Filed by Bowne Pure Compliance





Exhibit 10.5




SYSCOMM INTERNATIONAL CORPORATION

2001 FLEXIBLE STOCK PLAN




(As Amended and Restated on December 4, 2008)



 


 









 








TABLE OF CONTENTS




(As Amended and Restated on December 4, 2008)




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	1. NAME AND PURPOSE
	 	 	1	 
	1.1. Name
	 	 	 1	 
	1.2. Purpose
	 	 	 1	 
	 
	 	 	 	 
	2. DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION
	 	 	1	 
	2.1. General Definitions
	 	 	 1	 
	2.1.1. Affiliate
	 	 	1	 
	2.1.2. Agreement
	 	 	1	 
	2.1.3. Benefit
	 	 	1	 
	2.1.4. Board
	 	 	1	 
	2.1.5. Cash Award
	 	 	1	 
	2.1.6. Change of Control
	 	 	2	 
	2.1.7. Code
	 	 	3	 
	2.1.8. Company
	 	 	3	 
	2.1.9. Committee
	 	 	3	 
	2.1.10. Common Stock
	 	 	4	 
	2.1.11. Effective Date
	 	 	4	 
	2.1.12. Employee
	 	 	4	 
	2.1.13. Employer
	 	 	4	 
	2.1.14. Exchange Act
	 	 	4	 
	2.1.15. Fair Market Value
	 	 	4	 
	2.1.16. Fiscal Year
	 	 	4	 
	2.1.17. ISO
	 	 	5	 
	2.1.18. NQSO
	 	 	5	 
	2.1.19. Option
	 	 	5	 
	2.1.20. Other Stock Based Award
	 	 	5	 
	2.1.21. Parent
	 	 	5	 
	2.1.22. Participant
	 	 	5	 
	2.1.23. Performance Based Compensation
	 	 	5	 
	2.1.24. Performance Share
	 	 	5	 
	2.1.25. Plan
	 	 	6	 
	2.1.26. Reload Option
	 	 	6	 
	2.1.27. Restricted Stock
	 	 	6	 
	2.1.28. Rule 16b-3
	 	 	6	 
	2.1.29. SEC
	 	 	6	 
	2.1.30. Share
	 	 	6	 
	2.1.31. SAR
	 	 	6	 
	2.1.32. Subsidiary
	 	 	6	 
	2.2. Other Definitions
	 	 	 6	 
	2.3. Conflicts
	 	 	 6	 






 


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	 	 	Page	 
	 
	 	 	 	 
	3. COMMON STOCK
	 	 	7	 
	3.1. Number of Shares
	 	 	 7	 
	3.2. Reusage
	 	 	 7	 
	3.3. Adjustments
	 	 	 7	 
	 
	 	 	 	 
	4. ELIGIBILITY
	 	 	7	 
	4.1. Determined By Committee.
	 	 	 7	 
	 
	 	 	 	 
	5. ADMINISTRATION
	 	 	8	 
	5.1. Committee
	 	 	 8	 
	5.2. Authority
	 	 	 8	 
	5.3. Delegation
	 	 	 9	 
	5.4. Determination
	 	 	 9	 
	 
	 	 	 	 
	6. AMENDMENT
	 	 	9	 
	6.1. Power of Board
	 	 	 9	 
	6.2. Limitation
	 	 	 9	 
	 
	 	 	 	 
	7. TERM AND TERMINATION
	 	 	9	 
	7.1. Term
	 	 	 9	 
	7.2. Termination
	 	 	9	 
	 
	 	 	 	 
	8. MODIFICATION OR TERMINATION OF BENEFITS
	 	 	10	 
	8.1. General
	 	 	10	 
	8.2. Committee’s Right
	 	 	10	 
	 
	 	 	 	 
	9. CHANGE OF CONTROL
	 	 	10	 
	9.1. Vesting and Payment
	 	 	10	 
	9.2. Other Action
	 	 	10	 
	 
	 	 	 	 
	10. AGREEMENTS AND CERTAIN BENEFITS
	 	 	11	 
	10.1. Grant Evidenced by Agreement
	 	 	11	 
	10.2. Provisions of Agreement
	 	 	11	 
	10.3. Transferability
	 	 	11	 
	 
	 	 	 	 
	11. REPLACEMENT AND TANDEM AWARDS
	 	 	11	 
	11.1. Replacement
	 	 	11	 
	11.2. Tandem Awards
	 	 	11	 
	 
	 	 	 	 
	12. PAYMENT AND WITHHOLDING
	 	 	12	 
	12.1. Payment
	 	 	12	 
	12.3. Dividend Equivalents
	 	 	12	 
	12.3. Withholding
	 	 	12	 
	 
