Exhibit 10.8


 


PANOLAM HOLDINGS CO.


 


2005 EQUITY INCENTIVE PLAN


 


1.                                       Purpose. The Panolam Holdings
Co. 2005 Equity Incentive Plan (the “Plan”) is intended to
attract, retain and motivate officers and employees of, consultants to, and
non-employee directors providing services to Panolam Holdings Co. (the “Company”)
and its subsidiaries and affiliates by providing them with appropriate
incentives and rewards either through a proprietary interest in the long-term
success of the Company or compensation based on their performance in fulfilling
their personal responsibilities.


 


2.                                       Administration.


 


(a)                                  Committee. The
Plan will be administered by a committee (the “Committee”) appointed by
the Board of Directors of the Company (the “Board”) from among its
members and shall be comprised, unless otherwise determined by the Board, of
not less than two (2) members, each of whom shall be (i) a “Non-Employee
Director” within the meaning of Rule 16b-3(b)(3) (or any
successor rule) promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) and (ii) an “outside director” within
the meaning of Treasury Regulation Section 1.162-27(e)(3) under Section 162(m)
of the Internal Revenue Code of 1986, as amended (the “Code”).


 


(b)                                 Authority. The
Committee is authorized, subject to the provisions of the Plan, to establish
such rules as it deems necessary for the proper administration of the Plan
and to make such determinations and interpretations in its sole discretion and
to take such action in connection with the Plan and any awards granted
hereunder as it deems necessary or advisable, including the right to accelerate
the vesting or exerciseability of awards, establish the terms and conditions of
awards and cancel awards upon a Change of Control. The Committee may determine
the extent to which any Award under the Plan is required to comply, or not
comply, with Section 409A of the Code and to establish terms and
conditions of awards accordingly. All determinations and interpretations made
by the Committee shall be binding and conclusive on all participants and their
legal representatives.


 


(c)                                  Indemnification.
Except in circumstances involving bad faith or willful misconduct of the person
acting or failing to act, no member of the Committee and no employee of the Company
shall be liable for any act or failure to act hereunder or for any act or
failure to act hereunder by any other member or employee or by any agent to
whom duties in connection with the administration of this Plan have been
delegated. The Company shall indemnify members of the Committee and any agent
of the Committee who is an employee of the Company, a subsidiary or an
affiliate against any and all liabilities or expenses to which they may be
subjected by reason of any act or failure to act with respect to their duties
on behalf of the Plan, except in circumstances involving such person’s bad
faith or willful misconduct.


 


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(d)                                 Delegation
and Advisers. The Committee may delegate to one or more of its members,
or to one or more agents, such administrative duties as it may deem
advisable. Any person to whom it has delegated duties as aforesaid may employ
one or more persons to render advice with respect to any responsibility the
Committee or such person may have under the Plan. The Committee may employ
such legal or other counsel, consultants and agents as it may deem
desirable for the administration of the Plan and may rely upon any opinion
or computation received from any such counsel, consultant or agent. Expenses
incurred by the Committee in the engagement of such counsel, consultant or
agent shall be paid by the Company, or the subsidiary or affiliate whose
employees have benefited from the Plan, as determined by the Committee.


 


3.                                       Participants. Participants will consist of such officers,
employees, consultants, and non-employee directors of the Company and its
subsidiaries and affiliates as the Committee in its sole discretion determines
and whom the Committee may designate from time to time to receive awards
under the Plan. Designation of a participant in any year shall not require the
Committee to designate such person to receive an award in any other year or,
once designated, to receive the same type or amount of award as granted to the
participant in any other year. The Committee shall consider such factors as it
deems pertinent in selecting participants and in determining the type and
amount of their respective awards.


 


4.                                       Type of Awards. Awards under the Plan may be granted in
any one or a combination of:  (a) stock
options, (b) stock appreciation rights, (c) restricted stock, (d) stock
units, and (e) cash. Restricted stock, stock units and cash awards may, as
determined by the Committee in its discretion, constitute performance-based
awards, as described in Section 11 hereof. Awards granted under the Plan
shall be evidenced by agreements (which need not be identical) that provide
additional terms and conditions associated with such awards, as determined by
the Committee in its sole discretion; provided, however, that in the event of any conflict between the
provisions of the Plan and any such agreement, the provisions of the Plan shall
prevail.


