Document:

Exhibit 10.1

 

 

AVAYA
INC. 2004 LONG TERM INCENTIVE PLAN (“PLAN”)

FORM OF
PERFORMANCE VESTING RESTRICTED STOCK UNIT AWARD AGREEMENT

 

 

	
  Name

   

  «FirstName» «LastName»

  	
  Grant Date

   

  «GrantDate»

   

  
	
  Capitalized
  terms not otherwise defined herein shall have the same meanings as in the
  Plan.

  

 

You
have been granted as of the Grant Date set forth above, «XX» restricted
stock units (“Restricted Stock Units”) (subject to Section 1 below). Upon
termination of the restrictions related thereto, each Restricted Stock Unit
will be converted into one share of Avaya Inc. (“Avaya” or “Company”) common
stock, par value $.01 (“Shares”), subject to the terms and conditions of the
Plan and this Agreement.

 

1.               Vesting
of Award.  The
Restricted Stock Units shall vest and become nonforfeitable upon the date the
Committee determines that the following condition has been satisfied:  that Avaya’s diluted earnings per share
(determined in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”)
and as adjusted by the Items (defined below)) (“EPS”) for the fiscal year ended
September 30, 20XX, shall be at least $XX; provided, however, that the
percentage of Restricted Stock Units that may vest and become nonforfeitable
shall be determined based on the schedule attached hereto as Appendix A;
provided, further, however, that if the aggregate EPS total calculated by
combining Avaya’s EPS for each of the fiscal years ended September 30, 20XX through
and including September 30, 20XX is less than $XX, then all Restricted Stock
Units shall be forfeited and cancelled (the date on which any Restricted Stock
Unit vests being the “Vesting Date” for such Restricted Stock Unit).  Consistent with the terms of the Plan, the
Committee may, in its discretion, reduce the amount of any Award subject to
Article 22 of the Plan based on such criteria as it shall determine, including
but not limited to individual merit.

 

“Items” shall
include:

 

(a)                                  any of the following items that has an
impact on net income for a fiscal year of more than $XX million:

(i)    extraordinary items (net of applicable
taxes),

(ii)   cumulative effects of changes in accounting
principles, and

(iii)       nonrecurring items (net of applicable taxes)
including, but not limited to, gains or losses on asset dispositions and sales
of divisions, business units or subsidiaries, restructuring charges, gains and
losses from qualified benefit plan curtailments and settlements, and income or
expenses related to deferred tax assets, and

 

(b)           any of the following items that has
an impact on EPS for a fiscal year of more than $XX per share:

(i)    gains and losses (net of applicable  taxes) from the sales of securities, and

(ii)          the issuance or exercise of any dilutive securities
such as convertible debt, preferred stock, warrants, restricted stock units or
stock options.

 

                        The period
beginning on the October 1 immediately preceding the Grant Date (the “Period
Start Date”) and ending on the day prior to the Vesting Date for a Restricted
Stock Unit is herein referred to as the “Restriction Period” with respect to
such Restricted Stock Unit.

 

 

2.               Termination
of Employment.  Upon
termination of your employment for any reason other than death or disability as
described below, including without limitation, retirement and termination as a
result of your employer ceasing to be either Avaya or a Subsidiary, any
Restricted Stock Units that are not vested shall be forfeited and cancelled.
Transfer to and from Avaya and any Subsidiary shall not be considered a
termination of employment for purposes of this Agreement.  Nor shall it be considered a termination of
employment for purposes of this Agreement if you are placed on an approved
leave of absence, unless the Committee shall otherwise determine.

 

(a)                                  Death - If you die prior to the Vesting Date,
then the Restriction Period will end and the award will be paid only if the
condition set forth in Section 1 is met after your date of death, in which case
the award will be paid as soon as practicable after the Vesting Date according
to the following formula and all other Restricted Stock Units not so paid will
be forfeited and cancelled:  the number
of Restricted Stock Units that will vest shall be determined by multiplying the
total number of Restricted Stock Units subject to  this award by a fraction, the numerator of
which shall be equal to the number of complete months which you survived
following the Period Start Date, and the denominator of which shall be equal to
the number of complete months in the Restriction Period.  In all other instances if you die prior to
the Vesting Date your award will be forfeited and cancelled.

 

(b)                                 Disability - “Disability”
means termination of employment under circumstances where you qualify for and
receive payments under a long-term disability pay plan maintained by Avaya or
any Subsidiary or as required by or available under applicable local law.  If your employment is terminated prior to the
Vesting Date, then the Restriction Period will end and the award will be paid
only if the condition set forth in Section 1 is met after your date of termination,
in which case the award will be paid as soon as practicable after the Vesting
Date according to the following formula and all other Restricted Stock Units
not so paid will be forfeited and cancelled: 
the number of Restricted Stock Units that will vest shall be determined
by multiplying the total number of Restricted Stock Units subject to  this award by a fraction, the numerator of
which shall be equal to the number of complete months you were employed by Avaya
or any Subsidiary following the Period Start Date, and the denominator of which
shall be equal to the number of complete months in the Restriction Period.  In all other instances if you terminate your
employment as a result of a Disability, your award will be forfeited.

 

3.               Delivery
of Shares.   As soon as
practicable after termination of the Restriction Period, and subject to Section
6, the Company will deliver a certificate representing the Shares being
distributed to you or to your legal representative.