	 	 	 	 
	13. OPTIONS
	 	 	13	 
	13.1. Types of Options
	 	 	13	 
	13.2. Grant of ISOs and Option Price
	 	 	13	 
	13.3. Other Requirements for ISOs
	 	 	13	 






 


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	 	 	Page	 
	 
	 	 	 	 
	13.4. NQSOs
	 	 	13	 
	13.5. Determination by Committee
	 	 	13	 
	 
	 	 	 	 
	14. SARS
	 	 	13	 
	14.1. Grant and Payment
	 	 	13	 
	14.2. Grant of Tandem Award
	 	 	13	 
	14.3. ISO Tandem Award
	 	 	13	 
	14.4. Payment of Award
	 	 	13	 
	 
	 	 	 	 
	15. ANNUAL LIMITATIONS
	 	 	14	 
	15.1. Limitation on Options and SARs
	 	 	14	 
	15.2. Computations
	 	 	14	 
	 
	 	 	 	 
	16. RESTRICTED STOCK AND PERFORMANCE SHARES
	 	 	14	 
	16.1. Restricted Stock
	 	 	14	 
	16.2. Cost of Restricted Stock
	 	 	14	 
	16.3. Non-Transferability
	 	 	14	 
	16.4. Performance Shares
	 	 	15	 
	16.5. Grant
	 	 	15	 
	 
	 	 	 	 
	17. CASH AWARDS
	 	 	15	 
	17.1. Grant
	 	 	15	 
	17.2. Rule 16b-3
	 	 	15	 
	17.3. Restrictions
	 	 	15	 
	 
	 	 	 	 
	18. OTHER STOCK BASED AWARDS AND OTHER BENEFITS
	 	 	15	 
	18.1. Other Stock Based Awards
	 	 	15	 
	18.2. Other Benefits
	 	 	15	 
	 
	 	 	 	 
	19. MISCELLANEOUS PROVISIONS
	 	 	16	 
	19.1. Underscored References
	 	 	16	 
	19.2. Number and Gender
	 	 	16	 
	19.3. Unfunded Status of Plan
	 	 	16	 
	19.4. Termination of Employment
	 	 	16	 
	19.5. Designation of Beneficiary
	 	 	16	 
	19.6. Governing Law
	 	 	17	 
	19.7. Purchase for Investment
	 	 	17	 
	19.8. No Employment Contract
	 	 	17	 
	19.9. No Effect on Other Benefits
	 	 	17	 







 


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SYSCOMM INTERNATIONAL CORPORATION

2001 FLEXIBLE STOCK PLAN




(As Amended and Restated on December 4, 2008)




1. NAME AND PURPOSE





1.1.
Name.




The name of this Plan is the “SysComm International Corporation 2001 Flexible Stock Plan.”




1.2.
Purpose.



The Company has established this Plan to attract, retain, motivate and reward Employees and
other individuals, to encourage ownership of the Company’s Common Stock by Employees and other
individuals, and to promote and further the best interests of the Company by granting cash and
other awards. This Plan is intended to be “Broadly Based” (as such term is used for purposes of
rules promulgated by The National Association of Securities Dealers).



2. DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION





2.1. General Definitions.



The following words and phrases, when used in the Plan, unless otherwise specifically defined or unless the context clearly otherwise requires, shall have the following respective meanings:




2.1.1. Affiliate.



Parent or Subsidiary of the Company.




2.1.2. Agreement.



The document which evidences the grant of any Benefit under the Plan and which sets forth the Benefit and the terms, conditions and provisions of, and restrictions relating to, such Benefit.




2.1.3. Benefit.



Any benefit granted to a Participant under the Plan.




2.1.4. Board.



The Board of Directors of the Company.




2.1.5. Cash Award.



A Benefit payable in the form of cash.


 


 









 






2.1.6. Change of Control.




The occurrence of any of the following:



(a) An acquisition of any Common Stock or other voting securities of the Company entitled to
vote generally for the election of directors (the “Voting Securities”) by any “Person” or “Group”
(as each such term is used for purposes of Section 13(d) or 14(d) of the Exchange Act), immediately
after which such Person or Group, as the case may be, has “Beneficial Ownership” (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 20% of the then outstanding
shares of Common Stock or the combined voting power of the Company’s then outstanding Voting
Securities; provided, however, that in determining whether a Change of Control has occurred, shares
of Common Stock or Voting Securities that are acquired in a Non-Control Acquisition (as defined
below) shall not constitute an acquisition which would cause a Change of Control. A “Non-Control
Acquisition” shall mean an acquisition by (i) the Company, (ii) any Subsidiary or (iii) any
employee benefit plan maintained by the Company or any Subsidiary, including a trust forming part
of any such plan (an “Employee Benefit Plan”);