 


5.                                       Common Stock Available Under the Plan.


 


(a)                                  Maximum Shares.
The aggregate number of shares of common stock of the Company par value $.001 (“Shares”) that may be
issued under this Plan shall be 17,778 Shares, which may be authorized and
unissued or treasury Shares, subject to Section 5(c) hereof and Section 13
hereof (“Maximum Shares”). The maximum number of shares that may be
“incentive stock options”, within the meaning of Section 422 of the
Code, is 17,778 shares (the “ISO Maximum”).


 


(b)                                 Counting
Shares. Shares shall be charged against the Maximum Shares and, if
applicable, the ISO Maximum, upon the grant of each award (other than cash
awards, stock appreciation rights and stock units to be settled only in cash
and performance based awards which are not denominated in common stock) regardless of the vested status of the award, provided, however, that in the case of a stock appreciation
right granted in tandem with a stock option, only the number of Shares subject
to the stock option shall be counted.


 


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(c)                                  Additional Shares.
Any Shares subject to an outstanding award granted under the Plan which are,
for any reason, forfeited, expired, canceled or settled in cash without
delivery to the award recipient of Shares, shall again be available for awards
under the Plan.


 


Any Shares
delivered to the Company as part or full payment for the exercise or
purchase price of an award granted under this Plan or, to the extent the
Committee determines that the availability of ISOs under the Plan will not be
compromised to satisfy the Company’s withholding obligation with respect to an
award granted under this Plan, shall again be available for awards under the
Plan.


 


6.                                       Stock Options.


 


(a)                                  Generally.
Stock options will consist of awards from the Company that will enable the
holder to purchase a number of Shares at set terms. Options shall be either
incentive stock options or nonqualified stock options. The Committee shall have
the authority to grant to any participant stock options (with or without stock
appreciation rights). A stock option granted as an incentive stock option shall,
to the extent it fails to qualify as an incentive stock option, be treated as a
nonqualified option. Each stock option shall be subject to such terms and
conditions, including vesting, consistent with the Plan as the Committee may impose
from time to time, subject to the following limitations.


 


(b)                                 Exercise Price.
Each stock option granted hereunder shall have a per-Share exercise price of
not less than the fair market value (as defined in Section 17 of the Plan)
of a Share on the date of grant;  provided, however, that
if an award is retroactively granted in tandem with or in substitution for
other awards made by the Company, the exercise price may be the price on
the date of grant of such other award; and provided, further, that
if a stock option is granted to a participant upon assumption of or in
substitution of an award granted by another entity in connection with a
corporate transaction between the Company and the granting entity, such as a
merger, consolidation or acquisition, the exercise price may be less than
fair market value of a Share on the date the substitute stock option is granted
if the aggregate fair market value of the Shares subject to the substitute
stock option over the aggregate exercise price of the substitute stock option
does not exceed the aggregate fair market value of the shares of the
predecessor entity subject to the award being assumed or substituted as of the
date immediately preceding the corporate transaction (as determined by the
Committee), over the aggregate grant price or exercise price of any such award.


 


(c)                                  Payment of
Exercise Price. The option exercise price may be paid in cash or, in
the discretion of the Committee, by the delivery of Shares. In the discretion
of the Committee, payment may also be made by delivering a properly
executed exercise notice to the Company together with a copy of irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale
or loan proceeds to pay the exercise price. The Committee may prescribe
any other method of paying the exercise price that it determines to be
consistent with applicable law and the purpose of the Plan.


 


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(d)                                 Exercise Period.
Stock options granted under the Plan shall be exercisable to the extent vested,
at such time or times and subject to such terms and conditions as shall be
determined by the Committee; provided, however,
that no stock option shall be exercisable later than ten (10) years after
the date it is granted except in the event of a participant’s death within six (6) months
prior to such expiration date, in which case, the exercise period of such
participant’s stock options may be extended beyond such period but no
later than one (1) year after the participant’s death. All stock options
shall terminate at such earlier times and upon such conditions or circumstances
as the Committee shall in its discretion set forth in such option agreement at
the date of grant.


