EX-10.1






Exhibit 10.1




HORIZON LINES, INC.




AMENDED AND RESTATED

EQUITY INCENTIVE PLAN




As Amended and Restated Effective December 31, 2008




     1. Purpose. The purpose of the Horizon Lines, Inc. Amended and Restated Equity
Incentive Plan is to attract, motivate and retain eligible individuals who are important to the
success of Horizon Lines, Inc. and to provide equity grants to non-employee directors of Horizon
Lines, Inc.



     2. Definitions. When used herein, the following terms shall have the following
meanings.



     “Administrator” means the Board, or a committee of the Board, duly appointed to administer the
Plan and shall be composed to meet the requirements of Section 162(m) of the Code and the
requirements established by the securities exchange or system on which the Shares are traded or
listed if such requirements are applicable; provided, however, that with respect to
the participation of non-employee directors of the Company in the Plan, the term “Administrator”
means the Board.



     “Affiliate” means, with respect to any specified Person, a Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by or is under common control with,
such specified Person (it being understood that a Person shall be deemed to “control” another
Person, for purposes of this definition, if such Person directly or indirectly has the power to
direct or cause the direction of the management and policies of such other Person, whether through
holding beneficial ownership interests in such other Person, through contracts or otherwise). For
purposes of an individual, an Affiliate of such individual shall also mean any family member of
such individual or a Person owned 10% or more by such individual.



     “Award” means, individually or collectively, a grant under this Plan of Nonqualified Stock
Options, Incentive Stock Options, Restricted Stock or Restricted Share Units.



     “Award Agreement” means an agreement entered into by the Company and each Participant setting
forth the terms and provisions applicable to an Award.



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



     “Castle Harlan Group” means CHP IV, CHI and any other accounts or funds managed by CHI or any
Affiliate of CHI, other than the Company and its Subsidiaries



     “Cause” means, with respect to a Participant who is an employee of the Company or any
Subsidiary thereof, (a) the Participant’s continued failure for a period of 90 days, including the
ten (10) business day notice and cure period set forth in the next sentence, to substantially
perform the Participant’s duties, (b) the Participant’s failure to follow the lawful directions of
the



 









 




board of directors of the Company or any Subsidiary thereof by whom the Participant is then
employed, either directly or indirectly through its Chairman, if any, or such Participant’s
supervisor, (c) material, willful acts of dishonesty, theft or fraud by the Participant resulting
or intending to result in personal gain or enrichment at the expense of the Company or any of its
Subsidiaries, (d) the Participant’s conviction, plea of no contest or plea of no contendere, or the
imposition of unadjudicated probation on the Participant, for any felony involving moral turpitude
that is reasonably expected to be detrimental to the reputation, business or operations of the
Company or any of its Subsidiaries or any member of their respective boards of directors or similar
governing bodies, (e) the Participant’s violation of any written policy of the Company or any of
its Subsidiaries, including, but not limited to, employment manuals, rules and regulations of the
Company or any of its Subsidiaries by whom the Participant is then employed, which adversely
affects the Company or any of its Subsidiaries by whom the Participant is then employed or could
reasonably be expected to adversely affect the Company or any of its Subsidiaries by whom the
Participant is then employed, (f) the Participant engaging in any act that is intended, or may
reasonably be expected to harm the reputation, business or operations of the Company or any of its
Subsidiaries by whom the Participant is then employed or any member of their respective boards of
directors or similar governing bodies, or (g) any other material breach by the Participant of such
Participant’s Award Agreement or any other agreement with the Company or any of its Subsidiaries
that the Participant signs in such Participant’s personal capacity, including, but not limited to,
any non-competition and confidentiality agreement. Prior to a termination for “Cause,” the
Participant shall be entitled to written notice from the Company and ten (10) business days to cure
the deficiency leading to the Cause determination, if such deficiency is curable. Notwithstanding
the foregoing and without limiting the foregoing in any way, for the avoidance of doubt, the
Participant shall receive written notice and ten (10) business days to cure a deficiency under
subsections (a) and (b) hereof. Notwithstanding the foregoing, to the extent that the Participant
is subject to an employment agreement with the Company and/or one of its Subsidiaries that contains
a definition of cause, “Cause” under the Plan shall be as defined in such employment agreement.




     “Cause” means, with respect to a Participant who is a consultant of the Company or any
Subsidiary thereof, (a) the Participant’s continued failure for a period of 90 days, including the
ten (10) business day notice and cure period set forth in the next sentence, to substantially
perform the Participant’s duties, (b) the Participant’s material, willful acts of dishonesty, theft
or fraud resulting or intending to result in personal gain or enrichment at the expense of the
Company or any of its Subsidiaries, (c) the Participant’s conviction, plea of no contest or plea of
no contendere, or the imposition of unadjudicated probation on the Participant, for any felony
involving moral turpitude, (d) the Participant engaging in any act that is intended, or may
reasonably be expected to harm the reputation, business or operations of the Company or any of its
Subsidiaries for whom the Participant is then providing services, or (e) any other material breach
by the Participant of such Participant’s Award Agreement or any other agreement with the Company or
any of its Subsidiaries that the Participant signs in such Participant’s personal capacity,
including, but not limited to, any non-competition and confidentiality agreement. Prior to a
termination for “Cause,” the Participant shall be entitled to written notice from the Company and
ten (10) business days to cure the deficiency leading to the Cause determination, if such
deficiency is curable. Notwithstanding the foregoing and without limiting the foregoing in any way,
for the avoidance of doubt, the Participant shall receive written notice and ten (10) business



 









 




days to cure a deficiency under subsection (a) hereof. Notwithstanding the foregoing, to the
extent that the Participant is subject to a consulting agreement with the Company and/or one of its
Subsidiaries that contains a definition of cause, “Cause” under the Plan shall be as defined in
such consulting agreement.