(b) When, during any 2-year period, individuals who, at the beginning of the 2-year period,
constitute the Board (the “Incumbent Board”), cease for any reason to constitute at least 50% of
the members of the Board; provided, however, that (i) if the election or nomination for election by
the Company’s shareholders of any new director was approved by a vote of at least two-thirds of the
Incumbent Board, such new director shall, for purposes hereof, be deemed to be a member of the
Incumbent Board; and (ii) no individual shall be deemed to be a member of the Incumbent Board if
such individual initially assumed office as a result of either an actual or threatened “Election
Contest” (as described in Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person or Group other than the
Board (a “Proxy Contest”) including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest;




(c) The consummation of:




(i) a merger, consolidation or reorganization involving the Company or any Subsidiary,
unless the merger, consolidation or reorganization is a Non-Control Transaction. A
“Non-Control Transaction” shall mean a merger, consolidation or reorganization of the
Company or any Subsidiary where:




(A) the shareholders of the Company immediately prior to the merger,
consolidation or reorganization own, directly or indirectly, immediately following
such merger, consolidation or reorganization, at least 50% of the combined voting
power of the outstanding voting securities of the corporation resulting from such
merger, consolidation or reorganization (the “Surviving Corporation”) in
substantially the same proportion as their ownership of the Common Stock or Voting
Securities, as the case maybe, immediately prior to the merger, consolidation or
reorganization,


 


2









 







(B) the individuals who were members of the Incumbent Board immediately prior
to the execution of the agreement providing for the merger, consolidation or
reorganization constitute at least two-thirds of the members of the board of
directors of the Surviving Corporation, or a corporation beneficially owning,
directly or indirectly, a majority of the voting securities of the Surviving
Corporation, and




(C) no Person or Group, other than (1) the Company, (2) any Subsidiary, (3) any
Employee Benefit Plan or (4) any other Person or Group who, immediately prior to the
merger, consolidation or reorganization, had Beneficial Ownership of not less than
20% of the then outstanding Voting Securities or Common Stock, has Beneficial
Ownership of 20% or more of the combined voting power of the Surviving Corporation’s
then outstanding voting securities or common stock;




(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 Subsidiary).



Notwithstanding the foregoing, a Change of Control shall not be deemed to have occurred solely
because any Person or Group (the “Subject Person”) acquired Beneficial Ownership of more than the
permitted amount of the then outstanding Voting Securities or Common Stock of the Company as a
result of an acquisition of Voting Securities or Common Stock by the Company which, by reducing the
number of shares of Voting Securities or Common Stock then outstanding, increases the proportional
number of shares beneficially owned by the Subject Person; provided, however, that if a Change of
Control would have occurred (but for the operation of this sentence) as a result of the acquisition
of Voting Securities or Common Stock by the Company, and after such acquisition by the Company, the
Subject Person becomes the beneficial owner of any additional shares of Voting Securities or Common
Stock, which increases the percentage of the then outstanding shares of Voting Securities or Common
Stock beneficially owned by the Subject Person, then a Change of Control shall be deemed to have
occurred. In addition, notwithstanding the foregoing, the acquisition or ownership of any Common
Stock or Voting Securities by Applied Digital Solutions, Inc. and its Affiliates (determined as if
it was the Company) shall not cause or result in a Change of Control.




2.1.7. Code.



The Internal Revenue Code of 1986, as amended. Any reference to the Code includes the regulations promulgated pursuant to the Code.




2.1.8. Company.



SysComm
International Corporation.




2.1.9. Committee.



The
Committee described in Section 5.1.


 


3









 










2.1.10. Common Stock.



The Company’s common stock which presently has a par value of $.01 per Share.




2.1.11. Effective Date.



The date that the Plan is approved by the shareholders of the Company which must occur within one year before or after approval by the Board. Any grants of Benefits prior to the approval by the shareholders of the Company shall be void if such approval is not obtained.




2.1.12. Employee.



Any person employed by the Employer.




2.1.13. Employer.



The Company and all Affiliates.




2.1.14. Exchange Act.



The Securities Exchange Act of 1934, as amended.




2.1.15. Fair Market Value.




(i) If the Shares are traded on the OTC Bulletin Board, the closing price of Shares on
the OTC Bulletin Board on a given date, or, in the absence of sales on a given date, the
closing price on the OTC Bulletin Board on the last day on which a sale of Shares on the OTC
Bulletin Board occurred prior to such date.




