent it shall deem necessary or advisable,
including so that the Plan and the operation of the Plan comply with Rule 16b-3 under the Exchange
Act, the Code to the extent applicable and other applicable law, and otherwise make the Plan fully
effective. All decisions and determinations by the Committee in the exercise of this power shall
be final, binding and conclusive upon the Company, its Subsidiaries, the Optionees and Grantees,
and all other persons having any interest therein;



               (d) determine the duration and purposes for leaves of absence which may be granted to an
Optionee or Grantee on an individual basis without constituting a termination of employment or
service for purposes of the Plan;



               (e) exercise its discretion with respect to the powers and rights granted to it as set forth
in the Plan; and



               (f) generally, exercise such powers and perform such acts as are deemed necessary or advisable
to promote the best interests of the Company with respect to the Plan.



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          3.4 The Committee may delegate to one or more officers of the Company the authority to grant
Options or Awards to Eligible Individuals (other than to himself or herself) and/or determine the
number of Shares subject to each Option or Award (by resolution that specifies the total number
of Shares subject to the Options or Awards that may be awarded by the officer and the terms of
any such Options or Awards, including the exercise price), provided that such delegation is made
in accordance with the Delaware General Corporation Law and with respect to Options and Awards
that are not intended to qualify as Performance-Based Compensation.




     4. Stock Subject to the Plan; Grant Limitations.



          4.1 The maximum number of Shares that may be made the subject of Options and Awards granted
under the Plan is 3,500,000; provided, however, that, (i) when aggregated with Options and Awards
granted under the 2000 Stock Option and Award Plan in any calendar year, no Eligible Individual may
be granted Options or Awards in the aggregate in respect of more than 1,000,000 Shares, and (ii) in
no event shall more than an aggregate of 30,000 Shares be issued upon the exercise of Incentive
Stock Options granted under the Plan. The Company shall reserve for the purposes of the Plan, out
of its authorized but unissued Shares or out of Shares held in the Company’s treasury, or partly
out of each, such number of Shares as shall be determined by the Board.




          4.2 Upon the granting of an Option or an Award, the number of Shares available under Section
4.1 for the granting of further Options and Awards shall be reduced as follows:




               (a) In connection with the granting of an Option or an Award, the number of Shares shall be
reduced by the number of Shares in respect of which the Option or Award is granted or denominated.



               (b) Stock Appreciation Rights to be settled in shares of Common Stock shall be counted in full
against the number of shares available for award under the Plan, regardless of the number of
Exercise Gain Shares issued upon settlement of the Stock Appreciation Right.



               (c) Notwithstanding the foregoing, Awards granted in the form of Restricted Stock (including
Restricted Stock Units), Performance Awards (including Shares issued in respect to Performance
Awards), and other Awards that are granted as “full value awards” shall reduce the number of shares
that may be the subject to Options and Awards under the Plan by 1.52 Shares for each Share subject
to such an Award.



          4.3 Whenever any outstanding Option or Award or portion thereof expires, is canceled, is
forfeited, is settled in cash or is otherwise terminated for any reason without having been
exercised or payment having been made in respect of the entire Option or Award, the Shares
allocable to the expired, canceled, forfeited, settled or otherwise terminated portion of the
Option or Award may again be the subject of Options or Awards granted hereunder. With regard to
Awards referred to in Section 4.2(c), for each Share subject to an Award that is cancelled,
forfeited, settled in cash or other otherwise terminated as provided in the foregoing sentence,
1.52 Shares may again be the subject of Options or Awards under the Plan.




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     5. Option Grants for Eligible Individuals.



          5.1 Authority of Committee. Subject to the provisions of the Plan, the Committee
shall have full and final authority to select those Eligible Individuals who will receive Options,
and the terms and conditions of the grant to such Eligible Individuals shall be set forth in an
Agreement. Incentive Stock Options may be granted only to Eligible Individuals who are employees
of the Company or any Subsidiary.




          5.2 Exercise Price. The purchase price or the manner in which the exercise price is
to be determined for Shares under each Option shall be determined by the Committee and set forth in
the Agreement; provided, however, that the exercise price per Share under each Nonqualified Stock
Option and each Incentive Stock Option shall not be less than 100% of the Fair Market Value of a
Share on the date the Option is granted (110% in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder).




          5.3 Maximum Duration. Options granted hereunder shall be for such term as the
Committee shall determine, provided that an Incentive Stock Option shall not be exercisable after
the expiration of ten (10) years from the date it is granted (five (5) years in the case of an
Incentive Stock Option granted to a Ten-Percent Stockholder) and a Nonqualified Stock Option shall
not be exercisable after the expiration of ten (10) years from the date it is granted; provided,
however, that unless the Committee provides otherwise, an Option (other than an Incentive Stock
Option) may, upon the death of the Optionee prior to the expiration of the Option, be exercised for
up to one (1) year following the date of the Optionee’s death even if such period extends beyond
ten (10) years from the date the Option is granted. The Committee may, subsequent to the granting
of any Option, extend the term thereof, but in no event shall the term as so extended exceed the
maximum term provided for in the preceding sentence.