 


(e)                                  Limitations on
Incentive Stock Options. Incentive stock options may be granted only
to participants who are employees of the Company or of a “parent corporation”
or “subsidiary corporation” (as defined in Sections 424(e) and (f) of
the Code, respectively) at the date of grant. The aggregate fair market value
(determined as of the time the stock option is granted) of the Shares with
respect to which incentive stock options are exercisable for the first time by
a participant during any calendar year (under all option plans of the Company
and of any parent corporation or subsidiary corporation) shall not exceed one
hundred thousand dollars ($100,000). For purposes of the preceding sentence,
incentive stock options will be taken into account in the order in which they
are granted. The per-Share exercise price of an incentive stock option shall
not be less than 100% of the fair market value of the common stock on the date
of grant, and no incentive stock option may be exercised later than 10
years after the date it is granted or, in the case of the death of a
participant, such longer period as permitted by Section 6(d).


 


(f)                                    Additional
Limitations on Incentive Stock Options for Ten Percent Shareholders. Incentive
stock options may not be granted to any participant who, at the time of
grant, owns stock possessing (after the application of the attribution rules of
Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or any parent corporation
or subsidiary corporation, unless the exercise price of the option is fixed at
not less than 110% of the fair market value of the common stock on the date of
grant and the exercise of such option is prohibited by its terms after the
expiration of five years from the date of grant of such option or, in the case
of the death of a participant, such longer period as permitted by Section 6(d).


 


7.                                       Stock Appreciation Rights.


 


(a)                                  Generally. The
Committee may, in its discretion, grant stock appreciation rights, including a
concurrent grant of stock appreciation rights in tandem with any stock option
grant. A “stock appreciation right” means a right to receive a payment
in cash, Shares or a combination thereof, in an amount equal to the excess of (i) the
fair market value, or other specified valuation, of a specified number of
shares of common stock on the date the right is exercised over (ii) the “grant
price”. Each stock appreciation right shall be subject to such terms and
conditions, including vesting, as the Committee shall impose from time to time.


 


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(b)                                 Grant Price. The
grant price per Share referenced in a stock appreciation right shall not be
less than the fair market value (as defined in Section 17 of the Plan) of
a Share on the date of grant; provided, however, that if an award is retroactively granted in tandem
with or in substitution for other awards made by the Company, the grant price may be
the price on the date of grant of such other award; and provided,
further, that if a stock appreciation right is granted to a
participant upon assumption of or in substitution of an award granted by
another entity in connection with a corporate transaction between the Company
and the granting entity, such as a merger, consolidation or acquisition, the
grant price may be less than fair market value of a Share on the date the
substitute stock appreciation right is granted if the aggregate fair market
value of the Shares subject to the substitute stock appreciation right over the
aggregate grant price of the substitute stock appreciation right does not
exceed the aggregate fair market value of the Shares of the predecessor entity
subject to the award being assumed or substituted as of the date immediately
preceding the corporate transaction (as determined by the Committee), over the
aggregate grant price or exercise price of any of such award.


 


(c)                                  Exercise Period.
Stock appreciation rights granted under the Plan shall be exercisable at such
time or times and subject to such terms and conditions, including vesting, as
shall be determined by the Committee; provided, however,
that no stock appreciation right shall be exercisable later than ten (10) years
after the date it is granted except in the event of a participant’s death
within six (6) months prior to such expiration date, in which case, the
exercise period of such participant’s stock appreciation rights may be
extended beyond such period but no later than one (1) year after the
participant’s death. All stock appreciation rights shall terminate at such
earlier times and upon such conditions or circumstances as the Committee shall
in its discretion set forth in such right at the date of grant.


 


8.                                       Restricted Stock Awards.


 


(a)                                  Generally. The
Committee may, in its discretion, grant restricted stock awards consisting of
common stock issued or transferred to participants with or without other
payments therefor, which are subject to transferability restrictions and/or a
substantial risk of forfeiture. Restricted stock awards shall be construed as
an offer by the Company to the participant to purchase the number of shares of
common stock subject to the restricted stock award at the purchase price, if
any, established therefor, and shall be subject to acceptance by a participant.


 


(b)                                 Payment of the
Purchase Price. If a restricted stock award requires payment therefor, the
purchase price of any shares of common stock subject to a restricted stock
award may be paid in any manner authorized by the Committee, which may include
any manner authorized under the Plan for the payment of the exercise price of a
stock option. Restricted stock awards may also be made in consideration of
services rendered to the Company or its subsidiaries or affiliates.