     “Cause” means, with respect to a Participant who is a non-employee director of the Company,
the removal of the Participant for cause during such Participant’s existing term as a director in
accordance with the Company Charter or bylaws of the Company or the certificate of incorporation,
bylaws, or limited liability company agreement of a Subsidiary of the Company.



     “CHI” means Castle Harlan, Inc., a Delaware corporation.



     “CHP IV” means Castle Harlan Partners IV, L.P., a Delaware limited partnership.



     “Code” means the Internal Revenue Code of 1986, as amended, or any successor statute thereto.



     “Common Stock” means the Common Stock of the Company, par value $.01 per share.



     “Company” means Horizon Lines, Inc., a Delaware corporation and its successors.



     “Company Charter” means the certificate of incorporation of the Company, as the same exists or
may hereafter be amended or otherwise supplemented from time to time, and including any
certificates of designation filed with the Secretary of State of the State of Delaware from time to
time in accordance with the terms thereof.



     “Disability” means, with respect to a Participant who is an employee or consultant of the
Company or a Subsidiary thereof, a determination by the Company, in accordance with applicable law
that, as a result of a physical or mental injury or illness, the Participant is unable to perform
the essential functions of the Participant’s job with or without reasonable accommodation.
Notwithstanding the foregoing, to the extent that the Participant is subject to an employment
agreement with the Company and/or one of its Subsidiaries that contains a definition of disability,
“Disability” under the Plan shall be as defined in such employment agreement or if the Participant
is not subject to an employment agreement with the Company and/or one of its Subsidiaries and such
Participant is covered by a disability policy covering employees of the Company and/or the relevant
Subsidiary by whom the Participant is then employed, then “Disability” shall be defined as such
term is defined in such policy. Notwithstanding the foregoing, with respect to any Award under the
Plan that is subject to Section 409A of the Code, “Disability” shall have the meaning set forth in
Section 409A(a)(2)(C) of the Code, but only to the extent such definition is more restrictive than
the definition otherwise provided for herein.



     “Disability” means, with respect to a Participant who is a non-employee director of the
Company, a physical or mental injury or illness which prevents the Participant from fulfilling the
Participant’s duties as director with or without reasonable accommodation. Notwithstanding the
foregoing, with respect to any Award under the Plan that is subject to Section 409A of the Code,



 









 




“Disability” shall have the meaning set forth in Section 409A(a)(2)(C) of the Code, but only
to the extent such definition is more restrictive than the definition otherwise provided for
herein.




     “Effective Date” means the date set forth in Section 22 hereof.



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



     “Fair Market Value” means, on any day, with respect to Shares which are (a) listed on a United
States securities exchange, the last sales price of such stock on such day on the largest United
States securities exchange on which such stock shall have traded on such day, or if such day is not
a day on which a United States securities exchange is open for trading, on the immediately
preceding day on which such securities exchange was open, (b) not listed on a United States
securities exchange but are included in The NASDAQ Stock Market System (including The NASDAQ
National Market), the last sales price on such system of such stock on such day, or if such day is
not a trading day, on the immediately preceding trading day, or (c) neither listed on a United
States securities exchange nor included in The NASDAQ Stock Market System, the fair market value of
such stock as determined by the Board using the reasonable application of a reasonable valuation
method in accordance with Section 1.409A-1(b)(5)(iv) of the U.S. Treasury Regulations.
Notwithstanding anything contained in this Plan to the contrary, in the case of a determination of
the Fair Market Value of a share of Common Stock as of a date which is the first day on which price
quotations for the Common Stock are reported on a United States securities exchange, the Fair
Market Value of a share of Common Stock on such date shall be the price per share at which shares
of Common Stock are initially offered for sale to the public by the Company’s underwriters in the
Company’s initial public offering of shares of Common Stock pursuant to the Company’s Registration
Statement on Form S-1 (Reg. No. 333-123073) filed with the Securities and Exchange Commission on
March 2, 2005, as amended from time to time.



     “Grant Date” means with respect to an Option, the date on which the Administrator completes
the corporate action necessary to create an offer of stock for sale to the recipient thereof under
the terms and conditions of the Option; and (ii) with respect to an Award other than an Option, the
date on which the Committee grants the Award. With respect to any Award, the Committee may specify
a future date on which the grant is to be granted or become effective.



     “Incentive Stock Option” means an Option that is designated by the Administrator as an
incentive stock option and qualifies as such within the meaning of Section 422 of the Code and is
granted by the Administrator to a Participant.



     “Key Employee” means an employee who owns more than 10% of the total combined voting power of
all classes of capital stock of the Company, determined at the time an Option is proposed to be
granted.



     “Nonqualified Stock Option” means an Option, which is not an Incentive Stock Option, granted
by the Administrator to a Participant.



 









 





     “Option” means a right granted under the Plan to a Participant to purchase a stated number of
Shares as an Incentive Stock Option or Nonqualified Stock Option.



     “Option Period” means the period within which an Option may be exercised pursuant to the Plan.



     “Participant” means any employee or consultant of the Company or any Subsidiary thereof, or
any non-employee director of the Company, who is selected to participate in the Plan in accordance
with Section 4 hereof.



     “Period of Restriction” means the period, if any, specified in an Award Agreement during which
the transfer of Shares of Restricted Stock or Restricted Share Units is limited in some way (based
on the passage of time, the achievement of a performance target, if applicable, or upon the
occurrence of other events as determined by the Administrator, at its discretion), and the Common
Stock is subject to a substantial risk of forfeiture, as provided in Section 7 or Section 8 herein.



     “Person” means any individual, partnership, firm, trust, corporation, limited liability
company or other similar entity. When two or more Persons act as a partnership, limited
partnership, syndicate or other group for the purpose of acquiring, holding or disposing of Shares
of the Company, such partnership, limited partnership, syndicate or group shall be deemed a
“Person.”