 

4.               Transferability.  Unless otherwise provided for in the Plan,
you may not transfer, pledge, assign, sell or otherwise alienate your
Restricted Stock Units.

 

5.               No
Right of Employment. 
Neither the Plan nor this Restricted Stock Unit Award shall be construed
as giving you the right to be retained in the employ of Avaya or any
Subsidiary.

 

6.               Taxes.  Avaya shall deduct or cause to be deducted
from, or collect or cause to be collected with respect to, your Restricted
Stock Units any federal, state, or local taxes required by law to be withheld
or paid with respect to your Restricted Stock Units, and you or your legal
representative or beneficiaries shall be required to pay any such amounts.  Avaya shall have the right to take such
action as may be necessary, in Avaya’s opinion, to satisfy such obligations.

 

7.               Beneficiary.  You may, in accordance with procedures
established by the Committee, designate one or more beneficiaries to receive
all or part of this award in case of your death, and you may change or revoke
such designation at any time.  Such
designation shall not be effective unless and until the Senior Vice President—Human
Resources shall determine, on advice of counsel, that resale of Shares by your
beneficiary(ies) does not require any registration, qualification, consent or
approval of any securities exchange or governmental or regulatory agency or
authority.  In the event of your death,
any portion of this Award that is subject to such a designation (to the extent
such designation is valid, effective and enforceable under this Agreement and
applicable law) shall be distributed to such beneficiary or beneficiaries in
accordance with this Agreement.  Any
other portion of this Award shall be distributed to your estate.  If there shall be any question as to the
legal right of any beneficiary to receive a distribution hereunder, or to the
extent your designation is not effective, such portion will be delivered to
your estate, in which event neither Avaya nor any Subsidiary shall have any
further liability to anyone with respect to such award.

 

 

8.               Confidentiality;
Non-solicitation; Recoupment of Profits.

 

(a)                                  You recognize and acknowledge that during
your employment with Avaya you have had access to highly confidential and
proprietary Company information and trade secrets (“Proprietary Information,”
as described herein) and the use, misappropriation or disclosure of  Proprietary Information would cause
irreparable injury to Avaya; and it is essential to the protection of Avaya’s
good will and to the maintenance of Avaya’s competitive position that
Proprietary Information be kept secret and that you not disclose  Proprietary Information to others or use any
Proprietary Information to your own advantage or the advantage of any third
parties.  For purposes of this Agreement,
the term “Proprietary Information” shall include any and all information, in
any form whatsoever, including but not limited to, hard copy, computer floppy
diskette, CD, CD-ROM drive, information retained in electronic storage, or
other information storage means, relating to Avaya’s technology; techniques;
processes; tools; research and development; market research, data and strategy;
and, information relating to sales, pricing and customers, including
customer-specific sales information, pricing policies and strategies.

 

(b)                                 You further recognize and acknowledge
that it is vital for the proper protection of Avaya’s legitimate interests that
during the term of your employment and for a period of one (1) year from the
date of termination of your Avaya employment you may not directly or
indirectly: (i) solicit, induce, or attempt to induce employees of Avaya or any
affiliate of Avaya to terminate their employment with, or otherwise cease their
relationship with Avaya or any affiliated company; or (ii)  solicit, induce, hire or attempt to solicit,
induce or hire any employee of Avaya to work or provide services to any third
party; or (iii) solicit to divert or take away or attempt to divert or to take
away, the business or patronage of any of Avaya’s clients, customers or
accounts, or prospective clients, customers or accounts.

 

(c)                                  You agree that if you violate the terms
of this Section (a) or (b), this Agreement will be cancelled immediately in its
entirety, and any benefit already paid out within twelve (12) months prior to
Avaya’s notice to you of such violation shall, at the sole discretion of Avaya,
be required to be repaid to Avaya within ten (10) business days of Avaya’s
demand of you in writing.  Further,
insofar as any violation of this Section (a) or (b) may cause harm or injury to
Avaya which may not be calculable or remedial by way of monetary damages, you
understand and acknowledge that Avaya may initiate an action in law or in
equity to prevent you from engaging in any conduct which is in violation of
this Section (a) or (b) and/or to initiate an action to recoup any and all
profits you have earned as a result of this Agreement.

 

(d)                                 If any restriction set forth in this
Section is found by a court of competent jurisdiction to be unenforceable
because it extends for too long a period of time or over too great a range of
activities or in too broad a geographic area, it shall be interpreted to extend
over the maximum period of time, range of activities or geographic areas as to
which it may be enforceable.

 

(e)                                  You understand and agree that the
restrictions contained in this Section are necessary for the protection of the
business and goodwill of Avaya and are expressly considered by you to be
reasonable for such purpose.

 

9.               Governing
Law.  The validity, construction and
effect of this Agreement shall be determined in accordance with the laws of the
State of Delaware without giving effect to principles of conflicts of law.

 

10.         Subject
to Plan.  This
Agreement and grant of Restricted Stock Units are subject to all of the terms
and conditions of the Plan.

 

 

 

 

	
  Please
  indicate your acceptance of terms 1-10, and acknowledge that you have
  received a copy of the Plan, as currently in effect, by signing at the place
  provided and returning the original of this Agreement.

   

  
	
  ACCEPTED
  AND AGREED:

  	
  Avaya
  Inc.