 


(c)                                  Additional Terms.
Restricted stock awards may be subject to such terms and conditions,
including vesting, as the Committee determines appropriate, including, without
limitation, restrictions on the sale or other disposition of such shares, the
right of


 


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the Company to
reacquire such shares for no consideration upon termination of the participant’s
employment within specified periods, and may constitute performance-based
awards, as described in Section 11 hereof. The Committee may require
the participant to deliver a duly signed stock power, endorsed in blank,
relating to the common stock covered by such an award. The Committee may also
require that the stock certificates evidencing such shares be held in custody
or bear restrictive legends until the restrictions thereon shall have lapsed.


 


(d)                                 Rights as a
Shareholder. Holders of restricted stock awards have the right to receive
dividends and to vote the shares; provided, however,
unless the Committee or the award agreement provides otherwise, dividends on
restricted stock awards shall be held in escrow and shall be payable, at such
time as the restrictions on the shares lapse, in either cash, shares or if
applicable the kind of property distributed as a dividend or any combination
thereof.


 


9.                                       Stock Units. The Committee may, in its discretion, grant
stock units with each such stock unit representing one share of common stock of
the Company. Stock units will be credited to a notional account maintained by
the Company. Unless the award agreement provides otherwise, each stock unit
shall also entitle the holder to an amount equal to the value of dividends paid
in respect of one share of common stock of the Company during the period the
unit is outstanding, which amount shall also be credited to the notional
account. Stock units may be subject to such terms and conditions, including
vesting and the time and method of settlement, as the Committee determines
appropriate; provided, however, that unless
the Committee or the award agreement provides otherwise, stock units shall be
settled in shares of common stock. Stock units may constitute
performance-based awards, as described in Section 11 hereof.


 


10.                                 Cash Awards.
The Committee may grant awards to be settled in cash; provided, however, that non-employee directors shall not be
eligible for cash awards. Cash awards may be subject to such terms and
conditions, including vesting, as the Committee determines to be appropriate. Cash
awards may constitute performance-based awards, as described in Section 11
hereof. The Company may, in its discretion, permit participants to defer
settlement of cash awards, in accordance with the requirements of Section 409A.


 


11.                                 Performance-Based
Awards.


 


(a)                                  Generally. Any
awards granted under the Plan may be granted in a manner such that the
awards qualify for the performance-based compensation exemption of Section 162(m)
of the Code (“performance-based awards”). As determined by the Committee
in its sole discretion, either the granting or vesting of such
performance-based awards shall be based on achievement of hurdle rates, growth
rates, and/or reductions in one or more business criteria that apply to the
individual participant, one or more business units or the Company as a whole.


 


(b)                                 Business Criteria.
The business criteria shall be as follows, individually or in combination: (i) net
earnings; (ii) earnings per Share; (iii) net sales growth; (iv) market


 


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share; (v) operating
profit; (vi) earnings before interest and taxes (EBIT); (vii) earnings
before interest, taxes, depreciation and amortization (EBITDA); (viii) gross
margin; (ix) expense targets; (x) working capital targets relating to
inventory and/or accounts receivable; (xi) operating margin; (xii) return on
equity; (xiii) return on assets; (xiv) planning accuracy (as measured by
comparing planned results to actual results); (xv) market price per Share;
(xvi) total return to stockholders; (xvii) net income; (xviii) pro forma net
income; (xix) return on capital; (xx) revenues; (xxi) expenses;
(xxii) operating cash flow; (xxiii) net profit margin; (xxiv) employee
headcount; (xxv) employee turnover; (xxvi) labor costs; and (xxvii)
customer service. In addition, performance-based awards may include
comparisons to the performance of other companies, such performance to be
measured by one or more of the foregoing business criteria.


 


(c)                                  Establishment of
Performance Goals. With respect to performance-based awards, the Committee
shall establish in writing (i) the performance goals applicable to a given
period, and such performance goals shall state, in terms of an objective
formula or standard, the method for computing the amount of compensation
payable to the participant if such performance goals are obtained and (ii) the
individual employees or class of employees to which such performance goals
apply no later than 90 days after the commencement of such period (but in no
event after 25% of such period has elapsed).


 


(d)                                 Certification of
Performance. No performance-based awards shall be payable to or vest with
respect to, as the case may be, any participant for a given period until
the Committee certifies in writing that the objective performance goals (and
any other material terms) applicable to such period have been satisfied.


