Exhibit 10.12


 


POLYPORE INTERNATIONAL, INC. 

STOCK INCENTIVE PLAN


1.             PURPOSE.


The purpose of the Plan is
to assist the Company in attracting, retaining, motivating and rewarding
Eligible Persons, and to promote the creation of long-term value for stockholders
by closely aligning the interests of Participants with those of
stockholders.  The Plan authorizes the
award stock-based incentives to Participants, to encourage such persons to
expend their maximum efforts in the creation of stockholder value.  The Plan is also intended to qualify certain
compensation awarded under the Plan for tax deductibility under
Section 162(m) of the Code to the extent deemed appropriate by the
Committee which administers the Plan.


2.             DEFINITIONS.


For purposes of the Plan,
the following terms shall be defined as set forth below:


(a)           “Affiliate” means, with respect to any
entity, any other entity that, directly or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with such
entity.


(b)           “Award” means any award of an Option, SAR,
Restricted Stock, Restricted Stock Units, Stock granted as a bonus or in lieu
of another award, or Other Stock-Based Award.


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


(d)           “Change in Control”
means (i) a change in ownership or control of the Company effected
through a transaction or series of transactions (other than an offering of
Stock to the general public through a registration statement filed with the
Securities and Exchange Commission) whereby any “person” or related “group” of
“persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the
Exchange Act) (other than the Company, any of its subsidiaries, an employee
benefit plan maintained by the Company or any of its subsidiaries, a Principal
Stockholder or an Affiliate of the Company or a Principal Stockholder) directly
or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of securities of the Company possessing more than fifty
percent (50%) of the total combined voting power of the Company’s securities
outstanding immediately after such acquisition; or (ii) the sale or conveyance
of all or substantially all of the assets of the Company.


(e)           “Code” means the Internal Revenue Code of 1986, as
amended from time to time, including regulations thereunder and successor
provisions and regulations thereto.


(f)            “Committee” means a committee of two or more
directors designated by the Board to administer the Plan; provided, however,
that directors appointed as members of the Committee shall not be employees of
the Company or any subsidiary.  In
appointing members of the Committee, the Board will consider whether a member
is or will be a Quali­fied Member, but such members are not required to be
Qualified Members at the time of appointment or during their term of service on
the Committee, and no action of the Committee shall be void or invalid


 

















 


due to the participation of a member who is not a
Qualified Member.  Initially, the
Committee shall be the Compensation Committee of the Board.


(g)           “Company” means Polypore International, Inc., a
Delaware corporation.


(h)           “Covered Employee”
means a person designated by the Committee as likely to be a “covered
employee,” as defined under Code Section 162(m) of the Code, with respect to a
specified fiscal year or other performance period.


(i)            “Dividend Equivalents” shall have the meaning set
forth in Section 9 hereof.


(j)            “Eligible Person” means each employee of the
Company or of any subsidiary, including each such person who may also be a
director of the Company, each non-employee director of the Company, each other
person who provides substantial services to the Company and/or its Affiliates
and who is designated as eligible by the Committee, and any person who has been
offered employment by the Company or an Affiliate, provided that such
prospective employee may not receive any payment or exercise any right relating
to an Award until such person has commenced employment with the Company or a
subsidiary or affiliate.  An employee on
an approved leave of absence may be considered as still in the employ of the
Company or an Affiliate for purposes of eligibility for participation in the
Plan.


(k)           “Exchange Act” means the Securities Exchange Act of
1934, as amended from time to time, including rules thereunder and successor
provisions and rules thereto.


(l)            “Fair Market Value”
means (i) prior to an IPO, the fair market value per share of Stock, as
determined by the Board in good faith, (ii) at the time of an IPO, the per
share price to the public in such IPO, and (iii) after an IPO, on any date (A)
if the Stock is listed on a national securities exchange, the mean between the
highest and lowest sale prices reported as having occurred on the primary
exchange with which the Stock is listed and traded on the date prior to such
date, or, if there is no such sale on that date, then on the last preceding
date on which such a sale was reported, or (B) if the Stock is not listed on
any national securities exchange but is quoted in the National Market System of
the National Association of Securities Dealers Automated Quotation System (“NASDAQ-NMS”)
on a last sale basis, the average between the high bid price and low ask price
reported on the date prior to such date, or, if there is no such sale on that
date then on the last preceding date on which such a sale was reported.  If, after an IPO, the Stock is not quoted on
NASDAQ-NMS or listed on an exchange, or representative quotes are not otherwise
available, the Fair Market Value shall mean the amount determined by the Board
in good faith to be the fair market value per share of Stock, on a fully
diluted basis.