  
	
  SIGNATURE

   

   

  	
  BYExhibit 10.51

 

QUANEX
CORPORATION

2006 OMNIBUS INCENTIVE PLAN

 

 

 

	
  ARTICLE I

  	
  ESTABLISHMENT,
  PURPOSE AND DURATION

  	
   

  
	
  1.1

  	
  Establishment

  	
  1

  
	
  1.2

  	
  Purpose of the Plan

  	
  1

  
	
  1.3

  	
  Duration of Plan

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  DEFINITIONS

  	
   

  
	
  2.1

  	
  Affiliate

  	
  1

  
	
  2.2

  	
  Annual Incentive Award

  	
  1

  
	
  2.3

  	
  Award

  	
  1

  
	
  2.4

  	
  Award Agreement

  	
  1

  
	
  2.5

  	
  Board

  	
  1

  
	
  2.6

  	
  Cash-Based Award

  	
  1

  
	
  2.7

  	
  Code

  	
  2

  
	
  2.8

  	
  Committee

  	
  2

  
	
  2.9

  	
  Company

  	
  2

  
	
  2.10

  	
  Corporate Change

  	
  2

  
	
  2.11

  	
  Director

  	
  2

  
	
  2.12

  	
  Disability

  	
  2

  
	
  2.13

  	
  Dividend Equivalent

  	
  2

  
	
  2.14

  	
  Employee

  	
  2

  
	
  2.15

  	
  Fair Market Value

  	
  2

  
	
  2.16

  	
  Fiscal Year

  	
  2

  
	
  2.17

  	
  Holder

  	
  2

  
	
  2.18

  	
  Minimum Statutory Tax Withholding
  Obligation

  	
  2

  
	
  2.19

  	
  Option

  	
  2

  
	
  2.20

  	
  Option Price

  	
  2

  
	
  2.21

  	
  Other Stock-Based Award

  	
  3

  
	
  2.22

  	
  Performance Goals

  	
  3

  
	
  2.23

  	
  Performance Stock Award

  	
  3

  
	
  2.24

  	
  Performance Unit Award

  	
  3

  
	
  2.25

  	
  Period of Restriction

  	
  3

  
	
  2.26

  	
  Plan

  	
  3

  
	
  2.27

  	
  Restricted Stock

  	
  3

  
	
  2.28

  	
  Restricted Stock Award

  	
  3

  
	
  2.29

  	
  RSU

  	
  3

  
	
  2.30

  	
  RSU Award

  	
  3

  
	
  2.31

  	
  SAR

  	
  3

  
	
  2.32

  	
  Section 409A

  	
  3

  
	
  2.33

  	
  Stock

  	
  3

  
	
  2.34

  	
  Substantial Risk of Forfeiture

  	
  3

  
	
  2.35

  	
  Termination of Employment

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  ELIGIBILITY
  AND PARTICIPATION

  	
   

  
	
  3.1

  	
  Eligibility

  	
  4

  
	
  3.2

  	
  Participation

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  GENERAL
  PROVISIONS RELATING TO AWARDS

  	
   

  
	
  4.1

  	
  Authority to Grant Awards

  	
  4

  
	
  4.2

  	
  Dedicated Shares; Maximum Awards

  	
  4

  

 

i

 

	
  4.3

  	
  Non-Transferability

  	
  5

  
	
  4.4

  	
  Requirements of Law

  	
  5

  
	
  4.5

  	
  Changes in the Company’s Capital Structure

  	
  5

  
	
  4.6

  	
  Election Under Section 83(b) of the
  Code

  	
  8

  
	
  4.7

  	
  Forfeiture for Cause

  	
  8

  
	
  4.8

  	
  Forfeiture Events

  	
  8

  
	
  4.9

  	
  Award Agreements

  	
  8

  
	
  4.10

  	
  Amendments of Award Agreements

  	
  8

  
	
  4.11

  	
  Rights as Stockholder

  	
  8

  
	
  4.12

  	
  Issuance of Shares of Stock

  	
  8

  
	
  4.13

  	
  Restrictions on Stock Received

  	
  9

  
	
  4.14

  	
  Compliance With Section 409A

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  OPTIONS

  	
   

  
	
  5.1

  	
  Authority to Grant Options

  	
  9

  
	
  5.2

  	
  Option Agreement

  	
  9

  
	
  5.3

  	
  Option Price

  	
  9

  
	
  5.4

  	
  Duration of Option

  	
  9

  
	
  5.5

  	
  Amount Exercisable

  	
  9

  
	
  5.6

  	
  Exercise of Option

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  STOCK
  APPRECIATION RIGHTS

  	
   

  
	
  6.1

  	
  Authority to Grant SAR Awards

  	
  10

  
	
  6.2

  	
  General Terms

  	
  10

  
	
  6.3

  	
  SAR Agreement

  	
  10

  
	
  6.4

  	
  Term of SAR

  	
  10

  
	
  6.5

  	
  Exercise of SAR

  	
  10

  
	
  6.6

  	
  Payment of SAR Amount

  	
  10

  
	
  6.7

  	
  Termination of Employment

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  RESTRICTED
  STOCK AWARDS

  	
   

  
	
  7.1

  	
  Restricted Stock Awards

  	
  11

  
	
  7.2

  	
  Restricted Stock Award Agreement

  	
  11

  
	
  7.3

  	
  Holder’s Rights as Stockholder

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  RESTRICTED
  STOCK UNIT AWARDS

  	
   

  
	