 


(e)                                  Modification of
Performance-Based Awards. With respect to any awards intended to qualify as
performance-based awards, after establishment of a performance goal, the
Committee shall not revise such performance goal or increase the amount of
compensation payable thereunder (as determined in accordance with Section 162(m)
of the Code) upon the attainment of such performance goal. However, the
measurement of performance against goals shall exclude the impact of charges
for restructurings, discontinued operations, extraordinary items and other
unusual or non-recurring items, and the cumulative effects of accounting
changes, each as defined by generally accepted accounting principles as
identified in the financial statements, notes to the financial statements or
management’s discussion or analysis. In accordance with Section 162(m) of
the Code, the Committee may only exercise negative discretion with respect
to the amount of a performance-based award.


 


12.                                 Foreign Laws. The Committee may grant awards to
individual participants who are subject to the tax laws of nations other than
the United States, which awards may have terms and conditions as
determined by the Committee as necessary to comply with applicable foreign laws.
The Committee may take any action which it deems advisable to obtain
approval of such awards by the appropriate foreign governmental entity; provided, however, that no such awards may be granted
pursuant to this Section 12 and no action may be taken which would
result in a violation of the Exchange Act, the Code or any other applicable
law.


 


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13.                                 Adjustment Provisions; Change of Control.


 


(a)                                  Adjustment
Generally. If there shall be any change in the common stock of the Company,
through merger, consolidation, reorganization, recapitalization, stock or
special one-time cash dividend, stock split, reverse stock split, split up,
spin-off, combination of shares, exchange of shares, dividend in kind or other
like change in capital structure or distribution (other than normal cash
dividends) to stockholders of the Company, an adjustment shall be made to each
outstanding award such that each such award shall thereafter be exercisable for
such securities, cash and/or other property as would have been received in
respect of the common stock subject to such award had such award been exercised
in full immediately prior to such change or distribution, and such an
adjustment shall be made successively each time any such change shall occur.


 


(b)                                 Modification
of Awards. In the event of any change or distribution described in subsection (a) above,
in order to prevent dilution or enlargement of participants’ rights under the
Plan, the Committee will have authority to adjust, in an equitable manner, the
number and kind of shares that may be issued under the Plan, the number
and kind of shares subject to outstanding awards, the exercise price applicable
to outstanding awards, and the fair market value of the common stock and other
value determinations applicable to outstanding awards; provided,
however, that any such arithmetic adjustment to a performance-based
award shall not cause the amount of compensation payable thereunder to be
increased from what otherwise would have been due upon attainment of the
unadjusted award. Appropriate adjustments may also be made by the
Committee in the terms of any awards under the Plan to reflect such changes or
distributions and to modify any other terms of outstanding awards on an
equitable basis, including modifications of performance targets and changes in
the length of performance periods; provided, however,
that any such arithmetic adjustment to a performance-based award shall not
cause the amount of compensation payable thereunder to be increased from what
otherwise would have been due upon attainment of the unadjusted award. In
addition, other than with respect to stock options, stock appreciation rights,
and other awards intended to constitute performance-based awards, the Committee
is authorized to make adjustments to the terms and conditions of, and the
criteria included in, awards in recognition of unusual or nonrecurring events
affecting the Company or the financial statements of the Company, or in
response to changes in applicable laws, regulations, or accounting principles.


 


(c)                                  Effect of a Change
of Control. Notwithstanding any other provision of this Plan, if there is a
Change of Control (as defined in subsection (d) below) of the
Company, the Committee may provide at anytime prior to the Change of
Control that all then outstanding stock options, stock appreciation rights and
stock units and unvested cash awards shall immediately vest and become
exercisable and any restrictions on restricted stock awards or stock units
shall immediately lapse. In addition, the Committee may provide that all
awards held by participants who are at the time of the Change of Control in the
service of the Company a subsidiary or affiliate shall remain exercisable for
the remainder of their terms notwithstanding any subsequent termination of a
participant’s service. All awards shall be subject to the terms of any
agreement effecting the Change of Control, which agreement may provide,
without limitation, that


 


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in lieu of
continuing the awards, each stock option and stock appreciation right
outstanding hereunder shall terminate within a specified number of days after
notice to the holder, and that such holder shall receive, with respect to each
share of common stock subject to such stock option or stock appreciation right,
an amount equal to the excess of the fair market value of such shares of common
stock immediately prior to the occurrence of such Change of Control over the
exercise price (or base price) per Share underlying such stock option or stock
appreciation right with such amount payable in cash, in one or more kinds of
property (including the property, if any, payable in the transaction) or in a
combination thereof, as the Committee, in its discretion, shall determine. A
provision like the one contained in the preceding sentence shall be
inapplicable to a stock option or stock appreciation right granted within 6
months before the occurrence of a Change of Control if the holder of such stock
option or stock appreciation right is subject to the reporting requirements of Section 16(a) of
the Exchange Act and no exception from liability under Section 16(b) of
the Exchange Act is otherwise available to such holder.