(m)          “Fund” means Warburg Pincus Private Equity
VIII, L.P. or Warburg Pincus International Partners, L.P.


(n)           “IPO” means an
initial public offering of the Stock registered under the Securities Act
pursuant to an effective registration statement.


 


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(o)           “IPO Date” means the effective date of the
registration statement for the IPO.


(p)           “Option” means a conditional right, granted to a
Participant under Section 6 hereof, to purchase Stock or other Awards at a
specified price during specified time periods. 
Options under the Plan are not intended to qualify as incentive stock
options meeting the requirements of Section 422 of the Code.


(q)           “Other Stock-Based Awards” means Awards granted to
a Participant under Section 11 hereof.


(r)            “Participant” means a person who has been granted
an Award under the Plan which remains outstanding, or if applicable, such other
person or entity who holds an outstanding Award.


(s)           “Plan” means this Polypore International, Inc.
Stock Incentive Plan.


(t)            “Principal Stockholder” means either Fund or any
of their respective Affiliates.


(u)           “Qualified Member” means a member of the Committee
who is a “Non-Employee Director” within the meaning of Rule 16b-3(b)(3) and an
“outside director” within the meaning of Regulation 1.162-27(c) under Code
Section 162(m).


(v)           “Restricted Stock” means Stock granted to a Participant
under Section 8 hereof, that is subject to certain restrictions and to a risk
of forfeiture.


(w)          “Restricted Stock Agreement” means a written
agreement between the Company and a Participant evidencing the terms and
conditions of an individual Restricted Stock grant.


(x)            “Restricted Stock Unit” means a notional unit
representing the right to receive one share of Stock on the Settlement Date.


(y)           “Restricted Stock Unit Agreement” means a written
agreement between the Company and a Participant evidencing the terms and
conditions of an individual Restricted Stock Unit grant.


(z)            “Rule 16b-3” means Rule 16b-3, as from time
to time in effect and applicable to the Plan and Participants, promulgated by
the Securities and Exchange Commission under Section 16 of the Exchange Act.


(aa)         “Securities Act” means the Securities Act of 1933, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.


(bb)         “Settlement Date” shall have the meaning set forth in
Section 9 hereof.


 


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(cc)         “Stock” means the Company’s Common Stock, $.01 par
value, and such other securities as may be substituted for Stock pursuant to
Section 12 hereof.


(dd)         “Stock Appreciation Right” or “SAR” means a conditional
right granted to a Participant under Section 7 hereof.


3.             ADMINISTRATION.


(a)           Authority of the Committee.  Except as otherwise provided below, the Plan
shall be administered by the Committee. 
The Committee shall have full and final authority, in each case subject
to and consistent with the provisions of the Plan, to (i) select Eligible
Persons to become Participants; grant Awards; (ii) determine the type, number,
and other terms and condi­tions of, and all other matters relating to, Awards;
(iii) prescribe Award agreements (which need not be identical for each
Participant) and rules and regulations for the adminis­tration of the Plan;
(iv) construe and interpret the Plan and Award agreements and correct defects,
supply omissions, or reconcile inconsistencies therein; and (v) make all other
decisions and determinations as the Committee may deem necessary or advisable
for the administration of the Plan.  The
foregoing notwithstanding, the Board shall perform the functions of the
Committee for purposes of granting Awards under the Plan to non-employee
directors.  In any case in which the
Board is performing a function of the Committee under the Plan, each reference
to the Committee herein shall be deemed to refer to the Board, except where the
context otherwise requires.  Any action
of the Committee shall be final, conclusive and binding on all persons,
including, without limitation, the Company, its subsidiaries, Eligible Persons,
Participants and beneficiaries of Participants.


(b)           Manner of Exercise of Committee Authority. 
At any time that a member of the Committee is not a Qualified Member,
(i) any action of the Committee relating to an Award intended by the Committee
to qualify as “performance-based compensation” within the meaning of Section
162(m) of the Code and regulations thereunder may be taken by a subcommittee,
designated by the Committee or the Board, composed solely of two or more
Qualified Members; and (ii) any action relating to an Award granted or to be
granted to a Participant who is then subject to Section 16 of the Exchange Act
in respect of the Company may be taken either by such a subcommittee or by the
Committee but with each such member who is not a Qualified Member abstaining or
recusing himself or herself from such action, provided that, upon such
abstention or recusal, the Committee remains composed of two or more Qualified
Members.  Such action, authorized by
such a subcommittee or by the Committee upon the abstention or recusal of such
non-Qualified Member(s), shall be the action of the Committee for purposes of
the Plan.  The express grant of any
specific power to the Committee, and the taking of any action by the Committee,
shall not be construed as limiting any power or authority of the Committee.