  8.1

  	
  Authority to Grant RSU Awards

  	
  11

  
	
  8.2

  	
  RSU Award

  	
  11

  
	
  8.3

  	
  RSU Award Agreement

  	
  12

  
	
  8.4

  	
  Dividend Equivalents

  	
  12

  
	
  8.5

  	
  Form of Payment Under RSU Award

  	
  12

  
	
  8.6

  	
  Time of Payment Under RSU Award

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  PERFORMANCE
  STOCK AWARDS AND PERFORMANCE UNIT AWARDS

  	
   

  
	
  9.1

  	
  Authority to Grant Performance Stock Awards
  and Performance Unit Awards

  	
  12

  
	
  9.2

  	
  Performance Goals

  	
  12

  
	
  9.3

  	
  Time of Establishment of Performance Goals

  	
  13

  
	
  9.4

  	
  Written Agreement

  	
  13

  
	
  9.5

  	
  Form of Payment Under Performance Unit
  Award

  	
  13

  
	
  9.6

  	
  Time of Payment Under Performance Unit
  Award

  	
  13

  

 

ii

 

	
  9.7

  	
  Holder’s Rights as Stockholder With Respect
  to a Performance Stock Award

  	
  13

  
	
  9.8

  	
  Increases Prohibited

  	
  13

  
	
  9.9

  	
  Stockholder Approval

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  ANNUAL
  INCENTIVE AWARDS

  	
   

  
	
  10.1

  	
  Authority to Grant Annual Incentive Awards

  	
  13

  
	
  10.2

  	
  Performance Goals

  	
  14

  
	
  10.3

  	
  Time of Establishment of Performance Goals

  	
  14

  
	
  10.4

  	
  Written Agreement

  	
  14

  
	
  10.5

  	
  Form of Payment Under Annual Incentive
  Award

  	
  14

  
	
  10.6

  	
  Time of Payment Under Annual Incentive
  Award

  	
  14

  
	
  10.7

  	
  Increases Prohibited

  	
  14

  
	
  10.8

  	
  Stockholder Approval

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  OTHER
  STOCK-BASED AWARDS

  	
   

  
	
  11.1

  	
  Authority to Grant Other Stock-Based Awards

  	
  15

  
	
  11.2

  	
  Value of Other Stock-Based Award

  	
  15

  
	
  11.3

  	
  Payment of Other Stock-Based Award

  	
  15

  
	
  11.4

  	
  Termination of Employment

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
  CASH-BASED
  AWARDS

  	
   

  
	
  12.1

  	
  Authority to Grant Cash-Based Awards

  	
  15

  
	
  12.2

  	
  Value of Cash-Based Award

  	
  15

  
	
  12.3

  	
  Payment of Cash-Based Award

  	
  15

  
	
  12.4

  	
  Termination of Employment

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
  SUBSTITUTION
  AWARDS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  	
  ADMINISTRATION

  	
   

  
	
  14.1

  	
  Awards

  	
  16

  
	
  14.2

  	
  Authority of the Committee

  	
  16

  
	
  14.3

  	
  Decisions Binding

  	
  16

  
	
  14.4

  	
  No Liability

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV

  	
  AMENDMENT
  OR TERMINATION OF PLAN

  	
   

  
	
  15.1

  	
  Amendment, Modification, Suspension, and
  Termination

  	
  17

  
	
  15.2

  	
  Awards Previously Granted

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVI

  	
  MISCELLANEOUS

  	
   

  
	
  16.1

  	
  Unfunded Plan/No Establishment of a Trust
  Fund

  	
  17

  
	
  16.2

  	
  No Employment Obligation

  	
  17

  
	
  16.3

  	
  Tax Withholding

  	
  18

  
	
  16.4

  	
  Gender and Number

  	
  18

  
	
  16.5

  	
  Severability

  	
  18

  
	
  16.6

  	
  Headings

  	
  18

  
	
  16.7

  	
  Other Compensation Plans

  	
  18

  
	
  16.8

  	
  Other Awards

  	
  18

  
	
  16.9

  	
  Successors

  	
  19

  
	
  16.10

  	
  Law Limitations/Governmental Approvals

  	
  19

  
	
  16.11

  	
  Delivery of Title

  	
  19

  

 

iii

 

	
  16.12

  	
  Inability to Obtain Authority

  	
  19

  
	
  16.13

  	
  Investment Representations

  	
  19

  
	
  16.14

  	
  Persons Residing Outside of the United
  States

  	
  19

  
	
  16.15

  	
  Arbitration of Disputes

  	
  19

  
	
  16.16

  	
  Governing Law

  	
  19

  

 

iv

 

ARTICLE
I

ESTABLISHMENT, PURPOSE AND DURATION

 

1.1           Establishment.  The Company hereby establishes an incentive
compensation plan, to be known as the “Quanex Corporation 2006 Omnibus
Incentive Plan,” as set forth in this document. 
The Plan permits the grant of Options, SARs, Restricted Stock, RSUs,
Performance Stock Awards, Performance Unit Awards, Annual Incentive Awards,
Cash-Based Awards and Other Stock-Based Awards. 
The Plan shall become effective on the later of (a) the date the
Plan is approved by the Board and (b) the date the Plan is approved by the
stockholders of the Company.