          5.4 Vesting. Subject to Section 5.10, each Option shall become exercisable in such
installments (which need not be equal) and at such times as may be designated by the Committee and
set forth in the Agreement. To the extent not exercised, installments shall accumulate and be
exercisable, in whole or in part, at any time after becoming exercisable, but not later than the
date the Option expires. The Committee may accelerate the exercisability of any Option or portion
thereof at any time.




          5.5 Deferred Delivery of Option Shares. The Committee may, in its discretion, permit
Optionees to elect to defer the issuance of Shares upon the exercise of one or more Nonqualified
Stock Options granted pursuant to the Plan. The terms and conditions of such deferral shall be
determined at the time of the grant of the Option or thereafter and shall be set forth in the
Agreement evidencing the Option.




          5.6 Limitations on Incentive Stock Options. To the extent that the aggregate Fair
Market Value (determined as of the date of the grant) of Shares with respect to which Incentive
Stock Options granted under the Plan and “incentive stock options” (within the meaning of Section
422 of the Code) granted under all other plans of the Company or its Subsidiaries (in either case
determined without regard to this Section 5.6) are exercisable by an Optionee for the first time
during any calendar year exceeds $100,000, such Incentive Stock Options shall be treated as
Nonqualified Stock Options. In applying the limitation in the preceding sentence in the case of
multiple Option grants, Options which were intended to be Incentive Stock Options shall be treated
as Nonqualified Stock Options according to the order in which they were granted such that the most
recently granted Options are first treated as Nonqualified Stock Options.




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          5.7 Non-Transferability. No Option shall be transferable by the Optionee otherwise
than by will or by the laws of descent and distribution or, in the case of an Option other than an
Incentive Stock Option, pursuant to a domestic relations order (within the meaning of Rule 16a-12
promulgated under the Exchange Act), and an Option shall be exercisable during the lifetime of such
Optionee only by the Optionee or his or her guardian or legal representative. Notwithstanding the
foregoing, the Committee may set forth in the Agreement evidencing an Option (other than an
Incentive Stock Option), at the time of grant or thereafter, that the Option may be transferred to
members of the Optionee’s immediate family, to trusts solely for the benefit of such immediate
family members and to partnerships in which such family members and/or trusts are the only
partners, and for purposes of this Plan, a transferee of an Option shall be deemed to be the
Optionee. For this purpose, immediate family means the Optionee’s spouse, parents, children,
stepchildren and grandchildren and the spouses of such parents, children, stepchildren and
grandchildren. The terms of an Option shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the Optionee.




          5.8 Method of Exercise. The exercise of an Option shall be made only by a written
notice delivered in person or by mail to the Secretary of the Company at the Company’s principal
executive office, specifying the number of Shares to be exercised and, to the extent applicable,
accompanied by payment therefor and otherwise in accordance with the Agreement pursuant to which
the Option was granted; provided, however, that Options may not be exercised by an Optionee
following a hardship distribution to the Optionee to the extent such exercise is prohibited under
the Community Health Systems, Inc. 401(k) Plan or Treasury Regulation § 1.401(k)-1(d)(2)(iv)(B)(4).
The exercise price for any Shares purchased pursuant to the exercise of an Option shall be paid in
either of the following forms (or any combination thereof): (a) cash or (b) the transfer, either
actually or by attestation, to the Company of Shares that have been held by the Optionee for at
least six (6) months (or such lesser period as may be permitted by the Committee) prior to the
exercise of the Option, such transfer to be upon such terms and conditions as determined by the
Committee or (c) a combination of cash and the transfer of Shares; provided, however, that the
Committee may determine that the exercise price shall be paid only in cash. In addition, Options
may be exercised through a registered broker-dealer pursuant to such cashless exercise procedures
which are, from time to time, deemed acceptable by the Committee. Any Shares transferred to the
Company as payment of the exercise price under an Option shall be valued at their Fair Market Value
on the day of exercise of such Option. If requested by the Committee, the Optionee shall deliver
the Agreement evidencing the Option to the Secretary of the Company who shall endorse thereon a
notation of such exercise and return such Agreement to the Optionee. No fractional Shares (or cash
in lieu thereof) shall be issued upon exercise of an Option and the number of Shares that may be
purchased upon exercise shall be rounded to the nearest number of whole Shares.




          5.9 Rights of Optionees. No Optionee shall be deemed for any purpose to be the owner
of any Shares subject to any Option unless and until (a) the Option shall have been exercised
pursuant to the terms thereof, (b) the Company shall have issued and delivered Shares to the
Optionee, and (c) the Optionee’s name shall have been entered as a stockholder of record on the
books of the Company. Thereupon, the Optionee shall have full voting, dividend and other ownership
rights with respect to such Shares, subject to such terms and conditions as may be set forth in the
applicable Agreement.




          5.10 Effect of Change in Control. In the event of a Change in Control, each Option
held by the Optionee as of the date of the Change in Control shall become immediately




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and fully exercisable and shall, notwithstanding any shorter period set forth in the Agreement
evidencing the Option, remain exercisable for a period ending not before the earlier of (x) the six
(6) month anniversary of the Change in Control or (y) the expiration of the stated term of the
Option. In addition, the Agreement evidencing the grant of an Option may provide for any other
treatment of the Option in the event of a Change in Control.




     6. [intentionally omitted].