 


(d)                                 Definitions.
For purposes of this Section 13, a “Change of Control” of the
Company shall be deemed to have occurred upon any of the following events:


 


(i)                                     Any
person(s) acting together which would constitute a “group” for purposes
of Section 13(d) of the Exchange Act (other than any holder of the
Company’s stock as of the effective date of this Plan, the Company or any
subsidiary) shall “beneficially own” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, at least 50% of the total
voting power of all classes of capital stock of the Company entitled to vote
generally in the election of the Board;


 


(ii)                                  Consummation
of (A) a plan of complete liquidation of the Company, or (B) a merger
or consolidation of the Company (x) in which the Company is not the continuing
or surviving corporation (other than a consolidation or merger with a
wholly-owned subsidiary of the Company in which all shares of common stock
outstanding immediately prior to the effectiveness thereof are changed into or
exchanged for common stock of the subsidiary) or (y) pursuant to which the
common stock is converted into cash, securities or other property, except in
either case, a consolidation or merger of the Company in which the holders of
the common stock immediately prior to the consolidation or merger have,
directly or indirectly, at least a majority of the common stock of the
continuing or surviving corporation immediately after such consolidation or
merger or in which the Board immediately prior the merger or consolidation
would, immediately after the merger or consolidation, constitute a majority of
the board of directors of the continuing or surviving corporation; or


 


(iii)                               The
consummation of a sale or other disposition (in one transaction or a series of
transactions) of all or substantially all of the assets of the Company.


 


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14.                                 Termination
of Service.


 


(a)                                  Termination (other
than for Cause). Unless the Committee or the applicable award agreement
provides otherwise, if a participant’s service with the Company or any
subsidiary or affiliate terminates for any reason other than for “cause”
(which shall have the meaning defined in the applicable award agreement or, in
the absence of such definition shall be defined by the Committee).


 


(i)                                     Stock
Options/Stock Appreciation Rights. Except as provided in Section 13(c) hereof,
any outstanding stock options and stock appreciation rights shall expire on the
earlier of:


 


(A)                              the
expiration of their term,


 


(B)                                90
days following termination of the participant’s service other than termination
of service on account of death or Disability.


 


provided, however,
that a participant (or in the case of the participant’s death or Disability,
the participant’s representative) may exercise all or part of the
participant’s stock options and stock appreciation rights at any time before
the expiration of such stock options following termination of service only to
the extent that the stock options and stock appreciation rights are vested on
or before the date participant’s service terminates. The balance of the stock
options and stock appreciation rights (which are not vested on the date
participant’s service terminates) shall lapse when the participant’s service
terminates.


 


If by
virtue of this provision, an incentive stock option is not exercised within
three (3) months after a participant’s employment terminates, then unless
such participant’s employment termination is due to his or her death or
Disability (defined for this purpose only as described in Section 22(e)(3) of
the Code), the incentive stock option shall be treated as a nonqualified stock
option.


 


(ii)                                  Restricted
Stock Awards/Stock Units. All unvested restricted stock awards and stock
units shall expire upon termination of service.


 


(iii)                               Cash
Awards/Performance-Based Awards. All cash awards and performance-based
awards shall be forfeited upon termination of service.


 


(b)                                 Termination of
Service (for Cause). All of a participant’s awards (including any exercised
stock options for which shares or cash have not been delivered to the
participant) shall be cancelled and forfeited immediately on the date of the
participant’s termination of service with the Company or any subsidiary if such
termination is for cause or cause exists on such date, and the Company shall
return to the participant the price (if any) paid for any undelivered shares. Should
a participant die at a time when cause exists, all of the participant’s awards
(including any exercised stock options for which shares have not been delivered
to the participant) shall be cancelled and forfeited immediately as of the date
of the participant’s death.