 

1.2           Purpose of the Plan.  The Plan is intended to advance
the best interests of the Company, its Affiliates and its stockholders by
providing those persons who have substantial responsibility for the management
and growth of the Company and its Affiliates with additional performance
incentives and an opportunity to obtain or increase their proprietary interest
in the Company, thereby encouraging them to continue in their employment or
affiliation with the Company or its Affiliates.

 

1.3           Duration of Plan.  The Plan shall continue indefinitely until it
is terminated pursuant to Section 15.1. 
The applicable provisions of the Plan will continue in effect with
respect to an Award granted under the Plan for as long as such Award remains
outstanding.

 

ARTICLE
II

DEFINITIONS

 

The words and phrases defined in this
Article shall have the meaning set out below throughout the Plan, unless
the context in which any such word or phrase appears reasonably requires a
broader, narrower or different meaning.

 

2.1           “Affiliate“
means any corporation, partnership, limited liability company or association,
trust or other entity or organization which, directly or indirectly, controls,
is controlled by, or is under common control with, the Company.  For purposes of the preceding sentence, “control”
(including, with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any entity or organization,
shall mean the possession, directly or indirectly, of the power (a) to
vote more than fifty percent (50%) of the securities having ordinary voting
power for the election of directors of the controlled entity or organization,
or (ii) to direct or cause the direction of the management and policies of the
controlled entity or organization, whether through the ownership of voting
securities or by contract or otherwise.

 

2.2           “Annual
Incentive Award“ means an Award granted to a Holder pursuant to
Article X.

 

2.3           “Award“
means, individually or collectively, a grant under the Plan of Options, SARs,
Restricted Stock, RSUs, Performance Stock Awards, Performance Unit Awards,
Annual Incentive Awards, Other Stock-Based Awards and Cash-Based Awards, in
each case subject to the terms and provisions of the Plan.

 

2.4           “Award Agreement“
means an agreement that sets forth the terms and conditions applicable to an
Award granted under the Plan.

 

2.5           “Board“
means the board of directors of the Company.

 

2.6           “Cash-Based Award“
means an Award granted pursuant to Article XII.

 

1

 

2.7           “Code“ means
the United States Internal Revenue Code of 1986, as amended from time to time.

 

2.8           “Committee“
means the Compensation Committee of the Board.

 

2.9           “Company“
means Quanex Corporation, a Delaware corporation, or any successor (by
reincorporation, merger or otherwise).

 

2.10         “Corporate
Change“ shall have the meaning ascribed to that term in
Section 4.5(c).

 

2.11         “Director“
means a director of the Company who is not an Employee.

 

2.12         “Disability“
means as determined by the Committee in its discretion exercised in good faith,
a physical or mental condition of the Holder that would entitle him to payment
of disability income payments under the Company’s long-term disability
insurance policy or plan for Employees as then in effect; or in the event that
the Holder is not covered, for whatever reason, under the Company’s long-term
disability insurance policy or plan for Employees or in the event the Company
does not maintain such a long-term disability insurance policy, “Disability”
means a permanent and total disability as defined in section 22(e)(3) of
the Code.  A determination of Disability
may be made by a physician selected or approved by the Committee and, in this
respect, the Holder shall submit to an examination by such physician upon
request by the Committee.

 

2.13         “Dividend Equivalent“  means a payment equivalent in amount to
dividends paid to the Company’s stockholders.

 

2.14         “Employee“
means a person employed by the Company or any Affiliate as a common law
employee.

 

2.15         “Fair Market Value“ of the Stock as of any particular
date means (1) if the Stock is traded on a stock exchange, the closing sale
price of the Stock on that date as reported on the principal securities
exchange on which the Stock is traded, or (2) if the Stock is traded in the
over-the-counter market, the average between the high bid and low asked price
on that date as reported in such over-the-counter market; provided that
(a) if the Stock is not so traded, (b) if no closing price or bid and
asked prices for the stock was so reported on that date or (c) if, in the
discretion of the Committee, another means of determining the fair market value
of a share of Stock at such date shall be necessary or advisable, the Committee
may provide for another means for determining such fair market value.

 

2.16         “Fiscal Year“
means the Company’s fiscal year.

 

2.17         “Holder“
means a person who has been granted an Award or any person who is entitled to
receive shares of Stock or cash under an Award.

 

2.18         “Minimum Statutory Tax
Withholding Obligation“   means, with respect to an
Award, the amount the Company or an Affiliate is required to withhold for
federal, state and local taxes based upon the applicable minimum statutory
withholding rates required by the relevant tax authorities.

 

2.19         “Option“
means a “nonqualified stock option” to purchase Stock granted pursuant to
Article V that does not satisfy the requirements of section 422 of the
Code.

 

2.20         “Option Price“
shall have the meaning ascribed to that term in Section 5.3.

 

2

 

2.21         “Other
Stock-Based Award“ means an equity-based or
equity-related Award not otherwise described by the terms and provisions of the
Plan that is granted pursuant to Article XI.

 

2.22         “Performance
Goals“ means one or more of the criteria described in
Section 9.2 on which the performance goals applicable to an Award are
based.

 

2.23         “Performance Stock Award“
means an Award designated as a performance stock award granted to a Holder
pursuant to Article IX.

 

2.24         “Performance Unit Award“
means an Award designated as a performance unit award granted to a Holder
pursuant to Article IX.

 

2.25         “Period of Restriction“ means the period during
which Restricted Stock is subject to a substantial risk of forfeiture (based on
the passage of time, the achievement of performance goals, or upon the
occurrence of other events as determined by the Committee, in its discretion),
as provided in Article VII.