     “Plan” means the Horizon Lines, Inc. Amended and Restated Equity Incentive Plan, as amended
from time to time. The Horizon Lines, Inc. Equity Incentive Plan is hereby superseded and replaced
in its entirety by this Plan.



     “Plan Year” means the fiscal year of the Company.



     “Public Offering” shall mean a public offering of equity interests of the Company or any of
its Subsidiaries or any of their successors.



     “Qualifying Change of Control” shall mean, with respect to a Participant, the date on which
the Company experiences a change in ownership (as described in subsection (i)), a change in
effective control (as described in subsection (ii)), or a change in the ownership of a substantial
portion of its assets (as described in subsection (iii)):




     (i) any person or more than one person acting as a group acquires beneficial ownership
of the Company’s stock that, together with the Company stock already held by such person or
group, represents more than 50 percent of the total fair market value or total voting power
of the Company’s stock; provided, however, that if any one person or more than one person
acting as a group is considered to own more than 50 percent of the total fair market value
or total voting power of the Company’s stock, the acquisition of additional stock by the
same person or persons is not considered to cause a change in the ownership of the Company
for purposes of this subsection (i) or to cause a change in effective control of the Company
for purposes of subsection (ii);



 









 






     (ii) (1) any person or more than one person acting as a group acquires (or has acquired
during the twelve-consecutive-month period ending on the date of the most recent acquisition
by such person or persons) beneficial ownership of Company stock possessing 30 percent or
more of the total voting power of the Company’s stock; or (2) a majority of members of the
Board is replaced during a twelve-consecutive-month period by directors whose appointment or
election is not endorsed by a majority of the members of the Board before the date of the
appointment or election; provided, however, that if any one person or more than one person
acting as a group is considered to effectively control the Company for purposes of this
subsection (ii), the acquisition of additional control of the Company by the same person or
persons is not considered to cause a change in the effective control for purposes of this
subsection (ii) or to cause a change in ownership of the Company for purposes of subsection
(i); or




     (iii) any person or more than one person acting as a group acquires (or has acquired
during the twelve-consecutive-month period ending on the date of the most recent acquisition
by such person or group) assets from the Company having a total gross fair market value
equal to 40 percent or more of the total gross fair market value of all of the assets of the
Company immediately prior to such acquisition or acquisitions; provided that a transfer of
assets by the Company is not treated as a change in the ownership of such assets if the
assets are transferred to (I) a shareholder of the Company immediately before the asset
transfer in exchange for or with respect to Company stock; (II) an entity, 50 percent or
more of the total fair market value or total voting power of which is owned, directly or
indirectly, by the Company; (III) a person or more than one person acting as a group that
owns, directly or indirectly, 50 percent or more of the total fair market value or total
voting power of all outstanding Company stock; or (IV) an entity, at least 50 percent of the
total fair market value or total voting power of which is owned, directly or indirectly, by
a person described in (III) above. Except as otherwise provided in this subsection (iii), a
person’s status is determined immediately after the transfer of the assets. For purposes of
this subsection (iii), “gross fair market value” means the value of the assets of the
Company, or the value of the assets being disposed of, determined without regard to any
liabilities associated with such assets.



     Notwithstanding anything in the foregoing to the contrary, an event which does not constitute
a change in the ownership, a change in the effective control, or a change in the ownership of a
substantial portion of the assets of the Company, each as defined in Section 1.409A-3(i)(5) of the
Treasury Regulations (or any successor provision), shall not constitute a Qualifying Change of
Control for purposes of this Plan.



     “Restricted Share Unit” means an Award for Shares granted to a Participant pursuant to Section
8 herein.



     “Restricted Stock” means an Award of Shares granted to a Participant pursuant to Section 7
herein.



 









 





     “Separation from Service” means a Participant’s termination of employment or other separation
from service (within the meaning of Section 1.409A-1(h) of the U.S. Treasury Regulations, applying
the default terms thereof) with the entity (either the Company or one of its Subsidiaries) to which
the Participant provides services at the time of such termination or other separation (the “Service
Recipient”), and all other persons that would be treated as a single employer with the Service
Recipient under Code sections 414(b) or (c); provided that, in applying Code sections 1563(a)(1),
(2) and (3) for purposes of determining a controlled group of corporations, or in applying U.S.
Treasury Regulation 1.414(c)-2 for purposes of determining trades or businesses under common
control, the phrase “at least 50%” shall replace the phrase “at least 80%” each time it appears in
those sections.



     “Shares” means the shares of the Common Stock.



     “Subsidiary” means any Person more than 50% of the outstanding voting or equity securities of
which, or any partnership, joint venture or other entity more than 50% of the total equity or other
economic interest of which, is directly or indirectly owned by another Person; provided that, for
purposes of determining eligibility to receive Nonqualified Stock Options, “Subsidiary” shall mean
any corporation or other entity in a chain of corporations or other entities in which each
corporation or other entity has a controlling interest (within the meaning of Section
1.409A-1(b)(5)(iii)(E)(1) of the U.S. Treasury Regulations, but only to the extent more restrictive
than otherwise provided for herein) in another corporation or other entity in the chain, beginning
with a corporation or other entity in which the Company has a controlling interest.



     3. Administration. The Plan shall be administered by the Administrator. Subject to the
provisions of the Plan, the Administrator shall have the authority to:



     (a) select the Participants;



     (b) determine the number of Shares covered by any Award granted to a Participant and other
terms of an Award, including, but not limited to, the exercise price and vesting schedule of an
Award; provided, however, that no Award shall be granted after the expiration of
the period of ten (10) years from the Effective Date;



     (c) determine whether each Award shall be a grant of an Incentive Stock Option, a Nonqualified
Stock Option, Restricted Stock or Restricted Share Unit; and



     (d) establish from time to time regulations for the administration of the Plan, interpret the
Plan, delegate in writing administrative matters to committees of the Board or to other persons,
and make such other determinations and take such other action, as it deems necessary or advisable
for the administration of the Plan.