     7. Stock Appreciation Rights.



          The Committee may in its discretion, either alone or in connection with the grant of an
Option, grant Stock Appreciation Rights in accordance with the Plan, the terms and conditions of
which shall be set forth in an Agreement. If granted in connection with an Option, a Stock
Appreciation Right shall cover the same Shares covered by the Option (or such lesser number of
Shares as the Committee may determine) and shall, except as provided in this Section 7, be
subject to the same terms and conditions as the related Option.




          7.1 Time of Grant. A Stock Appreciation Right may be granted (a) at any time if
unrelated to an Option, or (b) if related to an Option, either at the time of grant or at any time
thereafter during the term of the Option.




          7.2 Stock Appreciation Right Related to an Option.




               (a) Exercise. A Stock Appreciation Right granted in connection with an Option shall
be exercisable at such time or times and only to the extent that the related Option is exercisable,
and will not be transferable except to the extent the related Option may be transferable. A Stock
Appreciation Right granted in connection with an Incentive Stock Option shall be exercisable only
if the Fair Market Value of a Share on the date of exercise exceeds the exercise price specified in
the related Incentive Stock Option Agreement. In no event shall a Stock Appreciation Right related
to an Option have a term of greater than ten (10) years; provided, however, that the Committee may
provide that a Stock Appreciation Right may, upon the death of the Grantee, be exercised for up to
one (1) year following the date of the Grantee’s death even if such period extends beyond ten (10)
years from the date the Stock Appreciation Right is granted.



               (b) Amount Payable. Upon the exercise of a Stock Appreciation Right related to an
Option, the Grantee shall be entitled to receive an amount determined by multiplying (i) the excess
of the Fair Market Value of a Share on the date of exercise of such Stock Appreciation Right over
the per Share exercise price under the related Option, by (ii) the number of Shares as to which
such Stock Appreciation Right is being exercised. Notwithstanding the foregoing, the Committee may
limit in any manner the amount payable with respect to any Stock Appreciation Right by including
such a limit in the Agreement evidencing the Stock Appreciation Right at the time it is granted.



               (c) Treatment of Related Options and Stock Appreciation Rights Upon Exercise. Upon
the exercise of a Stock Appreciation Right granted in connection with an Option, the Option shall
be canceled to the extent of the number of Shares as to which the Stock Appreciation Right is
exercised, and upon the exercise of an Option granted in connection with a Stock Appreciation
Right, the Stock Appreciation Right shall be canceled to the extent of the number of Shares as to
which the Option is exercised or surrendered.



11









 





          7.3 Stock Appreciation Right Unrelated to an Option. The Committee may grant to
Eligible Individuals Stock Appreciation Rights unrelated to Options. Stock Appreciation Rights
unrelated to Options shall contain such terms and conditions as to exercisability (subject to
Section 7.7), vesting and duration as the Committee shall determine, but in no event shall they
have a term of greater than ten (10) years; provided, however, that the Committee may provide that
a Stock Appreciation Right may, upon the death of the Grantee, be exercised for up to one (1) year
following the date of the Grantee’s death even if such period extends beyond ten (10) years from
the date the Stock Appreciation Right is granted. Upon exercise of a Stock Appreciation Right
unrelated to an Option, the Grantee shall be entitled to receive an amount determined by
multiplying (a) the excess of the Fair Market Value of a Share on the date of exercise of such
Stock Appreciation Right over the Fair Market Value of a Share on the date the Stock Appreciation
Right was granted, by (b) the number of Shares as to which the Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may limit in any manner the amount payable
with respect to any Stock Appreciation Right by including such a limit in the Agreement evidencing
the Stock Appreciation Right at the time it is granted.




          7.4 Non-Transferability. No Stock Appreciation Right shall be transferable by the
Grantee otherwise than by will or by the laws of descent and distribution or pursuant to a domestic
relations order (within the meaning of Rule 16a-12 promulgated under the Exchange Act), and such
Stock Appreciation Right shall be exercisable during the lifetime of such Grantee only by the
Grantee or his or her guardian or legal representative. The terms of such Stock Appreciation Right
shall be final, binding and conclusive upon the beneficiaries, executors, administrators, heirs and
successors of the Grantee.




          7.5 Method of Exercise. Stock Appreciation Rights shall be exercised by a Grantee
only by a written notice delivered in person or by mail to the Secretary of the Company at the
Company’s principal executive office, specifying the number of Shares with respect to which the
Stock Appreciation Right is being exercised. If requested by the Committee, the Grantee shall
deliver the Agreement evidencing the Stock Appreciation Right being exercised and the Agreement
evidencing any related Option to the Secretary of the Company who shall endorse thereon a notation
of such exercise and return such Agreement to the Grantee.




          7.6 Form of Payment. Payment of the amount determined under Sections 7.2(b) or 7.3
may be made in the discretion of the Committee solely in whole Shares in a number determined at
their Fair Market Value on the date of exercise of the Stock Appreciation Right, or solely in cash,
or in a combination of cash and Shares. If the Committee decides to make full payment in Shares
and the amount payable results in a fractional Share, payment for the fractional Share will be made
in cash.