 

2.26         “Plan“ means
the Quanex Corporation 2006 Omnibus Incentive Plan, as set forth in this
document as it may be amended from time to time.

 

2.27         “Restricted Stock“
means shares of restricted Stock issued or granted under the Plan pursuant to
Article VII.

 

2.28         “Restricted Stock Award“
means an authorization by the Committee to issue or transfer Restricted Stock
to a Holder.

 

2.29         “RSU“ means
a restricted stock unit credited to a Holder’s ledger account maintained by the
Company pursuant to Article VIII.

 

2.30         “RSU
Award“ means an Award granted pursuant to Article VIII.

 

2.31         “SAR“ means
a stock appreciation right granted under the Plan pursuant to Article VI.

 

2.32         “Section 409A“  means section 409A of the Code and Department
of Treasury rules and regulations issued thereunder.

 

2.33         “Stock“
means the common stock of the Company, $0.50 par value per share (or such other
par value as may be designated by act of the Company’s stockholders).  In addition, for purposes of the Plan and the
Awards, the term Stock shall also be deemed to include any rights to purchase (“Rights”) the Series A Junior Participating Preferred Stock
of the Company that may then be trading together with the Stock as provided in
the Rights Agreement between the Company and Wells Fargo Bank, N.A. relating to
the Rights.

 

2.34         “Substantial Risk of Forfeiture“ shall have the meaning ascribed to that
term in section 409A of the Code and Department of Treasury guidance issued
thereunder.

 

2.35         “Termination
of Employment“ means the termination of the Award recipient’s employment
relationship with the Company and all Affiliates.

 

3

 

ARTICLE
III

ELIGIBILITY AND PARTICIPATION

 

3.1           Eligibility.  The persons who are eligible to receive
Awards under the Plan other than Annual Incentive Awards are key Employees and
Directors.  The persons who are eligible
to receive Annual Incentive Awards under the Plan are key executive Employees
who, by the nature and scope of their positions, regularly directly make or
influence policy decisions which significantly impact the overall results or
success of the Company.

 

3.2           Participation.  Subject to the terms and provisions of the
Plan, the Committee may, from time to time, select the Employees and Directors
to whom Awards shall be granted and shall determine the nature and amount of
each Award.

 

ARTICLE
IV

GENERAL PROVISIONS RELATING TO AWARDS

 

4.1           Authority to Grant Awards.  The Committee may grant Awards to those key
Employees and Directors as
the Committee shall from time to time determine, under the terms and conditions
of the Plan.  Subject only to any
applicable limitations set out in the Plan, the number of shares of Stock or
other value to be covered by any Award to be granted under the Plan shall be as
determined by the Committee in its sole discretion.

 

4.2           Dedicated Shares; Maximum
Awards.  The aggregate number of shares of Stock with
respect to which Awards may be granted under the Plan is 1,750,000.  The aggregate number of shares of Stock with
respect to which full value awards (such as Restricted Stock Awards and Performance
Stock Awards) may be granted under the Plan is 875,000.  The maximum number of shares of Stock with
respect to which Options may be granted to an Employee during a Fiscal Year is 200,000.  The maximum number of shares of Stock with
respect to which Performance Stock Awards may be granted to an Employee during
a Fiscal Year is 100,000.  The maximum
number of shares of Stock with respect to which Performance Unit Awards payable
in Stock may be granted to an Employee during a Fiscal Year is 100,000.  The maximum value of cash with respect to
which Performance Unit Awards payable in cash may be granted to an Employee
during a Fiscal Year, determined as of the dates of Grants of the Performance
Unit Awards, is $2,000,000.  The maximum
amount that may be paid to an Employee under Annual Incentive Award(s) granted
to an Employee during a Fiscal Year is $2,000,000.  The maximum number of shares with respect to
which SARs may be granted to an Employee during a Fiscal Year is 200,000.  Each of the foregoing numerical limits stated
in this Section 4.2 shall be subject to adjustment in accordance with the
provisions of Section 4.5.  The
number of shares of Stock stated in this Section 4.2 shall also be increased by
such number of shares of Stock as become subject to substitute Awards granted
pursuant to Article XIII; provided, however, that
such increase shall be conditioned upon the approval of the stockholders of the
Company to the extent stockholder approval is required by law or applicable
stock exchange rules.  If shares of Stock
are withheld from payment of an Award to satisfy tax obligations with respect
to the Award, such shares of Stock will count against the aggregate number of
shares of Stock with respect to which Awards may be granted under the
Plan.  If shares of Stock are tendered in
payment of an Option Price of an Option, such shares of Stock will not be added
to the aggregate number of shares of Stock with respect to which Awards may be
granted under the Plan.  To the extent
that any outstanding Award is forfeited or cancelled for any reason or is
settled in cash in lieu of shares of Stock, the shares of Stock allocable to
such portion of the Award may again be subject to an Award granted under the
Plan.  When a SAR is settled in shares of
Stock, the number of shares of Stock subject to the SAR under the SAR Award
Agreement will be counted against the aggregate number of

 

4

 

shares of Stock with respect to which Awards may be granted under the
Plan as one share for every share subject to the SAR, regardless of the number
of shares used to settle the SAR upon exercise.