(ii) If the Shares are listed on any established stock exchange or a national market
system, including without limitation the National Market System of the National Association
of Securities Dealers, Inc. Automated Quotation (“NASDAQ”) System, the closing sales price
for the Shares (or the closing bid, if no sales were reported) as quoted on such system or
exchange (or the exchange with the greatest volume of trading in Shares) on the date of
determination, as reported in The Wall Street Journal or such other source as the Committee
deems reliable.



(iii) In the absence of an established market for the Shares, and if the Shares are not traded on the OTC Bulletin Board, as determined in good faith by the Committee.





2.1.16. Fiscal Year.



The taxable year of the Company which is the calendar year.


 


4









 








2.1.17. ISO.



An Incentive Stock Option as defined in Section 422 of the Code.




2.1.18. NQSO.



A non-qualified stock Option, which is an Option that does not qualify as an ISO.




2.1.19. Option.



An option to purchase Shares granted under the Plan.




2.1.20. Other Stock Based Award.




An award under Section 18 that is valued in whole or in part by reference to, or otherwise based on, Common Stock.




2.1.21. Parent.



Any corporation (other than the Company or a Subsidiary) in an unbroken chain of corporations
ending with the Company, if, at the time of the grant of an Option or other Benefit, each of the
corporations (other than the Company) owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such chain.




2.1.22. Participant.



An individual who is granted a Benefit under the Plan. Benefits may be granted only to
Employees, members of the Board, employees and owners of entities which are not Affiliates but
which have a direct or indirect ownership interest in an Employer or in which an Employer has a
direct or indirect ownership interest, individuals who, and employees and owners of entities which,
are customers and suppliers of an Employer, individuals who, and employees and owners of entities
which, render services to an Employer, and individuals who, and employees and owners of entities,
which have ownership or business affiliations with any individual or entity previously described.





2.1.23. Performance Based Compensation.



Compensation which meets the requirements of Section 162(m)(4)(C) of the Code.




2.1.24. Performance Share.




A Share awarded to a Participant under Section 16.5 of the Plan.


 


5









 







2.1.25. Plan.



The SysComm International Corporation 2001 Flexible Stock Plan and all amendments and supplements to it.




2.1.26. Reload Option.



An Option to purchase the number of Shares used by a Participant to exercise an Option and to satisfy any withholding requirement incident to the exercise of such Option.




2.1.27. Restricted Stock.



Shares
issued under Section 16.1 of the Plan.




2.1.28. Rule 16b-3.



Rule 16b-3 promulgated by the SEC, as amended, or any successor rule in effect from time to time.




2.1.29. SEC.



The Securities and Exchange Commission.




2.1.30. Share.



A share of Common Stock.




2.1.31. SAR.



A stock appreciation right, which is the right to receive an amount equal to the appreciation, if any, in the Fair Market Value of a Share from the date of the grant of the right to the date of its payment.




2.1.32. Subsidiary.



Any corporation, other than the Company, in an unbroken chain of corporations beginning with
the Company if, at the time of grant of an Option or other Benefit, each of the corporations, other
than the last corporation in the unbroken chain, owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations in such chain.




2.2.
Other Definitions.



In addition to the above definitions, certain words and phrases used in the Plan and any
Agreement may be defined in other portions of the Plan or in such Agreement.




2.3.
Conflicts.



In the case of any conflict in the terms of the Plan relating to a Benefit, the provisions in
the section of the Plan which specifically grants such Benefit shall control those in a different
section. In the case of any conflict between the terms of the Plan relating to a Benefit and the
terms of an Agreement relating to a Benefit, the terms of the Plan shall control.


 


6









 







3. COMMON STOCK





3.1.
Number of Shares.



The number of Shares which may be issued or sold or for which Options, SARs or Performance
Shares may be granted under the Plan shall be 2,500,000 Shares, plus an annual increase, effective
as of the first day of each calendar year, commencing with 2002, equal to 25% of the number of
outstanding Shares as of the first day of such calendar year, but in no event more than 10,000,000
Shares in the aggregate. Such Shares may be authorized but unissued Shares, Shares held in the
treasury, or both. The full number of Shares available may be used for any type of Option or other
Benefit.




3.2.
Reusage.



If an Option or SAR expires or is terminated, surrendered, or canceled without having been
fully exercised, if Restricted Shares or Performance Shares are forfeited, or if any other grant
results in any Shares not being issued, the Shares covered by such Option or SAR, grant of
Restricted Shares, Performance Shares or other grant, as the case may be, shall again be available
for use under the Plan. Any Shares which are used as full or partial payment to the Company upon
exercise of an Option or for any other Benefit that requires a payment to the Company shall be
available for purposes of the Plan.