          7.7 Effect of Change in Control. In the event of a Change in Control, each Stock
Appreciation Right held by the Grantee shall become immediately and fully exercisable and shall,
notwithstanding any shorter period set forth in the Agreement evidencing the Stock Appreciation
Right, remain exercisable for a period ending not before the earlier of (x) the six (6) month
anniversary of the Change in Control or (y) the expiration of the stated term of the Stock
Appreciation Right. In addition, the Agreement evidencing the grant of a Stock Appreciation Right
unrelated to an Option may provide for any other treatment of such Stock Appreciation Right in the
event of a Change in Control.




     8. Restricted Stock and Restricted Stock Units



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          8.1 Restricted Stock. The Committee may grant Awards to Eligible Individuals of
Restricted Stock, which shall be evidenced by an Agreement between the Company and the Grantee.
Each Agreement shall contain such restrictions, terms and conditions as the Committee may, in its
discretion, determine and (without limiting the generality of the foregoing) such Agreements may
require that an appropriate legend be placed on Share certificates. Awards of Restricted Stock
shall be subject to the terms and provisions set forth below in this Section 8.1.




               (a) Rights of Grantee. Shares of Restricted Stock granted pursuant to an Award
hereunder shall be issued in the name of the Grantee as soon as reasonably practicable after the
Award is granted provided that the Grantee has executed an Agreement evidencing the Award, the
appropriate blank stock powers and, in the discretion of the Committee, an escrow agreement and any
other documents which the Committee may require as a condition to the issuance of such Shares. If
a Grantee shall fail to execute the Agreement evidencing a Restricted Stock Award, or any documents
which the Committee may require within the time period prescribed by the Committee at the time the
Award is granted, the Award shall be null and void. At the discretion of the Committee, Shares
issued in connection with a Restricted Stock Award shall be deposited together with the stock
powers with an escrow agent (which may be the Company) designated by the Committee. Unless the
Committee determines otherwise and as set forth in the Agreement, upon delivery of the Shares to
the escrow agent, the Grantee shall have all of the rights of a stockholder with respect to such
Shares, including the right to vote the Shares and to receive all dividends or other distributions
paid or made with respect to the Shares.



               (b) Non-Transferability. Until all restrictions upon the Shares of Restricted Stock
awarded to a Grantee shall have lapsed in the manner set forth in Section 8.4, such Shares shall
not be sold, transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated.



               (c) Lapse of Restrictions.




               (1) Generally. Restrictions upon Shares of Restricted Stock awarded hereunder
shall lapse at such time or times and on such terms and conditions as the Committee may
determine. The Agreement evidencing the Award shall set forth any such restrictions.




               (2) Effect of Change in Control. The Committee may determine at the time of
the grant of an Award of Restricted Stock the extent to which the restrictions upon Shares
of Restricted Stock shall lapse upon a Change in Control. The Agreement evidencing the
Award shall set forth any such provisions.



               (d) Treatment of Dividends. At the time an Award of Shares of Restricted Stock is
granted, the Committee may, in its discretion, determine that the payment to the Grantee of
dividends, or a specified portion thereof, declared or paid on such Shares by the Company shall be
(a) deferred until the lapsing of the restrictions imposed upon such Shares and (b) held by the
Company for the account of the Grantee until such time. In the event that dividends are to be
deferred, the Committee shall determine whether such dividends are to be reinvested in Shares
(which shall be held as additional Shares of Restricted Stock) or held in cash. If deferred
dividends are to be held in cash, there may be credited at the end of each year (or portion
thereof) interest on the amount of the account at the beginning of the year at a rate per annum as
the Committee, in its discretion, may determine. Payment of deferred



13









 




dividends in respect of Shares of Restricted Stock (whether held in cash or as additional
Shares of Restricted Stock), together with interest accrued thereon, if any, shall be made upon the
lapsing of restrictions imposed on the Shares in respect of which the deferred dividends were paid,
and any dividends deferred (together with any interest accrued thereon) in respect of any Shares of
Restricted Stock shall be forfeited upon the forfeiture of such Shares.




               (e) Delivery of Shares. Upon the lapse of the restrictions on Shares of Restricted
Stock, the Committee shall cause a stock certificate to be delivered to the Grantee with respect to
such Shares, free of all restrictions hereunder.



          8.2 Restricted Stock Units. The Committee may grant to Eligible Individuals Awards of
Restricted Stock Units, which shall be evidenced by an Agreement. Each such Agreement shall
contain such restrictions, terms and conditions as the Committee may, in its discretion, determine.
Awards of Restricted Stock Units shall be subject to the terms and provisions set forth below in
this Section 8.2.




               (a) Payment of Awards. Each Restricted Stock Unit shall represent the right of a
Grantee to receive a payment upon vesting of the Restricted Stock Unit or on any later date
specified by the Committee equal to the Fair Market Value of a Share as of the date the Restricted
Stock Unit was granted, the vesting date or such other date as determined by the Committee at the
time the Restricted Stock Unit was granted. The Committee may, at the time a Restricted Stock Unit
is granted, provide a limitation on the amount payable in respect of each Restricted Stock Unit.
The Committee may provide for the settlement of Restricted Stock Units in cash or with Shares
having a Fair Market Value equal to the payment to which the Grantee has become entitled.



               (b) Effect of Change in Control. The effect of a Change in Control on an Award of
Restricted Stock Units shall be set forth in the applicable Agreement.