 


(c)                                  Leave
of Absence. For purposes of this Section 14, service shall be deemed
to continue while the participant is on a bona fide leave of absence, if such
leave


 


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was approved by
the Company in writing or if continued crediting of service for this purpose is
expressly required by the terms of such leave or by applicable law (as
determined by the Committee).


 


15.                                 Nontransferability.
Each award granted under the Plan to a participant shall not be
transferable except by will or the laws of descent and distribution or as
permitted by the Committee to a participant’s spouse, lineal descendants,
siblings, parents, heirs, executors, administrators, testamentary trustees,
legatees, beneficiaries or a trust for the exclusive benefit of any of the
foregoing persons, or to any charitable organizations described in Section 501(c)(3) of
the Code, which shall have discretion to permit transferability to third
parties under such terms and conditions as it shall determine. In the event of
the death of a participant (which for this purpose only shall include any
transferee), each stock option or stock appreciation right theretofore granted
to him or her shall be exercisable during such period after his or her death as
described in Section 14 hereof but unless the Committee or the award
agreement provides otherwise, such award shall only be exercisable by the
executor or administrator of the estate of the deceased participant or the
person or persons to whom the deceased participant’s rights under the stock
option or stock appreciation right shall pass by will or the laws of descent
and distribution.


 


16.                                 Other
Provisions. The granting of or distribution under any award under
the Plan may also be subject to such other provisions (whether or not
applicable to the awards of any other participant) as the Committee determines
appropriate, including, without limitation, for the forfeiture of, or
restrictions on resale or other disposition of, common stock acquired under any
form of award, for the acceleration of exercisability or vesting of awards
in the event of a Change of Control, for the payment of the value of awards to
participants in the event of a Change of Control, or to comply with federal and
state securities laws, or understandings or conditions as to the participant’s
employment in addition to those specifically provided for under the Plan.


 


17.                                 Fair Market Value. For purposes of this Plan and any awards
awarded hereunder, fair market value per
Share as of a particular date shall mean (i) if shares are then listed on a
national stock exchange, the closing price per Share on the exchange for the
last preceding date on which there was a sale of shares on such exchange, as
determined by the Committee, (ii) if shares are not then listed on a
national stock exchange but are then traded on an over-the-counter market, the
average of the closing bid and asked prices for such shares in such
over-the-counter market for the last preceding date on which there was a sale
of such shares in such market, as determined by the Committee, or (iii) if
shares are not then listed on a national exchange or traded on an
over-the-counter market, such value as the Committee in its discretion may in
good faith determine; provided that, where such shares are so listed or traded,
the Committee may make discretionary determinations where the shares have
not been traded for 10 trading days.


 


18.                                 Withholding.
All payments or distributions of awards made pursuant to the Plan
shall be net of any amounts required to be withheld pursuant to applicable
federal, state and local tax withholding requirements at the minimum statutory


 


11

















 


withholding rates.
If the Company proposes or is required to distribute common stock pursuant to
the Plan, it may require the recipient to remit to it or to the
corporation that employs such recipient an amount sufficient to satisfy such
tax withholding requirements prior to the delivery of any certificates for such
common stock. In lieu thereof, the Company or the employing corporation shall
have the right to withhold the amount of such taxes from any other sums due or
to become due from such corporation to the recipient as the Committee shall
prescribe. The Committee may, in its discretion and subject to such rules as
it may adopt (including any as may be required to satisfy applicable
tax and/or non-tax regulatory requirements), permit an optionee or award or
right holder to pay all or a portion of the federal, state and local
withholding taxes arising in connection with any award consisting of shares of
common stock by electing to have the Company withhold shares of common stock
having a fair market value equal to the amount of tax to be withheld, such tax
calculated at minimum statutory withholding rates.


 


19.                                 Tenure. A
participant’s right, if any, to continue to serve the Company or any of its
subsidiaries or affiliates as an officer, employee, or otherwise, shall not be
enlarged or otherwise affected by his or her designation as a participant under
the Plan.


 


20.                                 Unfunded
Plan. Participants shall have no right, title, or interest
whatsoever in or to any investments which the Company may make to aid it
in meeting its obligations under the Plan. Nothing contained in the Plan, and
no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company and
any participant, beneficiary, legal representative or any other person. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Company. All payments to be made hereunder shall be
paid from the general funds of the Company and no special or separate fund
shall be established and no segregation of assets shall be made to assure
payment of such amounts except as expressly set forth in the Plan. The Plan is
not intended to be subject to the Employee Retirement Income Security Act of
1974, as amended.