     All decisions, actions and interpretations of the Administrator shall be final, conclusive and
binding upon all parties.



     4. Participation. Participants in the Plan shall be limited to those employees and
consultants of the Company or any Subsidiary thereof, and those non-employee directors of the
Company,



 









 




who have been notified in writing by the Administrator that they have been selected by the
Administrator to participate in the Plan.




     5. Shares Subject to the Plan. Awards may be granted by the Administrator to
Participants from time to time. The Shares issued with respect to Awards granted under the Plan may
be authorized and unissued Shares, or, if applicable and done pursuant to applicable law or
regulation, Shares purchased on the open market by the Company (at such time or times and in such
manner as it may determine). The Company shall be under no obligation to acquire Common Stock for
distribution to optionholders before payment in Shares is due. If any Award granted under the Plan
shall be canceled or shall expire without the Shares covered by such Award being purchased by the
applicable Award holder thereunder, new Awards may thereafter be granted covering such Shares.



     The maximum aggregate number of Shares available to be granted under the Plan is equal to
3,088,668 Shares (after giving effect to the pending reclassification of the outstanding shares of
the Company’s Common Stock, to occur on September 21, 2005) and such Shares shall be reserved from
the Company’s authorized and unissued share capital for Awards granted under the Plan (subject to
adjustment as provided in Section 11).



     6. Terms and Conditions of Options. Each Option granted under the Plan shall be
evidenced by an Award Agreement, which shall contain such terms and conditions as the Administrator
may deem appropriate. The provisions of separate Award Agreements need not be identical, but each
Award Agreement shall include (through incorporation of provisions hereof by reference in the Award
Agreement or otherwise) the substance of each of the following provisions:



     (a) Option Period. Each Option agreement shall specify that the Option thereunder is
granted for a period of ten (10) years, or such shorter period as the Administrator may determine,
from the date of grant and shall provide that the Option shall expire on such ten (10) year
anniversary, or shorter period, as the case may be (unless earlier exercised or terminated pursuant
to its terms); provided, however, that any Incentive Stock Option granted to a Key
Employee shall specify that the Incentive Stock Option is granted for a period of five (5) years
from the date of grant and shall expire on such five (5) year anniversary.



     (b) Option Price. The Option price per Share shall be the Fair Market Value at the
time the Option is granted; provided, however, that the Option price per Share for
any Incentive Stock Option granted to a Key Employee shall equal 110% of the Fair Market Value at
the time the Incentive Stock Option is granted.



     (c) Vesting. The Administrator, in its sole discretion shall determine the vesting
provisions applicable to the Options under the Plan, and such vesting provisions, including, but
not limited to, time-based and/or performance-based vesting, shall be set forth in the Award
Agreement. The vesting provisions in individual Award Agreements may vary. The Administrator
reserves the right, in its sole discretion, to waive or reduce the vesting requirements applicable
to any Options at any time.



 









 





     (d) Limitation on Amount of Incentive Stock Options Granted. Options shall be treated
as Incentive Stock Options only to the extent that the aggregate Fair Market Value of Stock with
respect to which Incentive Stock Options are exercisable for the first time by any optionholder
during any calendar year (whether under the terms of the Plan or any other stock option plan of the
Company or of its parent or any corporate Subsidiary) is $100,000 or less. To the extent that such
aggregate Fair Market Value exceeds $100,000, the Options shall be treated as Nonqualified Stock
Options. Fair Market Value shall be determined as of the time the Option with respect to such Stock
is granted.



     (e) Limitations on Granting of Options. The Administrator shall have the authority and
discretion to grant to an eligible employee either Incentive Stock Options or Nonqualified Stock
Options or both, but shall clearly designate the nature of each Option at the time of grant in the
Option agreement. A Participant who is a consultant or non-employee director may only receive
Nonqualified Stock Options.



     (f) Payment of Option Price Upon Exercise. The option price of the Shares as to which
an Option shall be exercised shall be paid to the Company at the time of exercise in cash or such
other method approved by the Administrator.



     (g) Termination of Employment or Relationship. Unless otherwise determined by the
Administrator, in its sole discretion or as otherwise set forth in an Award Agreement:



          (i) In the event of (x) the termination of a Participant’s employment relationship with the
Company or any Subsidiary thereof by the Company or any Subsidiary thereof for Cause (within the
meaning of clause (a) or (e) of the definition thereof applicable to employees), or (y) the
termination of a Participant’s consulting relationship with the Company or any Subsidiary thereof
by the Company or any Subsidiary thereof for Cause (within the meaning of clause (a) of the
definition thereof applicable to consultants), (i) any unvested portion of the Participant’s Option
shall terminate on the date of termination and (ii) the Participant may exercise any portion of the
Participant’s Option that was vested and exercisable on the date of his or her termination or
relationship until the 30th day following the date of the termination of such employment
or consulting relationship, and any portion of such Option not exercised within such period shall
be forfeited.




          (ii) in the event of (x) the termination of a Participant’s employment relationship with the
Company or any Subsidiary thereof by the Company or any Subsidiary thereof for Cause (other than
within the meaning of clause (a) or (e) of the definition thereof applicable to employees), (y) the
termination of a Participant’s consulting relationship with the Company or any Subsidiary thereof
by the Company or any Subsidiary thereof for Cause (other than within the meaning of clause (a) of
the definition thereof applicable to consultants), or (z) in the case of a Participant who is a
non-employee director of the Company, the termination of Participant’s status as a director of the
Company for Cause, the Participant’s Option (whether or not vested) shall terminate on the date of
such termination.