     9. Performance Awards.



          9.1 Performance Units. The Committee, in its discretion, may grant Awards of
Performance Units to Eligible Individuals, the terms and conditions of which shall be set forth in
an Agreement between the Company and the Grantee. Contingent upon the attainment of specified
Performance Objectives within the Performance Cycle, Performance Units represent the right to
receive payment as provided in Section 9.1(b) of (i) the Fair Market Value of a Share on the date
the Performance Unit was granted, the date the Performance Unit became vested or any other date
specified by the Committee or (ii) a percentage (which may be more than 100%) of the amount
described in clause (i) depending on the level of Performance Objective attainment; provided,
however, that the Committee may at the time a Performance Unit is granted specify a maximum amount
payable in respect of a vested Performance Unit. Each Agreement shall specify the number of
Performance Units to which it relates, the Performance Objectives which must be satisfied in order
for the Performance Units to vest and the Performance Cycle within which such Performance
Objectives must be satisfied.




               (a) Vesting and Forfeiture. Subject to Sections 9.3(c) and 9.4, a Grantee shall
become vested with respect to the Performance Units to the extent that the Performance Objectives
set forth in the Agreement are satisfied for the Performance Cycle.



               (b) Payment of Awards. Subject to Section 9.3(c), payment to Grantees in respect of
vested Performance Units shall be made as soon as practicable after the



14









 




last day of the Performance Cycle to which such Award relates unless the Agreement evidencing
the Award provides for the deferral of payment, in which event the terms and conditions of the
deferral shall be set forth in the Agreement. Subject to Section 9.4, such payments may be made
entirely in Shares valued at their Fair Market Value, entirely in cash, or in such combination of
Shares and cash as the Committee in its discretion shall determine at any time prior to such
payment, provided, however, that if the Committee in its discretion determines to make such payment
entirely or partially in Shares of Restricted Stock, the Committee must determine the extent to
which such payment will be in Shares of Restricted Stock and the terms of such Restricted Stock at
the time the Award is granted.




          9.2 Performance Shares. The Committee, in its discretion, may grant Awards of
Performance Shares to Eligible Individuals, the terms and conditions of which shall be set forth in
an Agreement between the Company and the Grantee. Each Agreement may require that an appropriate
legend be placed on Share certificates. Awards of Performance Shares shall be subject to the
following terms and provisions:




               (a) Rights of Grantee. The Committee shall provide at the time an Award of
Performance Shares is made the time or times at which the actual Shares represented by such Award
shall be issued in the name of the Grantee; provided, however, that no Performance Shares shall be
issued until the Grantee has executed an Agreement evidencing the Award, the appropriate blank
stock powers and, in the discretion of the Committee, an escrow agreement and any other documents
which the Committee may require as a condition to the issuance of such Performance Shares. If a
Grantee shall fail to execute the Agreement evidencing an Award of Performance Shares, the
appropriate blank stock powers and, in the discretion of the Committee, an escrow agreement and any
other documents which the Committee may require within the time period prescribed by the Committee
at the time the Award is granted, the Award shall be null and void. At the discretion of the
Committee, Shares issued in connection with an Award of Performance Shares shall be deposited
together with the stock powers with an escrow agent (which may be the Company) designated by the
Committee. Except as restricted by the terms of the Agreement, upon delivery of the Shares to the
escrow agent, the Grantee shall have, in the discretion of the Committee, all of the rights of a
stockholder with respect to such Shares, including the right to vote the Shares and to receive all
dividends or other distributions paid or made with respect to the Shares.



               (b) Non-Transferability. Until any restrictions upon the Performance Shares awarded
to a Grantee shall have lapsed in the manner set forth in Section 9.2(c) or 9.4, such Performance
Shares shall not be sold, transferred or otherwise disposed of and shall not be pledged or
otherwise hypothecated, nor shall they be delivered to the Grantee. The Committee may also impose
such other restrictions and conditions on the Performance Shares, if any, as it deems appropriate.



               (c) Lapse of Restrictions. Subject to Sections 9.3(c) and 9.4, restrictions upon
Performance Shares awarded hereunder shall lapse and such Performance Shares shall become vested at
such time or times and on such terms, conditions and satisfaction of Performance Objectives as the
Committee may, in its discretion, determine at the time an Award is granted.



               (d) Treatment of Dividends. At the time the Award of Performance Shares is granted,
the Committee may, in its discretion, determine that the payment to the Grantee of dividends, or a
specified portion thereof, declared or paid on Shares represented by such Award which have been
issued by the Company to the Grantee shall be (i) deferred until



15









 




the lapsing of the restrictions imposed upon such Performance Shares and (ii) held by the
Company for the account of the Grantee until such time. In the event that dividends are to be
deferred, the Committee shall determine whether such dividends are to be reinvested in shares of
Stock (which shall be held as additional Performance Shares) or held in cash. If deferred
dividends are to be held in cash, there may be credited at the end of each year (or portion
thereof) interest on the amount of the account at the beginning of the year at a rate per annum as
the Committee, in its discretion, may determine. Payment of deferred dividends in respect of
Performance Shares (whether held in cash or in additional Performance Shares), together with
interest accrued thereon, if any, shall be made upon the lapsing of restrictions imposed on the
Performance Shares in respect of which the deferred dividends were paid, and any dividends deferred
(together with any interest accrued thereon) in respect of any Performance Shares shall be
forfeited upon the forfeiture of such Performance Shares.