(c)           Delegation. 
The Committee may delegate to officers or employees of the Company or
any subsidiary or affiliate, or committees thereof, the authority, subject to
such terms as the Committee shall determine, to perform such functions,
including but not limited to administrative functions, as the Committee may
determine, to the fullest extent permitted under Section 157 and other
applicable provisions of the Delaware General Corporation Law.  The Committee may appoint agents to assist
it in administering the Plan. 
Notwithstanding the 


 


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foregoing or any other provision of the Plan to the
contrary, any Award granted under the Plan to any person or entity who is not
an employee of the Company or any of its Affiliates shall be expressly approved
by the Committee.


4.             SHARES AVAILABLE
UNDER THE PLAN.


(a)           Number of Shares Available for Delivery.  Subject to adjustment as provided in
Section 12 hereof, the total number of shares of Stock reserved and
available for delivery in connection with Awards under the Plan shall be       . 
Shares of Stock delivered under the Plan shall consist of authorized and
unissued shares or previously issued shares of Stock reacquired by the Company
on the open market or by private purchase.


(b)           Share Counting Rules.  The Committee may adopt reasonable counting procedures to ensure
appropriate counting, avoid double counting (as, for example, in the case of
tandem or substitute awards) and make adjustments if the number of shares of
Stock actually delivered differs from the number of shares previously counted
in connection with an Award.  To the
extent that an Award expires or is canceled, forfeited, settled in cash or
otherwise terminated or concluded without a delivery to the Participant of the
full number of shares to which the Award related, the undelivered shares will
again be available for Awards.  Shares
withheld in payment of the exercise price or taxes relating to an Award and
shares equal to the number surrendered in payment of any exercise price or
taxes relating to an Award shall be deemed to constitute shares not delivered
to the Participant and shall be deemed to again be available for Awards under
the Plan; provided, however, that, where shares are withheld or surrendered
more than ten years after the date of the most recent shareholder approval of
the Plan or any other transaction occurs that would result in shares becoming
available under this Section 4(b), such shares shall not become available if
and to the extent that it would constitute a material revision of the Plan
subject to shareholder approval under then applicable rules of the principle
stock exchange or automated quotation system on which the shares are then
listed or designated for trading.


5.             ELIGIBILITY; LIMITATIONS ON
AWARDS.


(a)           Grants to Eligible Persons.  Awards may be granted under the Plan only to
Eligible Persons.


(b)           162(m) Limitation. 
Subject to Section 12 relating to adjustments, no Employee shall be
eligible to be granted Options or Stock Appreciation Rights covering more than          shares of Stock during any calendar
year.  This subsection (b) shall not
apply prior to the IPO Date and, following the IPO Date, this subsection (b)
shall not apply until (i) the earliest of: 
(1) the first material modification of the Plan (including any increase
in the number of shares of Stock reserved for issuance under the Plan in
accordance with ); (2) the issuance of all of the shares of Stock reserved for
issuance under the Plan; (3) the expiration of the Plan; or (4) the first
meeting of stockholders at which directors are to be elected that occurs after
the close of the third calendar year following the calendar year in which
occurred the first registration of an equity security under Section 12 of
the Exchange Act; or (ii) such other date required by Section 162(m) of
the Code and the rules and regulations promulgated thereunder.


 


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6.             OPTIONS.


(a)           General. 
Options granted hereunder shall be in such form and shall contain such
terms and conditions as the Committee shall deem appropriate.  The provisions of separate Options shall be
set forth in an Option Agreement, which agreements need not be identical.


(i)            Term. 
The term of each Option shall be set by the Committee at the time of
grant; provided, however, that no Option granted hereunder shall be exercisable
after the expiration of ten (10) years from the date it was granted.


(ii)           Exercise Price.  The exercise price per share of Stock for each Option shall be
set by the Committee at the time of grant but shall not be less than the par
value of a share of Stock.