          (iii) With respect to a Participant who is an employee or consultant of the Company or any
Subsidiary thereof, in the event of (x) the termination by the Company or any Subsidiary




 









 







thereof (other than for Cause) of the Participant’s employment or consulting relationship with the
Company or any Subsidiary thereof or (y) the resignation of the Participant for any reason as an
employee of, or consultant to, the Company or any Subsidiary thereof, including, but not limited
to, on account of retirement (other than on account of death or Disability), (i) any unvested
portion of the Participant’s Option shall terminate and (ii) the Participant may exercise for a
period of time ending on the earlier of (x) 3 months after the date of termination and (y) the
expiration of the Option Period, any portion of the Participant’s Option that was vested and
exercisable on the date of his or her termination of employment or relationship, and any portion of
such Option not exercised within such period shall be forfeited.




          (iv) With respect to a Participant who is a non-employee director of the Company, in the event
of the termination (other than for Cause) of the Participant as a director of the Company or the
resignation by the Participant as a director of the Company (other than on account of death or
Disability), (i) any unvested portion of the Participant’s Option shall terminate and (ii) the
Participant may exercise for a period of time ending on the earlier of (a) 3 months after the date
of termination and (b) the expiration of the Option Period, any portion of the Participant’s Option
that was vested and exercisable on the date of his or her termination of relationship, and any
portion of such Option not exercised within such period shall be forfeited.




          (v) In the event of the termination of the Participant’s employment or consulting relationship
with the Company or any Subsidiary thereof, or, in the case of a Participant who is a non-employee
director of the Company, the termination of the Participant’s status as a director of the Company,
on account of the Participant’s death or Disability, (i) any unvested portion of the Participant’s
Option shall terminate and (ii) the Participant (or his or her personal representative) may
exercise for a period of time ending on the earlier of (x) one year from the date of such
termination or (y) the expiration of the Option Period, any portion of the Participant’s Option
that was vested and exercisable on the date of such termination, and any portion of such Option not
exercised within such period shall be forfeited.




     (h) Company Repurchase Right.



          (i) Unless otherwise provided in an Award Agreement, in the event of (x) the termination of a
Participant’s employment relationship with the Company or any Subsidiary thereof by the Company or
any Subsidiary thereof for Cause (within the meaning of clause (a) or (e) of the definition thereof
applicable to employees), or (y) the termination of a Participant’s consulting relationship with
the Company or any Subsidiary thereof by the Company or any Subsidiary thereof for Cause (within
the meaning of clause (a) of the definition thereof applicable to consultants), the Company shall
have the right, but not the obligation, to purchase from the Participant and to cause the
Participant to sell the number of Shares equal to the Shares issued to Participant in connection
with the exercise of an Option for an aggregate amount equal to the Fair Market Value of the Shares
on the date of such termination. Any amount payable to the Participant under this Section 6(h)(i)
shall be payable in cash upon the closing of the repurchase of the Shares.




          (ii) Unless otherwise provided in an Award Agreement, in the event of (x) the termination of a
Participant’s employment relationship with the Company or any Subsidiary




 









 







thereof by the Company or any Subsidiary thereof for Cause (other than within the meaning of clause
(a) or (e) of the definition thereof applicable to employees), (y) the termination of a
Participant’s consulting relationship with the Company or any Subsidiary thereof by the Company or
any Subsidiary thereof for Cause (other than within the meaning of clause (a) of the definition
thereof applicable to consultants), or (z) the termination of the status of a Participant as a
director of the Company and, prior to such termination, the Participant was a non-employee director
of the Company, the Company shall have the right, but not the obligation, to purchase from the
Participant and to cause the Participant to sell the number of Shares equal to the Shares issued to
Participant in connection with the exercise of an Option for an aggregate amount equal to the lower
of (i) the Fair Market Value of the Shares on the date of such termination and (ii) the price paid
by the Participant for the Shares. Any amount payable to the Participant under this Section
6(h)(ii) shall be payable in cash upon the closing of the repurchase of the Shares.




     (i) Transferability of Options. No Option granted under the Plan and no right arising
under such Option shall be transferable other than by will or by the applicable laws of descent and
distribution. During the lifetime of the Participant an Option shall be exercisable only by such
Participant. Any Option exercisable at the date of the Participant’s death and transferred by will
or by the applicable laws of descent and distribution shall be exercisable in accordance with the
terms of such Option by the executor or administrator, as the case may be, of the Participant’s
estate (each, a “Designated Beneficiary”) for a period provided in paragraph (g)(iv) above or such
longer period as the Administrator may determine, and shall then terminate.



     (j) Investment Representation. Each Award Agreement may contain an undertaking that,
upon demand by the Administrator for such a representation, the Participant or his or her
Designated Beneficiary, as the case may be, shall deliver to the Administrator at the time of any
exercise of an Option a written representation that the Shares to be acquired upon such exercise
are to be acquired for such Participant’s or Designated Beneficiary’s own account and not with a
view to, or for resale in connection with, any distribution. Upon such demand, delivery of such
representation prior to the delivery of any Shares issued upon exercise of an Option shall be a
condition precedent to the right of the Participant or his or her Designated Beneficiary to
purchase any Shares.



     (k) Optionholders to Have No Rights as Stockholders. No optionholder shall have any
rights as a stockholder with respect to any Shares subject to such optionholder’s Option prior to
the exercise of any Option.



     (l) Other Option Provisions. The form of Award Agreement applicable to Options
authorized by the Plan may contain such other provisions, consistent with this Plan, as the
Administrator may, from time to time, determine, including, without limitation, covenants of the
optionholders to comply, from and after the exercise of Options, with the provisions of the Company
Charter that by their terms are applicable to holders of shares of any class or series of capital
stock of the Company as a condition to acquiring and holding title to or a beneficial interest in
such shares.