               (e) Delivery of Shares. Upon the lapse of the restrictions on Performance Shares
awarded hereunder, the Committee shall cause a stock certificate to be delivered to the Grantee
with respect to such Shares, free of all restrictions hereunder.



          9.3 Performance Objectives.




               (a) Establishment. Performance Objectives for Performance Awards may be expressed in
terms of (i) earnings per Share, (ii) net revenue, (iii) adjusted EBITDA (iv) Share price, (v)
pre-tax profits, (vi) net earnings, (vii) return on equity or assets, or (viii) any combination of
the foregoing. Performance Objectives may be in respect of the performance of the Company, any of
its Subsidiaries, any of its Divisions or any combination thereof. Performance Objectives may be
absolute or relative (to prior performance of the Company or to the performance of one or more
other entities or external indices) and may be expressed in terms of a progression within a
specified range. The Performance Objectives with respect to a Performance Cycle shall be
established in writing by the Committee by the earlier of (x) the date on which a quarter of the
Performance Cycle has elapsed or (y) the date which is ninety (90) days after the commencement of
the Performance Cycle, and in any event while the performance relating to the Performance
Objectives remain substantially uncertain.



               (b) Effect of Certain Events. At the time of the granting of a Performance Award, or
at any time thereafter, in either case to the extent permitted under Section 162(m) of the Code and
the regulations thereunder without adversely affecting the treatment of the Performance Award as
Performance-Based Compensation, the Committee may provide for the manner in which performance will
be measured against the Performance Objectives (or may adjust the Performance Objectives) to
reflect the impact of specified corporate transactions, accounting or tax law changes and other
extraordinary or nonrecurring events.



               (c) Determination of Performance. Prior to the vesting, payment, settlement or
lapsing of any restrictions with respect to any Performance Award that is intended to constitute
Performance-Based Compensation made to a Grantee who is subject to Section 162(m) of the Code, the
Committee shall certify in writing that the applicable Performance Objectives have been satisfied
to the extent necessary for such Award to qualify as Performance Based Compensation.



          9.4 Effect of Change in Control. The Agreements evidencing Performance Shares and
Performance Units may provide for the treatment of such Awards (or portions




16









 




thereof) in the event of a Change in Control, including, but not limited to, provisions for
the adjustment of applicable Performance Objectives.




          9.5 Non-Transferability. Until the vesting of Performance Units or the lapsing of any
restrictions on Performance Shares, as the case may be, such Performance Units or Performance
Shares shall not be sold, transferred or otherwise disposed of and shall not be pledged or
otherwise hypothecated.




     10. Share Awards. The Committee may grant a Share Award to any Eligible Individual on
such terms and conditions as the Committee may determine in its sole discretion. Share Awards may
be made as additional compensation for services rendered by the Eligible Individual or may be in
lieu of cash or other compensation to which the Eligible Individual is entitled from the Company.



     11. Effect of a Termination of Employment.



          The Agreement evidencing the grant of each Option and each Award shall set forth the terms
and conditions applicable to such Option or Award upon a termination or change in the status of
the employment of the Optionee or Grantee by the Company, a Subsidiary or a Division (including a
termination or change by reason of the sale of a Subsidiary or a Division), which shall be as the
Committee may, in its discretion, determine at the time the Option or Award is granted or
thereafter.




     12. Adjustment Upon Changes in Capitalization.



               (a) In the event of a Change in Capitalization, the Committee shall conclusively determine the
appropriate adjustments, if any, to (i) the maximum number and class of Shares or other stock or
securities with respect to which Options or Awards may be granted under the Plan, (ii) the number
and class of Shares or other stock or securities which are subject to outstanding Options or Awards
granted under the Plan and the exercise price therefor, if applicable, and (iii) the Performance
Objectives.



               (b) Any such adjustment in the Shares or other stock or securities (a) subject to outstanding
Incentive Stock Options (including any adjustments in the exercise price) shall be made in such
manner as not to constitute a modification as defined by Section 424(h)(3) of the Code and only to
the extent permitted by Sections 422 and 424 of the Code or (b) subject to outstanding Options or
Awards that are intended to qualify as Performance-Based Compensation shall be made in such a
manner as not to adversely affect the treatment of the Options or Awards as Performance-Based
Compensation. In addition, (a) no adjustment to any Option or Award that is not subject to Section
409A of the Code shall be made in a manner that would subject the Option or Award to Section 409A
of the Code and (b) any adjustment to an Option or Award that is subject to Section 409A of the
Code shall be made only in a manner and to the extent permitted by Section 409A of the Code.



               (c) If, by reason of a Change in Capitalization, a Grantee of an Award shall be entitled to,
or an Optionee shall be entitled to exercise an Option with respect to, new, additional or
different shares of stock or securities of the Company or any other corporation, such new,
additional or different shares shall thereupon be subject to all of the conditions, restrictions
and performance criteria which were applicable to the Shares subject to the Award or Option, as the
case may be, prior to such Change in Capitalization.