 

4.3           Non-Transferability.  Except
as specified in the applicable Award Agreements or in domestic relations court
orders, an Award shall not be transferable by the Holder other than by will or
under the laws of descent and distribution, and shall be exercisable, during
the Holder’s lifetime, only by him or her. 
Any attempted assignment of an Award in violation of this Section 4.3
shall be null and void.  In the
discretion of the Committee, any attempt to transfer an Award other than under
the terms of the Plan and the applicable Award Agreement may terminate the
Award.

 

4.4           Requirements of Law.  The Company shall not be required to sell or
issue any shares of Stock under any Award if issuing those shares of Stock
would constitute or result in a violation by the Holder or the Company of any
provision of any law, statute or regulation of any governmental authority.  Specifically, in connection with any
applicable statute or regulation relating to the registration of securities,
upon exercise of any Option or pursuant to any other Award, the Company shall
not be required to issue any shares of Stock unless the Committee has received
evidence satisfactory to it to the effect that the Holder will not transfer the
shares of Stock except in accordance with applicable law, including receipt of
an opinion of counsel satisfactory to the Company to the effect that any
proposed transfer complies with applicable law. 
The determination by the Committee on this matter shall be final,
binding and conclusive. The Company may, but shall in no event be obligated to,
register any shares of Stock covered by the Plan pursuant to applicable
securities laws of any country or any political subdivision.  In the event the shares of Stock issuable on
exercise of an Option or pursuant to any other Award are not registered, the
Company may imprint on the certificate evidencing the shares of Stock any
legend that counsel for the Company considers necessary or advisable to comply
with applicable law, or, should the shares of Stock be represented by book or
electronic entry rather than a certificate, the Company may take such steps to
restrict transfer of the shares of Stock as counsel for the Company considers
necessary or advisable to comply with applicable law.  The Company shall not be obligated to take
any other affirmative action in order to cause or enable the exercise of an
Option or any other Award, or the issuance of shares of Stock pursuant thereto,
to comply with any law or regulation of any governmental authority.

 

4.5           Changes in the Company’s
Capital Structure.

 

(a)           The existence of outstanding Awards
shall not affect in any way the right or power of the Company or its stockholders
to make or authorize any or all adjustments, recapitalizations, reorganizations
or other changes in the Company’s capital structure or its business, any merger
or consolidation of the Company, any issue of bonds, debentures, preferred or
prior preference shares ahead of or affecting the Stock or Stock rights, the
dissolution or liquidation of the Company, any sale or transfer of all or any
part of its assets or business or any other corporate act or proceeding,
whether of a similar character or otherwise.

 

(b)           If the Company shall effect a
subdivision or consolidation of Stock or other capital readjustment, the
payment of a Stock dividend, or other increase or reduction of the number of
shares of Stock outstanding, without receiving compensation therefor in money,
services or property, then (1) the number, class or series and per share
price of Stock subject to outstanding Options or other Awards under the Plan
shall be appropriately adjusted in such a manner as to entitle a Holder to
receive upon exercise of an Option or other Award, for the same aggregate cash
consideration, the equivalent total number and class or series of Stock the
Holder would have received had the Holder exercised his or her Option or other
Award in full immediately prior to the event requiring the adjustment, and
(2) the number and class or series of Stock then reserved to be issued
under the Plan shall be adjusted by substituting for the total number and class
or series of Stock then reserved, that number and class or series of Stock that
would

 

5

 

have been received by the
owner of an equal number of outstanding shares of Stock of each class or series
of Stock as the result of the event requiring the adjustment.

 

(c)           If while unexercised Options or other
Awards remain outstanding under the Plan (1) the Company shall not be the
surviving entity in any merger, consolidation or other reorganization (or
survives only as a subsidiary of an entity other than an entity that was wholly-owned
by the Company immediately prior to such merger, consolidation or other
reorganization), (2) the Company sells, leases or exchanges or agrees to
sell, lease or exchange all or substantially all of its assets to any other
person or entity (other than an entity wholly-owned by the Company),
(3) the Company is to be dissolved or (4) the Company is a party to
any other corporate transaction (as defined under section 424(a) of the
Code and applicable Department of Treasury regulations) that is not described
in clauses (1), (2) or (3) of this sentence (each such event is referred to
herein as a “Corporate Change”), then, except
as otherwise provided in an Award Agreement or another agreement between the
Holder and the Company (provided that such exceptions shall not apply in the
case of a reincorporation merger), or as a result of the Committee’s
effectuation of one or more of the alternatives described below, there shall be
no acceleration of the time at which any Award then outstanding may be
exercised, and no later than ten days after the approval by the stockholders of
the Company of such Corporate Change, the Committee, acting in its sole and
absolute discretion without the consent or approval of any Holder, shall act to
effect one or more of the following alternatives, which may vary among
individual Holders and which may vary among Awards held by any individual
Holder (provided that, with respect to a reincorporation merger in which
Holders of the Company’s ordinary shares will receive one ordinary share of the
successor corporation for each ordinary share of the Company, none of such
alternatives shall apply and, without Committee action, each Award shall
automatically convert into a similar award of the successor corporation
exercisable for the same number of ordinary shares of the successor as the
Award was exercisable for ordinary shares of Stock of the Company):

 

(1)           accelerate the time at which some or
all of the Awards then outstanding may be exercised so that such Awards may be
exercised in full for a limited period of time on or before a specified date
(before or after such Corporate Change) fixed by the Committee, after which
specified date all such Awards that remain unexercised and all rights of
Holders thereunder shall terminate;