     (m) Notification of Sales of Common Stock. Any optionholder who disposes of Shares
acquired upon the exercise of an Incentive Stock Option either (a) within two (2) years from the



 









 




date of the grant of the Incentive Stock Option under which the Common Stock was acquired or (b)
within one (1) year after the transfer of such Shares to the optionholder, shall notify the Company
of such disposition and of the amount realized upon such disposition.




     (n) Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair
Market Value (determined at the time of grant) of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by any Participant during any calendar year (under
all plans of the Company and its Subsidiaries) exceeds one hundred thousand dollars ($100,000), the
Options or portions thereof which exceed such limit (according to the order in which they were
granted) shall be treated as Nonqualified Stock Options.



     (o) Modification. No modification (within the meaning of U.S. Treasury Regulation
1.409A-1(b)(5)(v)(B)) shall be made with respect to any Option if such modification would result in
the Option constituting a deferral of compensation, and no extension (within the meaning of U.S.
Treasury Regulation 1.409A-1(b)(5)(v)(C)) shall be made with respect to any Option if such
extension would result in the Option having an additional deferral feature from the Date of Grant,
in each case without the Participant’s consent.



     7. Restricted Stock.



     (a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the
Administrator, at any time and from time to time, may grant Awards of Restricted Stock to
Participants in such amounts as the Administrator shall determine.



     (b) Restricted Stock Agreement. Each Award applicable to Restricted Stock shall be
evidenced by an Award Agreement that shall specify the restrictions, including restrictions
creating a substantial risk of forfeiture, the Period(s) of Restriction, the number of Shares of
Restricted Stock granted, and such other provisions as the Administrator shall determine.
Restrictions on Restricted Stock shall lapse, or the Restricted Stock shall vest, at such time(s)
and in such manner and subject to such conditions as the Administrator shall in each instance
determine, which need not be the same for each Award or for each Participant.



     (c) Transferability. Except as provided in this Section 7, the Shares of Restricted
Stock granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated until the end of the applicable Period of Restriction established by the Administrator
and specified in the applicable Award Agreement, or upon earlier satisfaction of any other
conditions, as specified by the Administrator in its sole discretion and set forth in the Award
Agreement. All rights with respect to the Restricted Stock granted to a Participant under the Plan
shall be available during his or her lifetime only to such Participant, or in the event of the
Participant’s legal incapacity, to the Participant’s legal guardian or representative.



     (d) Other Restrictions. The Administrator shall impose such other conditions and/or
restrictions on any Shares of Restricted Stock granted pursuant to the Plan as it may deem
advisable and as set forth in an Award Agreement including, without limitation, a requirement that
Participants pay a stipulated purchase price for each Share of Restricted Stock, time-based and/or
performance-based restrictions on vesting, if applicable, covenants of the Participants to



 









 




comply with the provisions of the Company Charter that by their terms are applicable to holders of
shares of any class or series of capital stock of the Company as a condition to acquiring and
holding title to or a beneficial interest in such shares, and/or restrictions under applicable
Federal or state securities laws.




     (e) Certificates. The Company or its designee shall retain the certificates
representing Shares of Restricted Stock in the Company’s possession until such time as all
conditions and/or restrictions applicable to such Shares have been satisfied.



     (f) Last Day of Period of Restriction. Except as otherwise provided in this Section 7
or an Award Agreement, Shares of Restricted Stock covered by each Restricted Stock grant made under
the Plan shall become freely transferable by the Participant after the last day of the applicable
Period of Restriction.



     (g) Voting Rights. During the Period of Restriction, Participants holding Shares of
Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares.



     (h) Dividends and Other Distributions. During the Period of Restriction, Participants
holding Shares of Restricted Stock granted hereunder may be credited with regular cash dividends,
if any, paid with respect to the underlying Shares while they are so held. The Administrator may
apply any restrictions to the dividends that the Administrator deems appropriate.



     (i) Termination of Employment or Relationship with the Company. Each Award Agreement
shall set forth the extent to which the Participant shall have the right to retain unvested
Restricted Shares following termination of the Participant’s employment or consulting relationship
with the Company or any Subsidiary thereof or the termination of the Participant’s status as a
director of the Company. Such provisions shall be determined in the sole discretion of the
Administrator, shall be included in the Award Agreement entered into with each Participant, need
not be uniform among all Shares of Restricted Stock issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination of the Participant’s employment or consulting
relationship with the Company or any Subsidiary thereof or the termination of the Participant’s
status as a director of the Company.



     8. Restricted Share Units.



     (a) Grant of Restricted Share Units. Subject to the terms and provisions of the Plan,
the Administrator, at any time and from time to time, may grant Awards of Restricted Share Units to
Participants in such amounts as the Administrator shall determine.



     (b) Restricted Share Unit Agreement. Each Award applicable to Restricted Share Units
shall be evidenced by an Award Agreement that shall specify the restrictions, including
restrictions creating a substantial risk of forfeiture, the Period(s) of Restriction, the number of
Restricted Share Units, and such other provisions as the Administrator shall determine.
Restrictions on Restricted Share Units shall lapse or the Restricted Share Units shall vest at such
time(s) and in such manner and subject to such conditions as the Administrator shall in each
instance determine, which need not be the same for each Award or for each Participant.



 









 





     (c) Transferability. Except as provided in this Section 8, the Restricted Share Units
granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated. All rights with respect to the Restricted Share Units granted to a Participant under
the Plan shall be available during his or her lifetime only to such Participant, or in the event of
the Participant’s legal incapacity, to the Participant’s legal guardian or representative.