(iii)          Payment for Stock.  Payment for shares of Stock acquired
pursuant to Options granted hereunder shall be made in full, upon exercise of
the Options (i) in immediately available funds in United States dollars, by
certified or bank cashier’ s check; (ii) by surrender to the Company of shares
of Stock; (iii) by a combination of (i) and (ii); (iv) by delivery of a notice
of “net exercise” to the Company, pursuant to which the Participant shall
receive the number of shares of Stock underlying the Options so exercised
reduced by the number of shares of Stock equal to the aggregate exercise price
of the Options divided by the Fair Market Value on the date of exercise; or (v)
by any other means approved by the Committee. 
Anything herein to the contrary notwithstanding, the Company shall not
directly or indirectly extend or maintain credit, or arrange for the extension
of credit, in the form of a personal loan to or for any director or executive
officer of the Company through the Plan in violation of Section 402 of the
Sarbanes-Oxley Act of 2002 (“Section 402 of SOX”), and to the extent
that any form of payment would, in the opinion of the Company’s counsel, result
in a violation of Section 402 of SOX, such form of payment shall not be
available.


(iv)          Vesting. 
Options shall vest and become exercisable in such manner and on such
date or dates set forth in the Option Agreement, as may be determined by the
Committee; provided, however, that notwithstanding any vesting dates contained
herein or otherwise set by the Committee, the Committee may in its sole
discretion accelerate the vesting of any Option, which acceleration shall not
affect the terms and conditions of any such Option other than with respect to
vesting.  Unless otherwise specifically
determined by the Committee, the vesting of an Option shall occur only while
the Participant is employed or rendering services to the Company or its
subsidiaries and all vesting shall cease upon a Participant’s termination of
employment or services for any reason. 
If an Option is exercisable in installments, such installments or
portions thereof which become exercisable shall remain exercisable until the
Option expires.


(b)           Transferability of Options.  An Option shall not be transferable except
by will or by the laws of descent and distribution and shall be exercisable
during the lifetime of the 


 


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Participant only by the Participant.  Notwithstanding the foregoing, Options shall
be transferable to the extent provided in the Option Agreement or otherwise
determined by the Committee.


7.             STOCK APPRECIATION RIGHTS.


(a)           General.  The Committee is authorized to
grant SARs to Participants on the following terms and conditions:


(i)            Right
to Payment.  A SAR shall
confer on the Participant to whom it is granted a right to receive, upon
exercise thereof, the excess of (A) the Fair Market Value of one share of Stock
on the date of exercise over (B) the grant price of the SAR as determined by
the Committee.


(ii)           Term. 
The term of each SAR shall be set by the Committee at the time of grant;
provided, however, that no SAR granted hereunder shall be exercisable after the
expiration of ten (10) years from the date it was granted.


(iii)          Grant Price.  The grant price per share of Stock for each Option shall be set
by the Committee at the time of grant.


(iv)          Other
Terms.  The Committee shall
determine at the date of grant or thereafter: 
(A) the time or times at which and the circumstances under which a SAR
may be exercised in whole or in part (including based on achievement of
performance goals and/or future service requirements); (B) the method of
exercise; (C) the method of settlement; (D) whether cash or Stock will be payable
to the Participant upon exercise of the SAR; (E) the method by or forms in
which Stock will be delivered or deemed to be delivered to Participants; (F)
whether or not a SAR shall be alone, in tandem or in combination with any other
Award; and (G) and any other terms and conditions of any SAR.


8.             RESTRICTED STOCK.


(a)           General. 
Restricted Stock granted hereunder shall be in such form and shall
contain such terms and conditions as the Committee shall deem appropriate.  The terms and conditions of each Restricted
Stock grant shall be evidenced by a Restricted Stock Agreement, which
agreements need not be identical.  
Subject to the restrictions set forth in Section 8(b), except as
otherwise in the applicable Restricted Stock Agreement, the Participant shall
generally have the rights and privileges of a stockholder as to such Restricted
Stock, including the right to vote such Restricted Stock.  At the discretion of the Committee, cash
dividends and stock dividends, if any, with respect to the Restricted Stock may
be either currently paid to the Participant or withheld by the Company for the
Participant’s account.  A Participant’s
Restricted Stock Agreement may provide that cash dividends or stock dividends
so withheld shall be subject to forfeiture to the same degree as the shares of
Restricted Stock to which they relate. 
Except as otherwise determined by the Committee, no interest will accrue
or be paid on the amount of any cash dividends withheld.