3.3.
Adjustments.



If there is any change in the Common Stock of the Company by reason of any stock dividend,
spin-off, split-up, spin-out, recapitalization, merger, consolidation, reorganization, combination
or exchange of shares, or otherwise, the number of SARs and number and class of shares available
for Options and grants of Restricted Stock, Performance Shares and Other Stock Based Awards and the
number of Shares subject to outstanding Options, SARs, grants of Restricted Stock which are not
vested, grants of Performance Shares which are not vested, and Other Stock Based Awards, and the
price thereof, as applicable, shall be appropriately adjusted by the Committee.



4. ELIGIBILITY





4.1.
Determined By Committee.



The Participants and the Benefits they receive under the Plan shall be determined solely by
the Committee. In making its determinations, the Committee shall consider past, present and
expected future contributions of Participants and potential Participants to the Employer,
including, without limitation, the performance of, or the refraining from the performance of,
services. Unless specifically provided otherwise herein, all determinations of the Committee in
connection with the Plan or an Agreement shall be made in its sole discretion.


 


7









 







5. ADMINISTRATION





5.1.
Committee.



The Plan shall be administered by the Committee. The Committee shall consist of the Board,
unless the Board appoints a Committee of two or more but less than all of the Board. If the
Committee does not include the entire Board, it shall serve at the pleasure of the Board, which may
from time to time appoint members in substitution for members previously appointed and fill
vacancies, however caused, in the Committee. The Committee may select one of its members as its
Chairman and shall hold its meetings at such times and places as it may determine. A majority of
its members shall constitute a quorum. All determinations of the Committee made at a meeting at
which a quorum is present shall be made by a majority of its members present at the meeting. Any
decision or determination reduced to writing and signed by a majority of the members shall be fully
as effective as if it had been made by a majority vote at a meeting duly called and held.




5.2.
Authority.




Subject to the terms of the Plan, the Committee shall have discretionary authority to:



(a) determine the individuals to whom Benefits are granted, the type and amounts of Benefits
to be granted and the date of issuance and duration of all such grants;



(b) determine the terms, conditions and provisions of, and restrictions relating to, each
Benefit granted;




(c) interpret and construe the Plan and all Agreements;




(d) prescribe, amend and rescind rules and regulations relating to the Plan;




(e) determine the content and form of all Agreements;




(f) determine all questions relating to Benefits under the Plan;




(g) maintain accounts, records and ledgers relating to Benefits;




(h) maintain records concerning its decisions and proceedings;



(i) employ agents, attorneys, accountants or other persons for such purposes as the Committee
considers necessary or desirable;



(j) take,
at any time, any action described in Section 9.1 or permitted by
Section 9.2(a), irrespective of whether any Change of Control has occurred or is imminent;



(k) determine, except to the extent otherwise provided in the Plan, whether and the extent to
which Benefits under the Plan will be structured to conform to the requirements
applicable to
Performance-Based Compensation, and to take such action, establish such procedures, and impose such
restrictions at the time such Benefits are granted as the Committee determines to be necessary or
appropriate to conform to such requirements; and


(l) do and perform all acts which it may deem necessary or appropriate for the administration
of the Plan and carry out the purposes of the Plan.



 


8









 







5.3. Delegation.



Except as required by Rule 16b-3 with respect to grants of Options, Stock Appreciation Awards,
Performance Shares, Other Stock Based Awards, or other Benefits to individuals who are subject to
Section 16 of the Exchange Act or as otherwise required for compliance with Rule 16b-3 or other
applicable law, the Committee may delegate all or any part of its authority under the Plan to any
Employee, Employees or committee.




5.4. Determination.



All determinations of the Committee shall be final.



6. AMENDMENT





6.1. Power of Board.



Except as hereinafter provided, the Board shall have the sole right and power to amend the
Plan at any time and from time to time.




6.2. Limitation.




The Board may not amend the Plan, without approval of the shareholder of the Company:



(a) in a manner which would cause Options which are intended to qualify as ISOs to fail to
qualify;




(b) in a manner which would cause the Plan to fail to meet the requirements of Rule 16b-3; or




(c) in a manner which would violate applicable law.



7. TERM AND TERMINATION





7.1. Term.



The Plan shall commence as of the Effective Date and, subject to the terms of the Plan,
including those requiring approval by the shareholders of the Company and those limiting the period
over which ISOs or any other Benefits may be granted, shall continue in full force and effect until
terminated.




7.2. Termination.




The Plan may be terminated at any time by the Board.