     (d) Other Restrictions. The Administrator shall impose such other conditions and/or
restrictions on any Restricted Share Units granted pursuant to the Plan as it may deem advisable
and as set forth in an Award Agreement including, without limitation, a requirement that
Participants pay a stipulated purchase price for each Restricted Share Unit, time-based and/or
performance-based restrictions on vesting, if applicable, covenants of the Participants to comply
with the provisions of the Company Charter that by their terms are applicable to holders of shares
of any class or series of capital stock of the Company as a condition to acquiring and holding
title to or a beneficial interest in such shares, and/or restrictions under applicable Federal or
state securities laws.



     (e) Rights as a Stockholder. Until the Restricted Share Units have vested (the Period
of Restriction has lapsed) and Shares are issued in connection with the Restriction Share Units,
the Participant shall have no rights as a stockholder of the Company (including, but not limited
to, voting or dividend rights).



     (f) Last Day of Period of Restriction. Except as otherwise provided in this Section 8
or an Award Agreement, Shares issued in connection with Restricted Share Units granted under the
Plan shall become freely transferable by the Participant after the last day of the applicable
Period of Restriction.



     (g) Termination of Employment or Relationship with the Company. Each Award Agreement
shall set forth the extent to which the Participant shall have the right to retain unvested
Restricted Share Units following termination of the Participant’s employment or consulting
relationship with the Company or any Subsidiary thereof or the termination of the Participant’s
status as a director of the Company. Such provisions shall be determined in the sole discretion of
the Administrator, shall be included in the Award Agreement entered into with each Participant,
need not be uniform among all Restricted Share Units issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination of the Participant’s employment or consulting
relationship with the Company or any Subsidiary thereof or the termination of the Participant’s
status as a director of the Company.



     9. Going Private Transaction. Notwithstanding any provision of the Plan to the
contrary, unless otherwise determined by the Administrator, in its sole discretion or as otherwise
set forth in an Award Agreement, if there should be a Going Private Transaction (as defined below),
the Company shall give each Participant written notice of such Going Private Transaction as
promptly as practicable prior to the effective date thereof and (i) any unvested Awards as of the
date of the Going Private Transaction shall become vested and immediately exercisable as of the
effective date of such Going Private Transaction and (ii) the Administrator may determine, in its



 









 




sole discretion, the treatment of any Awards which are exercisable or vested at the time of
the Going Private Transaction or become exercisable or vested pursuant to this Section 9.




     For purposes of the Plan, a “Going Private Transaction” means any transaction or series of
transactions which (a) causes any class of equity securities of the Company which is subject to
Section 12(g) or Section 15(d) of the Exchange Act, to be held of record by less than 300 persons;
or (b) causes any class of equity securities of the Company which is either listed on a national
securities exchange or authorized to be quoted in an inter-dealer quotation system of a registered
national securities association to be neither listed on any national securities exchange nor
authorized to be quoted on an inter-dealer quotation system of a registered national securities
association.



     Notwithstanding the forgoing, delivery or payment under any Award that provides for a deferral
of compensation for purposes of Section 409A of the Code shall occur upon a Going Private
Transaction pursuant to this Section 9 only if the Going Private Transaction is also a Qualifying
Change in Control.



     10. Citizenship Restriction. If the Participant is not a citizen of the United States
by birth, naturalization or as otherwise authorized by applicable law, and if, in the reasonable
determination of the Administrator, the Participant’s purchase of shares of Common Stock upon the
exercise of any Option on the closing date for such exercise would result in beneficial ownership
(as defined below) by Non-U.S. Citizens (as defined below) of shares of such class of capital stock
of the Company in the aggregate in excess of the Permitted Percentage (as defined below) for such
class, then, unless otherwise specified in the applicable Award Agreement for such Option, the
Administrator, upon written notice to the Participant, may, in its sole discretion, elect that (a)
all or a portion of such Option, as determined by the Administrator in its sole discretion, shall
be deemed not to have been exercised with respect to the shares of Common Stock to be purchased on
such closing date and (b) the Participant’s right to exercise such Option, in whole or in part (as
determined by the Administrator), shall be suspended until the first date, during the remaining
term of such Option, on which the Participant’s purchase of shares of Common Stock upon such
exercise of such Option would not result in beneficial ownership by Non-U.S. Citizens of shares of
such class of capital stock of the Company in the aggregate in excess of the Permitted Percentage
for such class. For purposes of this Section 10, the terms “beneficial ownership,” “Non-U.S.
Citizen,” and “Permitted Percentage” shall have the meanings ascribed to them in the Company’s
certificate of incorporation, as in effect from time to time.



     11. Adjustments in Event of Change in Common Stock. In the event of any change in the
Common Stock by reason of any Stock dividend, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of Shares, or of any similar change affecting the
Common Stock, the number and kind of Shares which thereafter may be optioned and sold under the
Plan and the number and kind of Shares subject to Award in outstanding Award Agreements and the
purchase price per share thereof, if any, may be appropriately adjusted consistent with such change
in such manner as the Board may deem equitable to prevent substantial dilution or enlargement of
the rights granted to, or available for, Participants in the Plan. Without limiting the generality
of the foregoing, if the Common Stock is recapitalized into



 









 




multiple classes of Common Stock, the kind of Shares subject to Award shall be those common
Shares intended for broad general ownership rather than any class of special super-voting or other
control stock.




     12. Plan and Awards Not to Confer Rights with Respect to Continuance of Employment or
Relationship. Neither the Plan nor any action taken thereunder shall be construed as giving any
Participant any right to continue such Participant’s relationship with the Company or a Subsidiary
thereof, nor shall it give any employee the right to be retained in the employ of the Company or a
Subsidiary thereof, or interfere in any way with the right of the Company or a Subsidiary thereof
to terminate any Participant’s employment or relationship, as the case may be, at any time with or
without Cause.