(b)           Restrictions on Transfer.  In addition to any other restrictions set forth in a
Participant’s Restricted Stock Agreement, until such time that the Restricted
Stock has vested 


 


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pursuant to the terms of the Restricted Stock
Agreement, which vesting the Committee may in its sole discretion accelerate at
any time, the Participant shall not be permitted to sell, transfer, pledge, or
otherwise encumber the Restricted Stock. 
Notwithstanding anything contained herein to the contrary, the Committee
shall have the authority to remove any or all of the restrictions on the
Restricted Stock whenever it may determine that, by reason of changes in
applicable laws or other changes in circumstances arising after the date of the
Restricted Stock Award, such action is appropriate.


(c)           Certificates. 
Restricted Stock granted under the Plan may be evidenced in such manner
as the Committee shall determine.  If
certificates representing Restricted Stock are registered in the name of the
Participant, the Committee may require that such certificates bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Company retain physical
possession of the certificates, and that the Participant deliver a stock power
to the Company, endorsed in blank, relating to the Restricted Stock.  Notwithstanding the foregoing, the Committee
may determine, in its sole discretion, that the Restricted Stock shall be held
in book entry form rather than delivered to the Participant pending the release
of the applicable restrictions.


9.             RESTRICTED STOCK
UNITS


(a)           General. 
Restricted Stock Units granted hereunder shall be in such form and shall
contain such terms and conditions as the Committee shall deem appropriate.  The terms and conditions of each Restricted
Stock Unit grant shall be evidenced by a Restricted Stock Unit Agreement.  No shares of Stock shall be issued at the
time a Restricted Stock Unit grant is made, and the Company will not be
required to set aside a fund for the payment of any such Award; provided,
however, that for purposes of Section 4(a) hereof, a share of Stock shall be
deemed awarded at the time of grant. 
Recipients of Restricted Stock Units may, in the sole discretion of the
Committee, be entitled to an amount equal to the cash dividends paid by the
Company upon one share of Stock for each Restricted Stock Unit then credited to
such recipient’s account (“Dividend Equivalents”).  To the extent a Participant receiving
Restricted Stock Units is entitled to Dividend Equivalents, the Committee
shall, in its sole discretion, determine whether to credit to the account of,
or to currently pay to, such Participant the Dividend Equivalents.  A Participant’s Restricted Stock Unit
Agreement may provide that Dividends Equivalents shall be subject to forfeiture
to the same degree as the shares of Restricted Stock Units to which they
relate.  Except as otherwise determined
by the Committee, no interest will accrue or be paid on Dividend Equivalents
credited to a recipient’s account.


(b)           Conditions of Grant.  Restricted Stock Units awarded to any eligible individual shall
be subject to (i) forfeiture until the expiration of the restricted period, to
the extent provided in the Restricted Stock Unit Agreement, and to the extent
such Awards are forfeited, all rights of the recipient to such Awards shall
terminate without further obligation on the part of the Company, and (ii) such
other terms and conditions as may be set forth in the applicable Award
agreement.  Notwithstanding anything
contained herein to the contrary, the Committee shall have the authority to
remove any or all of the restrictions on the Restricted Stock Units whenever it
may determine that, by reason of changes in applicable laws or other changes in
circumstances arising after the date of the Restricted Stock Unit Award, such
action is appropriate.


 


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(c)           Settlement of Restricted Stock Units.  Upon a date or dates on or following the
expiration of the restricted period as shall be determined by the Committee and
set forth in a Participant’s Restricted Stock Unit Agreement (the “Settlement
Date(s)”), unless earlier forfeited, the Company shall settle the
Restricted Stock Unit by delivering (i) a number of shares of Stock equal to
the number of Restricted Stock Units then vested and not otherwise forfeited,
and (ii) if applicable, a number of shares of Stock having a value equal to any
unpaid Dividend Equivalents accrued with respect to the Restricted Stock Units.  The Company may, in the Committee’s sole
discretion, settle a Restricted Stock Unit Award in cash in lieu of the
delivery of shares of Stock or partially in cash and partially in shares of
Stock.  A settlement in cash shall be
based on the value of the shares of Stock otherwise to be delivered on the
Settlement Date.


(d)           Creditor’s Rights. 
A holder of Restricted Stock Units shall have no rights other than those
of a general creditor of the Company. 
Restricted Stock Units represent an unfunded and unsecured obligation of
the Company, subject to the terms and conditions of the applicable Restricted
Stock Unit Agreement.