17









 





     13. Effect of Certain Transactions.



          Subject to Sections 5.10, 7.7, 8.4(b) and 9.4 or as otherwise provided in an Agreement, in
the event of (a) the liquidation or dissolution of the Company or (b) a merger or consolidation
of the Company (a “Transaction”), the Plan and the Options and Awards issued hereunder shall
continue in effect in accordance with their respective terms, except that following a Transaction
either (i) each outstanding Option or Award shall be treated as provided for in the agreement
entered into in connection with the Transaction or (ii) if not so provided in such agreement,
each Optionee and Grantee shall be entitled to receive in respect of each Share subject to any
outstanding Options or Awards, as the case may be, upon exercise of any Option or payment or
transfer in respect of any Award, the same number and kind of stock, securities, cash, property
or other consideration that each holder of a Share was entitled to receive in the Transaction in
respect of a Share; provided, however, that such stock, securities, cash, property, or other
consideration shall remain subject to all of the conditions, restrictions and performance
criteria which were applicable to the Options and Awards prior to such Transaction. The
treatment of any Option or Award as provided in this Section 13 shall be conclusively presumed to
be appropriate for purposes of Section 12.




     14. Interpretation.



          Following the required registration of any equity security of the Company pursuant to Section
12 of the Exchange Act:




               (a) The Plan is intended to comply with Rule 16b-3 promulgated under the Exchange Act and the
Committee shall interpret and administer the provisions of the Plan or any Agreement in a manner
consistent therewith. Any provisions inconsistent with such Rule shall be inoperative and shall
not affect the validity of the Plan.



               (b) Unless otherwise expressly stated in the relevant Agreement, each Option, Stock
Appreciation Right and Performance Award granted under the Plan is intended to be Performance-Based
Compensation. The Committee shall not be entitled to exercise any discretion otherwise authorized
hereunder with respect to such Options or Awards if the ability to exercise such discretion or the
exercise of such discretion itself would cause the compensation attributable to such Options or
Awards to fail to qualify as Performance-Based Compensation.



               (c) To the extent that any legal requirement of Section 16 of the Exchange Act or Section
162(m) of the Code as set forth in the Plan ceases to be required under Section 16 of the Exchange
Act or Section 162(m) of the Code, that Plan provision shall cease to apply.



     15. Termination and Amendment of the Plan or Modification of Options and
Awards.



          15.1 Plan Amendment or Termination. The Plan shall terminate on the day preceding
the tenth anniversary of the date of its adoption by the Board and no Option or Award may be
granted thereafter. The Board may sooner terminate the Plan and the Board may at any time and
from time to time amend, modify or suspend the Plan; provided, however, that:




               (a) no such amendment, modification, suspension or termination shall impair or adversely alter
any Options or Awards theretofore granted under the Plan, except with



18









 




the written consent of the Optionee or Grantee, nor shall any amendment, modification,
suspension or termination deprive any Optionee or Grantee of any Shares which he or she may have
acquired through or as a result of the Plan; and




               (b) to the extent necessary under any applicable law, regulation or exchange requirement no
amendment shall be effective unless approved by the stockholders of the Company in accordance with
applicable law, regulation or exchange requirement.



          15.2 Modification of Options and Awards. No modification of an Option or Award shall
adversely alter or impair any rights or obligations under the Option or Award without the written
consent of the Optionee or Grantee, as the case may be.




          15.3 No Repricing of Options or Stock Appreciation Rights. The Committee shall have
no authority to make any adjustment (other than in connection with a stock dividend,
recapitalization or other transaction where an adjustment is permitted or required under the terms
of the Plan) or amendment, and no such adjustment or amendment shall be made, that reduces or would
have the effect of reducing the exercise price of an Option or Stock Appreciation Right previously
granted under the Plan, whether through amendment, cancellation or replacement grants, or other
means, unless the Company’s stockholders shall have approved such adjustment or amendment.




     16. Non-Exclusivity of the Plan.



          The adoption of the Plan by the Board shall not be construed as amending, modifying or
rescinding any previously approved incentive arrangement or as creating any limitations on the
power of the Board to adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the Plan, and such
arrangements may be either applicable generally or only in specific cases.




     17. Limitation of Liability.



          As illustrative of the limitations of liability of the Company, but not intended to be
exhaustive thereof, nothing in the Plan shall be construed to:




               (a) give any person any right to be granted an Option or Award other than at the sole
discretion of the Committee;



               (b) give any person any rights whatsoever with respect to Shares except as specifically
provided in the Plan;



               (c) limit in any way the right of the Company or any Subsidiary to terminate the employment of
any person at any time; or



               (d) be evidence of any agreement or understanding, expressed or implied, that the Company will
employ any person at any particular rate of compensation or for any particular period of time.



     18. Regulations and Other Approvals; Governing Law.



19









 





          18.1 Except as to matters of federal law, the Plan and the rights of all persons claiming
hereunder shall be construed and determined in accordance with the laws of the State of Delaware
without giving effect to conflicts of laws principles thereof.




          18.2 The obligation of the Company to sell or deliver Shares with respect to Options and
Awards granted under the Plan shall be subject to all applicable laws, rules and regulations,
including all applicable federal and state securities laws, and the obtaining of all such approvals
by governmental agencies as may be deemed necessary or appropriate by the Committee.