 


21.                                 No Fractional Shares. No fractional shares of common stock
shall be issued or delivered pursuant to the Plan or any award. The Committee
shall determine whether cash, or awards, or other property shall be issued or
paid in lieu of fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.


 


22.                                 Duration,
Amendment and Termination. No award shall be granted more than 10
years after the Effective Date. The Committee may amend the Plan from time
to time or suspend or terminate the Plan at any time. No amendment of the Plan may be
made without approval of the stockholders of the Company if the amendment will:
(i)  increase the aggregate number of shares of common stock that may be
delivered through stock options under the Plan; (ii) increase the Maximum
Shares as set forth in Section 5 hereof; (iii) permit the re-pricing
of an award to a lower exercise price, base price or purchase price, as
applicable, (including, without limitation, the cancellation of an award
followed by a re-grant of that award six (6) months later); (iv) change
the types of business criteria on which performance-based awards are to be
based under the Plan;


 


12

















 


(v) modify
the requirements as to eligibility for participation in the Plan; or (vi) change
the legal entity authorized to make awards under the Plan. Notwithstanding
anything contained in this Section 22 or the Plan, the terms of the Plan
and any awards granted hereunder may be amended (retrospectively or prospectively)
as may be required to comply with the requirements of Section 409A.


 


23.                                 Governing
Law. This Plan, awards granted hereunder and actions taken in
connection herewith shall be governed and construed in accordance with the laws
of the State of Delaware (regardless of the law that might otherwise govern
under applicable Delaware principles of conflict of laws).


 


24.                                 Effective
Date. The Plan shall be effective as of September 30, 2005, the
date on which the Plan was adopted by the Board (the “Effective Date”),
provided that the Plan is approved by the stockholders of the Company at an
annual meeting or any special meeting of stockholders of the Company within 12
months of the Effective Date, and such approval of stockholders shall be a
condition to the right of each participant to receive any awards hereunder. Any
awards granted under the Plan prior to such approval of stockholders shall be
effective as of the date of grant (unless, with respect to any award, the
Committee specifies otherwise at the time of grant), but no such award may be
exercised or settled and no restrictions relating to any award may lapse
prior to such stockholder approval, and if stockholders fail to approve the
Plan as specified hereunder, any such award shall be cancelled.


 


13

















 


Section Where
Important Terms First Defined or Used


 


	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Board

  	
   

  	
  2(a)

  
	
   

  	
   

  	
   

  
	
  Cash Award

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  Cause

  	
   

  	
  14(a)

  
	
   

  	
   

  	
   

  
	
  Change of
  Control

  	
   

  	
  13(d)

  
	
   

  	
   

  	
   

  
	
  Code

  	
   

  	
  2(a)

  
	
   

  	
   

  	
   

  
	
  Committee

  	
   

  	
  2(a)

  
	
   

  	
   

  	
   

  
	
  Common Stock

  	
   

  	
  5(a)

  
	
   

  	
   

  	
   

  
	
  Company

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  Effective Date

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  Exchange Act

  	
   

  	
  2(a)

  
	
   

  	
   

  	
   

  
	
  Fair Market
  Value

  	
   

  	
  17

  
	
   

  	
   

  	
   

  
	
  Grant Price

  	
   

  	
  7(a)

  
	
   

  	
   

  	
   

  
	
  Independent
  Director

  	
   

  	
  2(a)

  
	
   

  	
   

  	
   

  
	
  ISO Maximum

  	
   

  	
  5(a)

  
	
   

  	
   

  	
   

  
	
  Maximum Shares

  	
   

  	
  5(a)

  
	
   

  	
   

  	
   

  
	
  Non-Employee
  Director

  	
   

  	
  2(a)

  
	
   

  	
   

  	
   

  
	
  Parent Corporation

  	
   

  	
  6(e)

  
	
   

  	
   

  	
   

  
	
  Performance-Based
  Awards

  	
   

  	
  11(a)

  
	
   

  	
   

  	
   

  
	
  Plan

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  Restricted Stock
  Award

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  Share

  	
   

  	
  5(a)

  
	
   

  	
   

  	
   

  
	
  Stock
  Appreciation Rights

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Stock Options

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Stock Unit

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  Subsidiary
  Corporation

  	
   

  	
  6(e)

  



 


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