10.           BONUS STOCK AND AWARDS IN LIEU OF
OBLIGATIONS.


The Committee is authorized
to grant Stock as a bonus, or to grant Stock or other Awards in lieu of obligations
of the Company or a subsidiary of the Company under the Plan or under other
plans or compensatory arrangements, subject to such terms and conditions as
shall be determined by the Committee.


11.           OTHER STOCK-BASED
AWARDS.


The Committee is authorized,
subject to limitations under applicable law, to grant to Participants such
other Awards that may be denominated or payable in, valued in whole or in part
by reference to, or otherwise based on, or related to, Stock, as deemed by the
Committee to be consistent with the purposes of the Plan.


12.           ADJUSTMENT FOR
RECAPITALIZATION, MERGER, ETC.


(a)           Capitalization Adjustments.  The aggregate number of shares of Stock
which may be granted or purchased pursuant to Awards granted hereunder, the
number of shares of Stock covered by each outstanding Award, the maximum number
of shares of Stock with respect to which any one person may be granted Options
or Stock Appreciation Rights in any calendar year, and the price per share
thereof in each such Award shall be equitably and proportionally adjusted or
substituted, as determined by the Committee in good faith and in its sole
discretion, as to the number, price or kind of a share of Stock or other
consideration subject to such Awards or as otherwise determined by the Committee
in good faith to be fair and equitable (i) in the event of changes in the
outstanding Stock or in the capital structure of the Company by reason of stock
dividends, stock splits, reverse stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges, or other
relevant changes in capitalization occurring after the date of grant of any
such Option, (ii) in the event of any change in applicable laws or any change
in circumstances which results in or would result in any substantial dilution
or enlargement of the rights granted to, or available for, Participants in the


 


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Plan, or (iii) for any other reason which the
Committee determines, in its sole discretion and acting in good faith, to
otherwise warrant equitable adjustment. 
Absent manifest error, any adjustment shall be conclusively determined
by the Committee; provided, in each case, the fair value of the Option
immediately following any such adjustment shall be equal to the fair value of
the Option immediately prior to such adjustment.


(b)           Corporate Events. 
Notwithstanding the foregoing, except as may otherwise be provided in an
Award agreement, in the event of (i) a merger or consolidation involving the
Company in which the Company is not the surviving corporation, (ii) a merger or
consolidation involving the Company in which the Company is the surviving
corporation but the holders of shares of Stock receive securities of another
corporation and/or other property, including cash, (iii) the sale of all or
substantially all of the assets of the Company, (iv) the reorganization or
liquidation of the Company or (v) a Change in Control (a “Corporate Event”),
in lieu of providing the adjustment set forth in subsection (a) above, the
Committee may, in its discretion, provide that all outstanding Awards shall
terminate as of the consummation of such Corporate Event, and provide that
holders of Awards will receive a payment in respect of cancellation of their
Awards based on the amount of the per share consideration being paid for the
Stock in connection with such Corporate Event, and in the case of Options,
Stock Appreciation Rights and other Awards with an exercise price or similar
provision, less the applicable exercise price. 
Payments to holders pursuant to the preceding sentence shall be made in
cash, or, in the sole discretion of the Committee, in such other consideration
necessary for a holder of an Award to receive property, cash or securities as
such holder would have been entitled to receive upon the occurrence of the
transaction if the holder had been, immediately prior to such transaction, the
holder of the number of shares of Stock covered by the Award at such time;
provided, that if such consideration received in the transaction is not solely
equity securities of the successor entity, the Committee may, with the consent
of the successor entity, provide for the consideration to be received in
respect of the Award to be solely equity securities of the successor entity equal
to the Fair Market Value of the per share consideration received by holders of
Stock in the Corporate Event.


(c)           Fractional Shares. 
Any such adjustment may provide for the elimination of any fractional
share which might otherwise become subject to an Award.


13.           CHANGE IN CONTROL


The Committee may, in its
sole discretion, may provide in an Award agreement that in the event of a
Change in Control, (a) Options shall become immediately exercisable with
respect to 100% of the shares subject to such Options, (b) shares of Restricted
Stock become 100% vested, (c) Restricted Stock Units shall be settled as if the
Settlement Date occurred immediately prior to such Change in Control, or (d)
all other Awards shall become fully vested and/or payable to the fullest extent
of any Award or portion thereof that has not then expired and any restrictions
with respect thereto shall expire.  The
Committee shall have full authority and discretion to interpret this Section 13
and to implement any course of action with respect to any Award so as to
satisfy the intent of this provision.