          18.3 The Board may make such changes as may be necessary or appropriate to comply with the
rules and regulations of any government authority, or to obtain for Eligible Individuals granted
Incentive Stock Options the tax benefits under the applicable provisions of the Code and
regulations promulgated thereunder.




          18.4 Each Option and Award is subject to the requirement that, if at any time the Committee
determines, in its discretion, that the listing, registration or qualification of Shares issuable
pursuant to the Plan is required by any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or Award or the issuance of Shares, no
Options or Awards shall be granted or payment made or Shares issued, in whole or in part, unless
listing, registration, qualification, consent or approval has been effected or obtained free of any
conditions as acceptable to the Committee.




          18.5 Notwithstanding anything contained in the Plan or any Agreement to the contrary, in the
event that the disposition of Shares acquired pursuant to the Plan is not covered by a then current
registration statement under the Securities Act of 1933, as amended (the “Securities Act”), and is
not otherwise exempt from such registration, such Shares shall be restricted against transfer to
the extent required by the Securities Act and Rule 144 or other regulations thereunder. The
Committee may require any individual receiving Shares pursuant to an Option or Award granted under
the Plan, as a condition precedent to receipt of such Shares, to represent and warrant to the
Company in writing that the Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than pursuant to an effective
registration thereof under the Securities Act or pursuant to an exemption applicable under the
Securities Act or the rules and regulations promulgated thereunder. The certificates evidencing
any such Shares shall be appropriately amended or have an appropriate legend placed thereon to
reflect their status as restricted securities as aforesaid.




          18.6 Compliance With Section 409A. All Options and Awards granted under the plan are
intended either not to be subject to Section 409A of the Code or, if subject to Section 409A of the
Code, to be administered, operated and construed in compliance with Section 409A of the Code and
any guidance issued thereunder. Notwithstanding this or any other provision of the Plan to the
contrary, the Committee may amend the Plan or any Option or Award granted hereunder in any manner,
or take any other action, that it determines, in its sole discretion, is necessary, appropriate or
advisable to cause the Plan or any Option or Award granted hereunder to comply with Section 409A
and any guidance issued thereunder. Any such action, once taken, shall be deemed to be effective
from the earliest date necessary to avoid a violation of Section 409A and shall be final, binding
and conclusive on all Eligible Individuals and other individuals having or claiming any right or
interest under the Plan.




20









 








     19. Miscellaneous.



          19.1 Multiple Agreements. The terms of each Option or Award may differ from other
Options or Awards granted under the Plan at the same time or at some other time. The Committee may
also grant more than one Option or Award to a given Eligible Individual during the term of the
Plan, either in addition to, or in substitution for, one or more Options or Awards previously
granted to that Eligible Individual.




          19.2 Beneficiary Designation. Each Participant may, from time to time, name one or
more individuals (each, a “Beneficiary”) to whom any benefit under the Plan is to be paid or who
may exercise any rights of the Participant under any Option or Award granted under the Plan in the
event of the Participant’s death before he or she receives any or all of such benefit or exercises
such Option. Each such designation shall revoke all prior designations by the same Participant,
shall be in a form prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant’s lifetime. In the absence of any
such designation, benefits remaining unpaid at the Participant’s death and rights to be exercised
following the Participant’s death shall be paid to or exercised by the Participant’s estate.




          19.3 Withholding of Taxes.




               (a) At such times as an Optionee or Grantee recognizes taxable income in connection with the
receipt of Shares or cash hereunder (a “Taxable Event”), the Optionee or Grantee shall pay to the
Company an amount equal to the federal, state and local income taxes and other amounts as may be
required by law to be withheld by the Company in connection with the Taxable Event (the
“Withholding Taxes”) prior to the issuance, or release from escrow, of such Shares or the payment
of such cash. The Company shall have the right to deduct from any payment of cash to an Optionee
or Grantee an amount equal to the Withholding Taxes in satisfaction of the obligation to pay
Withholding Taxes. The Committee may provide in an Agreement evidencing an Option or Award at the
time of grant or thereafter that the Optionee or Grantee, in satisfaction of the obligation to pay
Withholding Taxes to the Company, may elect to have withheld a portion of the Shares issuable to
him or her pursuant to the Option or Award having an aggregate Fair Market Value equal to the
Withholding Taxes. In the event Shares are withheld by the Company to satisfy any obligation to
pay Withholding Taxes, such Shares shall be retired and cancelled and shall not thereafter be
available to grant an Option or Award with respect thereto.



               (b) If an Optionee makes a disposition, within the meaning of Section 424(c) of the Code and
regulations promulgated thereunder, of any Share or Shares issued to such Optionee pursuant to the
exercise of an Incentive Stock Option within the two-year period commencing on the day after the
date of the grant or within the one-year period commencing on the day after the date of transfer of
such Share or Shares to the Optionee pursuant to such exercise, the Optionee shall, within ten (10)
days of such disposition, notify the Company thereof, by delivery of written notice to the Company
at its principal executive office.



          19.4 Effective Date. The effective date of this Plan shall be March 24, 2009, subject
only to the approval by the holders of a majority of the securities of the Company entitled to vote
thereon, in accordance with the applicable laws, within twelve (12) months of the adoption of the
Plan by the Board.





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