 


9









 






8. MODIFICATION OR TERMINATION OF BENEFITS





8.1. General.



Subject
to the provisions of Section 8.2, the amendment or termination of the Plan shall not
adversely affect a Participant’s right to any Benefit granted prior to such amendment or
termination.




8.2. Committee’s Right.



Any Benefit granted may be converted, modified, forfeited or canceled, in whole or in part, by
the Committee if and to the extent permitted in the Plan or applicable Agreement or with the
consent of the Participant to whom such Benefit was granted. Except as may be provided in an
Agreement, the Committee may, in its sole discretion, in whole or in part, waive any restrictions
or conditions applicable to, or accelerate the vesting of, any Benefit.



9. CHANGE OF CONTROL





9.1. Vesting and Payment.



In the event of a Change of Control:



(a) all outstanding Options shall become fully exercisable, except to the extent that the
right to exercise the Option is subject to restrictions established in connection with an SAR that
is issued in tandem with the Option;



(b) all outstanding SARs shall become immediately payable, except to the extent that the right
to exercise the SAR is subject to restrictions established in connection with an Option that is
issued in tandem with the SAR;




(c) all Shares of Restricted Stock shall become fully vested;



(d) all Performance Shares shall be deemed to be fully earned and shall be paid out in such
manner as determined by the Committee; and



(e) all Cash Awards, Other Stock Based Awards and other Benefits shall become fully vested
and/or earned and paid out in such manner as determined by the Committee.




9.2. Other Action.



In the event of a Change of Control, the Committee, in its sole discretion, may, in addition
to the provisions of Section 9.1 above and to the extent not inconsistent therewith:



(a) provide for the purchase of any Benefit for an amount of cash equal to the amount which
could have been attained upon the exercise or realization of such Benefit;



(b) make such adjustment to the Benefits then outstanding as the Committee deems appropriate
to reflect such transaction or change; and/or



(c) cause the Benefits then outstanding to be assumed, or new Benefits substituted therefor,
by the surviving corporation in such change.


 


10









 






10. AGREEMENTS AND CERTAIN BENEFITS





10.1. Grant Evidenced by Agreement.



The grant of any Benefit under the Plan may be evidenced by an Agreement which shall describe
the specific Benefit granted and the terms and conditions of the Benefit. The granting of any
Benefit shall be subject to, and conditioned upon, the recipient’s execution of any Agreement
required by the Committee. Except as otherwise provided in an Agreement, all capitalized terms
used in the Agreement shall have the same meaning as in the Plan, and the Agreement shall be
subject to all of the terms of the Plan.




10.2. Provisions of Agreement.



Each Agreement shall contain such provisions that the Committee shall determine to be
necessary, desirable and appropriate for the Benefit granted which may include, but not necessarily
be limited to, the following with respect to any Benefit: description of the type of Benefit; the
Benefit’s duration; its transferability; if an Option, the exercise price, the exercise period and
the person or persons who may exercise the Option; the effect upon such Benefit of the
Participant’s death, disability, changes of duties or termination of employment; the Benefit’s
conditions; when, if, and how any Benefit may be forfeited, converted into another Benefit,
modified, exchanged for another Benefit, or replaced; and the restrictions on any Shares purchased
or granted under the Plan.




10.3. Transferability.



Unless otherwise specified in an Agreement or permitted by the Committee, each Benefit granted
shall be not transferable other than by will or the laws of descent and distribution and shall be
exercisable during a Participant’s lifetime only by him.



11. REPLACEMENT AND TANDEM AWARDS





11.1. Replacement.



The Committee may permit a Participant to elect to surrender a Benefit in exchange for a new
Benefit.




11.2. Tandem Awards.



Awards may be granted by the Committee in tandem. However, no Benefit may be granted in
tandem with an ISO except SARs.


 


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12. PAYMENT AND WITHHOLDING





12.1. Payment.



Upon the exercise of an Option or in the case of any other Benefit that requires a payment by
a Participant to the Company, the amount due the Company is to be paid:




(a) in cash, including by means of a so-called “cashless exercise” of an Option;




(b) by the surrender of all or part of a Benefit (including the Benefit being exercised);



(c) by the tender to the Company of Shares owned by the optionee and registered in his name
having a Fair Market Value equal to the amount due to the Company;



(d) in other property, rights and credits deemed acceptable by the Committee, including the
Participant’s promissory note;




(e) by any combination of the payment methods specified in (a), (b), (c) and (d) above.



Notwithstanding, the foregoing, any method of payment other than (a) may be used only with the
consent of the Committee or if and to the extent so provided in an Agreement. The proceeds of the
sale of Shares purchased pursuant to an Option and any payment to the Company for other Benefits
shall be added to the general funds of the Company or to the Shares held in treasury, as the case
may be, and used for the corporate purposes of the Company as the Board shall determine.