 


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14.           USE OF PROCEEDS.


The
proceeds received from the sale of Stock pursuant to the Plan shall be used for
general corporate purposes.


15.           RIGHTS AND PRIVILEGES
AS A STOCKHOLDER.


Except as otherwise
specifically provided in the Plan, no person shall be entitled to the rights
and privileges of stock ownership in respect of shares of Stock which are
subject to Awards hereunder until such shares have been issued to that person.


16.           EMPLOYMENT OR SERVICE
RIGHTS.


No individual shall have any
claim or right to be granted an Award under the Plan or, having been selected
for the grant of an Award, to be selected for a grant of any other Award.  Neither the Plan nor any action taken
hereunder shall be construed as giving any individual any right to be retained
in the employ or service of the Company or an Affiliate.


17.           COMPLIANCE WITH LAWS.


The obligation of the
Company to make payment of Awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by governmental
agencies as may be required. 
Notwithstanding any terms or conditions of any Award to the contrary,
the Company shall be under no obligation to offer to sell or to sell and shall
be prohibited from offering to sell or selling any shares of Stock pursuant to
an Award unless such shares have been properly registered for sale pursuant to
the Securities Act with the Securities and Exchange Commission or unless the
Company has received an opinion of counsel, satisfactory to the Company, that
such shares may be offered or sold without such registration pursuant to an
available exemption therefrom and the terms and conditions of such exemption
have been fully complied with.  The
Company shall be under no obligation to register for sale or resale under the
Securities Act any of the shares of Stock to be offered or sold under the Plan
or any shares of Stock issued upon exercise or settlement of Awards.  If the shares of Stock offered for sale or
sold under the Plan are offered or sold pursuant to an exemption from
registration under the Securities Act, the Company may restrict the transfer of
such shares and may legend the Stock certificates representing such shares in
such manner as it deems advisable to ensure the availability of any such
exemption.


18.           MARKET STANDOFF
AGREEMENT.


As a condition of receiving
any Award hereunder, the Participant agrees that in connection with any
registration of the Stock and upon the request of the Committee or the
underwriters managing any public offering of the Stock, the Participant will
not sell or otherwise dispose of any Stock without prior written consent of the
Committee or such underwriters, as the case may be, for a period of time (not
to exceed 180 days) from the effective date of such registration as the
Committee or the underwriters may specify for employee-shareholders generally.


 


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19.           WITHHOLDING
OBLIGATIONS.


As a condition to the
exercise or vesting, as applicable, of any Award, the Committee may require
that a Participant satisfy, through deduction or withholding from any payment
of any kind otherwise due to the Participant, or through such other arrangements
as are satisfactory to the Committee, the minimum amount of all Federal, state
and local income and other taxes of any kind required or permitted to be
withheld in connection with such vesting or exercise.  The Committee, in its discretion, may permit shares of Stock to
be used to satisfy tax withholding requirements and such shares shall be valued
at their Fair Market Value as of the settlement date of the Award.  For purposes of this Section 19, the term
“Company” shall be deemed to mean any Affiliate that may have a tax withholding
obligation due to its relationship with a Participant.


20.           AMENDMENT OF THE PLAN
OR AWARDS.


(a)           Amendment of Plan.  The Board at any time, and from
time to time, may amend the Plan; provided, however, that without further stockholder
approval the Board shall not make any amendment to the Plan which would
increase the maximum number of shares of Stock which may be issued pursuant to
Awards under the Plan, except as contemplated by Section 12 hereof, or,
following the IPO Date, which would otherwise violate the shareholder approval
requirements of the national securities exchange on which the Stock is listed
or Nasdaq, as applicable.


(b)           No Impairment of Rights.  Rights under any Award granted
before amendment of the Plan shall not be impaired by any amendment of the Plan
unless the Participant consents in writing.


(c)           Amendment of Stock
Awards.  The Committee, at any time, and from time to time, may amend the
terms of any one or more Awards; provided, however, that the rights under any
Award shall not be impaired by any such amendment unless the Participant
consents in writing.


21.           TERMINATION OR
SUSPENSION OF THE PLAN.


The Board may suspend or
terminate the Plan at any time.  Unless
sooner terminated, the Plan shall terminate on the day before the tenth (10th)
anniversary of the date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier.  No Awards may be granted under the Plan while the Plan is
suspended or after it is terminated.