     13. No Claim or Right Under the Plan. No employee or consultant of the Company or any
of its Subsidiaries, and no non-employee director of the Company, shall at any time have the right
to be selected as a Participant in the Plan nor, having been selected as a Participant and granted
an Award, to be granted any additional Award.



     14. Listing and Qualification of Shares. The Plan, the grant and exercise of Awards
thereunder, and the obligation of the Company to sell and deliver Shares under such Awards, shall
be subject to all applicable Federal or state laws, rules and regulations and to such approvals by
any government or regulatory agency as may be required. The Company, in its discretion, may
postpone the issuance or delivery of Shares upon any exercise of an Award until completion of any
stock exchange listing, or other qualification of such Shares under any state or Federal law, rule
or regulation as the Company may consider appropriate, and may require any Award holder to make
such representations and furnish such information as it may consider appropriate in connection with
the issuance or delivery of the Shares in compliance with applicable laws, rules and regulations.
Certificates representing Shares acquired by the exercise of an Award may bear such legend as the
Company may consider appropriate under the circumstances.



     15. Taxes. The Company may make such provisions and take such steps as it may deem
necessary or appropriate for the withholding of all federal, state, local and other taxes required
by law to be withheld with respect to Awards under the Plan including, but not limited to (a)
reducing the number of Shares otherwise deliverable, based upon their Fair Market Value on the date
of exercise, to permit deduction of the amount of any such withholding taxes from the amount
otherwise payable under the Plan, (b) deducting the amount of any such withholding taxes from any
other amount then or thereafter payable to a Participant, or (c) requiring a Participant,
beneficiary or legal representative to pay to the Company the amount required to be withheld or to
execute such documents as the Company deems necessary or desirable to enable it to satisfy its
withholding obligations as a condition of releasing the Share.



     16. No Liability of Administrator. No member of the Administrator shall be personally
liable by reason of any contract or other instrument executed by such member or on his or her
behalf in his or her capacity as a member of the Administrator nor for any mistake of judgment made
in good faith or actions taken by such person as a member of the Administrator in good faith, and
the Company shall indemnify and hold harmless each employee, officer or director of



 









 




the Company to whom any duty or power relating to the administration or interpretation of the
Plan may be allocated or delegated, against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim with the approval of the Board) arising
out of any act or omission to act in connection with the Plan unless such act arises out of the
member’s own fraud or bad faith.




     17. Amendment or Termination. The Administrator may, with prospective or retroactive
effect, amend, suspend or terminate the Plan or any portion thereof at any time and for any reason;
provided, however, that no amendment or other action that requires stockholder
approval in order for the Plan to continue to comply with any applicable law, rule or regulation
shall be effective unless such amendment or other action shall be approved by the requisite vote of
stockholders of the Company entitled to vote thereon and no repricing of outstanding Awards under
the Plan shall occur without stockholder approval. The Plan and all compensation derived therefrom
are intended not to constitute compensation deferred under a nonqualified deferred compensation
plan as contemplated in Section 409A of the Code. Accordingly, notwithstanding any other provision
of the Plan, the provisions of the Plan will be interpreted consistent with the preceding sentence,
and the Administrator may modify the Plan to the extent it deems advisable to prevent the
application of Section 409A of the Code.



     18. Compliance with Section 162(m) of the Code. At all times when Section 162(m) of
the Code is applicable, all Awards granted under the Plan shall comply with the requirements of
Section 162(m) of the Code; provided, however, that in the event the Administrator
determines that such compliance is not desired with respect to any Award of Restricted Stock or
Restricted Share Units, compliance with Section 162(m) of the Code will not be required for such
Award. In addition, in the event that changes are made to Section 162(m) of the Code to permit
greater flexibility with respect to any Award or Awards available under the Plan, the Administrator
may, subject to Section 17, make any adjustments it deems appropriate.



     19. Captions. The captions preceding the sections of the Plan have been inserted
solely as a matter of convenience and shall not in any manner define or limit the scope or intent
of any provision of the Plan.



     20. Governing Law. The Plan and all rights thereunder shall be governed by and
construed in accordance with the laws of the State of New York applicable to contracts made and to
be performed entirely within such State.



     21. Severability. In the event that any provision of the Plan shall be held illegal or
invalid for any reason, such illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not
been included.



     22. Effective Date. The Plan became effective on September 20, 2005, the date upon
which it was adopted by the Board.



     23. Separation from Service. With respect to any Award that provides for a deferral
of compensation for purposes of Section 409A of the Code and that is payable under its terms on a



 









 




Participant’s termination of employment (or other service relationship), (i) any references
herein and in the Participant’s Award Agreement to the Participant’s termination of employment (or
other service relationship) or date of termination of employment (or other service relationship)
shall be meant to refer to the Participant’s Separation from Service or date of Separation from
Service, as the case may be; and (ii) notwithstanding any provision herein or in the Participant’s
Award Agreement to the contrary, if at the time of payment under such an Award, the Participant is
a “key employee” (as defined below), no such payment shall occur prior to the earlier of (A) the
expiration of the six (6)-month period measured from the date of the Participant’s Separation from
Service, or (B) the date of the Participant’s death. Upon the expiration of the six (6)-month
deferral period referred to in the preceding sentence or the Participant’s death, all amounts that
would otherwise have been paid during such period but for this Section 23 shall be paid and any
amounts that remain to be paid under the Award shall be paid in accordance with the terms hereof
and of the Award Agreement. The term “key employee” shall have the same meaning as assigned to
that term under Section 416(i) of the Code, without regard to Section 416(i)(5) of the Code, and
whether a Participant is a key employee shall be determined in accordance with written guidelines
adopted by the Company for such purposes (or, in the absence of such guidelines, in accordance with
the default rules for determining specified employees under Section 409A of the Code).