12.2. Dividend Equivalents.



Grants of Benefits in Shares or Share equivalents may include dividend equivalent payments or
dividend credit rights.




12.3. Withholding.



The Company may, at the time any distribution is made under the Plan, whether in cash or in
Shares, or at the time any Option is exercised, withhold from such distribution or Shares issuable
upon the exercise of an Option, any amount necessary to satisfy federal, state and local income
and/or other tax withholding requirements with respect to such distribution or exercise of such
Options. The Committee or the Company may require a participant to tender to the Company cash
and/or Shares in the amount necessary to comply with any such withholding requirements.


 


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13. OPTIONS





13.1. Types of Options.



It is intended that both ISOs and NQSOs, which may be Reload Options, may be granted by the
Committee under the Plan.




13.2. Grant of ISOs and Option Price.



Each ISO must be granted to an Employee and granted within ten years from the earlier of the
date of adoption by the Board or the Effective Date. The purchase price for Shares under any ISO
shall be no less than the Fair Market Value of the Shares at the time the Option is granted.




13.3. Other Requirements for ISOs.



The terms of each Option which is intended to qualify as an ISO shall meet all requirements of
Section 422 of the Code.




13.4. NQSOs.



The terms of each NQSO shall provide that such Option will not be treated as an ISO. The
purchase price for Shares under any NQSO shall be no less than 100% of the Fair Market Value of the
Shares at the time the Option is granted.




13.5. Determination by Committee.



Except
as otherwise provided in Section 13.2 through Section 13.4, the terms of all Options shall be
determined by the Committee.



14. SARS





14.1. Grant and Payment.



The Committee may grant SARs. Upon electing to receive payment of a SAR, a Participant shall
receive payment in cash, in Shares, or in any combination of cash and Shares, as the Committee
shall determine.




14.2. Grant of Tandem Award.



The Committee may grant SARs in tandem with an Option, in which case: the exercise of the
Option shall cause a correlative reduction in SARs standing to a Participant’s credit which were
granted in tandem with the Option; and the payment of SARs shall cause a correlative reduction of
the Shares under such Option.




14.3. ISO Tandem Award.



When SARs are granted in tandem with an ISO, the SARs shall have such terms and conditions as
shall be required for the ISO to qualify as an ISO.




14.4. Payment of Award.



SARs shall be paid by the Company to a Participant, to the extent payment is elected by the
Participant (and is otherwise due and payable), as soon as practicable after the date on which such
election is made.


 


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15. ANNUAL LIMITATIONS





15.1. Limitation on Options and SARs.



The number of (a) Shares covered by Options where the purchase price is no less than the Fair
Market Value of the Shares on the date of grant plus (b) SARs which may be granted to any
Participant in any Fiscal Year shall not exceed $1,250,000.




15.2. Computations.




For purposes of Section 15.1: Shares covered by an Option that is canceled shall count against
the maximum, and, if the exercise price under an Option is reduced, the transaction shall be
treated as a cancellation of the Option and a grant of a new Option; and SARs covered by a grant of
SARs that is canceled shall count against the maximum, and, if the Fair Market Value of a Share on
which the appreciation under a grant of SARs will be calculated is reduced, the transaction will be
treated as a cancellation of the SARs and the grant of a new grant of SARs.



16. RESTRICTED STOCK AND PERFORMANCE SHARES





16.1. Restricted Stock.



The
Committee may grant Benefits in Shares available under Section 3 of the Plan as Restricted
Stock. Shares of Restricted Stock shall be issued and delivered at the time of the grant or as
otherwise determined by the Committee, but shall be subject to forfeiture until provided otherwise
in the applicable Agreement or the Plan. Each certificate representing Shares of Restricted Stock
shall bear a legend referring to the Plan and the risk of forfeiture of the Shares and stating that
such Shares are nontransferable until all restrictions have been satisfied and the legend has been
removed. At the discretion of the Committee, the grantee may or may not be entitled to full voting
and dividend rights with respect to all shares of Restricted Stock from the date of grant.




16.2. Cost of Restricted Stock.



Unless otherwise determined by the Committee, grants of Shares of Restricted Stock shall be
made at a per Share cost to the Participant equal to par value.




16.3. Non-Transferability.



Shares of Restricted Stock shall not be transferable until after the removal of the legend
with respect to such Shares.


 


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16.4. Performance Shares.