22.           EFFECTIVE DATE OF THE
PLAN.


The
Plan is effective as of July __, 2004, the date upon which the Board approved
the Plan.


23.           MISCELLANEOUS.


(a)           Awards to Participants Outside of the United States.  The Committee may modify the terms of any
Award under the Plan made to or held by a Participant who is then resident or
primarily employed outside of the United States in any manner deemed by the
Committee to be necessary or appropriate in order that such Award shall conform
to laws, 


 


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regulations and customs of the country in which the
Participant is then resident or primarily employed, or so that the value and
other benefits of the Award to the Participant, as affected by foreign tax laws
and other restrictions applicable as a result of the Participant’s residence or
employment abroad, shall be comparable to the value of such Award to a
Participant who is resident or primarily employed in the United States.  An Award may be modified under this Section
23(a) in a manner that is inconsistent with the express terms of the Plan, so
long as such modifications will not contravene any applicable law or regulation
or result in actual liability under Section 16(b) of the Exchange Act for the
Participant whose Award is modified.


(b)           No Liability of
Committee Members.  No member
of the Committee shall be personally liable by reason of any contract or other
instrument executed by such member or on his behalf in his capacity as a member
of the Committee nor for any mistake of judgment made in good faith, and the
Company shall indemnify and hold harmless each member of the Committee and each
other 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) arising out of any act or
omission to act in connection with the Plan unless arising out of such person’s
own fraud or willful bad faith; provided, however, that approval
of the Board shall be required for the payment of any amount in settlement of a
claim against any such person.  The
foregoing right of indemnification shall not be exclusive of any other rights
of indemnification to which such persons may be entitled under the Company’s
Articles of Incorporation or By-Laws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.


(c)           Payments Following Accidents or Illness. If the
Committee shall find that any person to whom any amount is payable under the
Plan is unable to care for his affairs because of illness or accident, or is a
minor, or has died, then any payment due to such person or his estate (unless a
prior claim therefor has been made by a duly appointed legal representative)
may, if the Committee so directs the Company, be paid to his spouse, child,
relative, an institution maintaining or having custody of such person, or any
other person deemed by the Committee to be a proper recipient on behalf of such
person otherwise entitled to payment. 
Any such payment shall be a complete discharge of the liability of the
Committee and the Company therefor.


(d)           Designation and Change of Beneficiary.  Each Participant may file with the Company a
written designation of one or more persons as the beneficiary who shall be
entitled to receive the rights or amounts payable with respect to an Award due
under the Plan upon his death.  A
Participant may, from time to time, revoke or change his beneficiary
designation without the consent of any prior beneficiary by filing a new
designation with the Committee.  The
last such designation received by the Company shall be controlling; provided,
however, that no designation, or change or revocation thereof, shall be
effective unless received by the Company prior to the Participant’s death, and
in no event shall it be effective as of a date prior to such receipt.  If no beneficiary designation is filed by
the Participant, the beneficiary shall be deemed to be his or her spouse or, if
the Participant is unmarried at the time of death, his or her estate.


 


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(e)           Governing Law. 
The Plan shall be governed by and construed in accordance with the
internal laws of the State of Delaware without reference to the principles of
conflicts of laws thereof.


(f)            Funding.  No provision of the Plan shall require the
Company, for the purpose of satisfying any obligations under the Plan, to purchase
assets or place any assets in a trust or other entity to which contributions
are made or otherwise to segregate any assets, nor shall the Company maintain
separate bank accounts, books, records or other evidence of the existence of a
segregated or separately maintained or administered fund for such
purposes.  Participants shall have no
rights under the Plan other than as unsecured general creditors of the Company,
except that insofar as they may have become entitled to payment of additional
compensation by performance of services, they shall have the same rights as
other employees under general law.


(g)           Reliance on Reports.  Each member of the Committee and each member
of the Board shall be fully justified in relying, acting or failing to act, and
shall not be liable for having so relied, acted or failed to act in good faith,
upon any report made by the independent public accountant of the Company and
its Affiliates and upon any other information furnished in connection with the
Plan by any person or persons other than himself.


(h)           Titles and Headings.  The titles and headings of the sections in the Plan are for
convenience of reference only, and in the event of any conflict, the text of
the Plan, rather than such titles or headings shall control.


 


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