Performance Shares are the right of an individual to whom a grant of such Shares is made to
receive Shares or cash equal to the Fair Market Value of such Shares at a future date in accordance
with the terms and conditions of such grant. The terms and conditions shall be determined by the
Committee, in its sole discretion, but generally are expected to be based substantially upon the
attainment of targeted profit and/or performance objectives.




16.5. Grant.



The Committee may grant an award of Performance Shares. The number of Performance Shares and
the terms and conditions of the grant shall be set forth in the applicable Agreement.



17. CASH AWARDS





17.1. Grant.



The
Committee may grant Cash Awards at such times and (subject to
Section 17.2) in such amounts
as it deems appropriate.




17.2. Rule 16b-3.



The amount of any Cash Award in any Fiscal Year to any Participant who is subject to Section
16 of the Exchange Act shall not exceed the greater of $100,000 or 100% of his cash compensation
(excluding any Cash Award under this Section 17) for such Fiscal Year.




17.3. Restrictions.



Cash Awards may be subject or not subject to conditions (such as an investment requirement),
restricted or nonrestricted, vested or subject to forfeiture and may be payable currently or in the
future or both.



18. OTHER STOCK BASED AWARDS AND OTHER BENEFITS





18.1. Other Stock Based Awards.



The Committee shall have the right to grant Other Stock Based Awards which may include,
without limitation, the grant of Shares based on certain conditions, the payment of cash based on
the performance of the Common Stock, and the grant of securities convertible into Shares.




18.2. Other Benefits.



The Committee shall have the right to provide types of Benefits under the Plan in addition to
those specifically listed, if the Committee believes that such Benefitswould further the purposes
for which the Plan was established.


 


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19. MISCELLANEOUS PROVISIONS





19.1. Underscored References.



The underscored references contained in the Plan are included only for convenience, and they
shall not be construed as a part of the Plan or in any respect affecting or modifying its
provisions.




19.2. Number and Gender.



The masculine and neuter, wherever used in the Plan, shall refer to either the masculine,
neuter or feminine; and, unless the context otherwise requires, the singular shall include the
plural and the plural the singular.




19.3. Unfunded Status of Plan.



The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation.
With respect to any payments or deliveries of Shares not yet made to a Participant by the Company,
nothing contained herein shall give any rights that are greater than those of a general creditor of
the Company. The Committee may authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Shares or payments hereunder consistent with the
foregoing.




19.4. Termination of Employment.



If the employment of a Participant by the Company terminates for any reason, except as
otherwise provided in an Agreement, all unexercised, deferred, and unpaid Benefits may be
exercisable or paid only in accordance with rules established by the Committee. These rules may
provide, as the Committee may deem appropriate, for the expiration, forfeiture, continuation, or
acceleration of the vesting of all or part of the Benefits.




19.5. Designation of Beneficiary.



A Participant may file with the Committee a written designation of a beneficiary or
beneficiaries (subject to such limitations as to the classes and number of beneficiaries and
contingent beneficiaries as the Committee may from time to time prescribe) to exercise, in the
event of the death of the Participant, an Option, or to receive, in such event, any Benefits. The
Committee reserves the right to review and approve beneficiary designations. A Participant may
from time to time revoke or change any such designation of beneficiary and any designation of
beneficiary under the Plan shall be controlling over any other disposition, testamentary or
otherwise; provided, however, that if the Committee shall be in doubt as to the right of any such
beneficiary to exercise any Option or to receive any Benefit, the Committee may determine to
recognize only an exercise by the legal representative of the recipient, in which case the Company,
the Committee and the members thereof shall not be under any further liability to anyone.



 


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19.6. Governing Law.



This Plan shall be construed and administered in accordance with the laws of the State of
Delaware.




19.7. Purchase for Investment.



The Committee may require each person purchasing Shares pursuant to an Option or other award
under the Plan to represent to and agree with the Company in writing that such person is acquiring
the Shares for investment and without a view to distribution or resale. The certificates for such
Shares may include any legend which the Committee deems appropriate to reflect any restrictions on
transfer. All certificates for Shares delivered under the Plan shall be subject to such
stock-transfer orders and other restrictions as the Committee may deem advisable under all
applicable laws, rules and regulations, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate references to such restrictions.




19.8. No Employment Contract.



Neither the adoption of the Plan nor any Benefit granted hereunder shall confer upon any
Employee any right to continued employment nor shall the Plan or any Benefit interfere in any way
with the right of the Employer to terminate the employment of any of its Employees at any time.




19.9. No Effect on Other Benefits.



The receipt of Benefits under the Plan shall have no effect on any benefits to which a
Participant may be entitled from the Employer, under another plan or otherwise, or preclude a
Participant from receiving any such benefits.




 


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