 

(2)           require the mandatory surrender to
the Company by all or selected Holders of some or all of the then outstanding
Awards held by such Holders (irrespective of whether such Awards are then
exercisable under the provisions of the Plan or the applicable Award Agreement
evidencing such Award) as of a date, before or after such Corporate Change,
specified by the Committee, in which event the Committee shall thereupon cancel
such Award and the Company shall pay to each such Holder an amount of cash per
share equal to the excess, if any, of the per share price offered to
stockholders of the Company in connection with such Corporate Change over the
exercise prices under such Award for such shares;

 

(3)           with respect to all or selected
Holders, have some or all of their then outstanding Awards (whether vested or
unvested) assumed or have a new award of a similar nature substituted for some
or all of their then outstanding Awards under the Plan (whether vested or
unvested) by an entity which is a party to the transaction resulting in such
Corporate Change and which is then employing such Holder or which is affiliated
or associated with such Holder in the same or a substantially similar manner as
the Company prior to the Corporate Change, or a parent or subsidiary of such
entity, provided that (A) such assumption or substitution is on a basis
where the excess of the aggregate fair market value of the Stock subject to the
Award immediately after the

 

6

 

assumption or substitution
over the aggregate exercise price of such Stock is equal to the excess of the
aggregate fair market value of all Stock subject to the Award immediately
before such assumption or substitution over the aggregate exercise price of
such Stock, and (B) the assumed rights under such existing Award or the
substituted rights under such new Award, as the case may be, will have the same
terms and conditions as the rights under the existing Award assumed or
substituted for, as the case may be;

 

(4)           provide that the number and class or
series of Stock covered by an Award (whether vested or unvested) theretofore
granted shall be adjusted so that such Award when exercised shall thereafter
cover the number and class or series of Stock or other securities or property
(including, without limitation, cash) to which the Holder would have been
entitled pursuant to the terms of the agreement or plan relating to such
Corporate Change if, immediately prior to such Corporate Change, the Holder had
been the holder of record of the number of shares of Stock then covered by such
Award; or

 

(5)           make such adjustments to Awards then
outstanding as the Committee deems appropriate to reflect such Corporate Change
(provided, however, that the Committee may determine in its sole and absolute
discretion that no such adjustment is necessary).

 

In effecting one or more of the alternatives set out in
paragraphs (3), (4) or (5) immediately above, and except as otherwise may
be provided in an Award Agreement, the Committee, in its sole and absolute
discretion and without the consent or approval of any Holder, may accelerate
the time at which some or all Awards then outstanding may be exercised.

 

(d)           In the event of changes in the
outstanding Stock by reason of 
recapitalizations, reorganizations, mergers, consolidations,
combinations, exchanges or other relevant changes in capitalization occurring
after the date of the grant of any Award and not otherwise provided for by this
Section 4.5, any outstanding Award and any Award Agreement evidencing such
Award shall be subject to adjustment by the Committee in its sole and absolute
discretion as to the number and price of Stock or other consideration subject
to such Award.  In the event of any such
change in the outstanding Stock, the aggregate number of shares of Stock
available under the Plan may be appropriately adjusted by the Committee, whose
determination shall be conclusive.

 

(e)           After a merger of one or more
corporations into the Company or after a consolidation of the Company and one
or more corporations in which the Company shall be the surviving corporation,
each Holder shall be entitled to have his Restricted Stock appropriately
adjusted based on the manner in which the shares of Stock were adjusted under
the terms of the agreement of merger or consolidation.

 

(f)            The issuance by the Company of stock
of any class or series, or securities convertible into, or exchangeable for,
stock of any class or series, for cash or property, or for labor or services
either upon direct sale or upon the exercise of rights or warrants to subscribe
for them, or upon conversion or exchange of stock or obligations of the Company
convertible into, or exchangeable for, stock or other securities, shall not
affect, and no adjustment by reason of such issuance shall be made with respect
to, the number, class or series, or price of shares of Stock then subject to
outstanding Options or other Awards.

 

7

 

4.6           Election Under
Section 83(b) of the Code.  No
Holder shall exercise the election permitted under section 83(b) of the
Code with respect to any Award without the written approval of the Chief
Financial Officer or General Counsel of the Company.  Any Holder who makes an election under section 83(b)
of the Code with respect to any Award without the written approval of the Chief
Financial Officer or General Counsel of the Company may, in the discretion of
the Committee, forfeit any or all Awards granted to him or her under the Plan.

 

4.7           Forfeiture for Cause.  Notwithstanding any other provision of the
Plan or an Award Agreement, if the Committee finds by a majority vote that a
Holder, before or after his Termination of Employment (a) committed fraud,
embezzlement, theft, felony or an act of dishonesty in the course of his
employment by the Company or an Affiliate which conduct damaged the Company or
an Affiliate or (b) disclosed trade secrets of the Company or an
Affiliate, then as of the date the Committee makes its finding, any Awards
awarded to the Holder that have not been exercised by the Holder (including all
Awards that have not yet vested) will be forfeited to the Company.  The findings and decision of the Committee
with respect to such matter, including those regarding the acts of the Holder and
the damage done to the Company, will be final for all purposes.  No decision of the Committee, however, will
affect the finality of the discharge of the individual by the Company or an
Affiliate.

 

4.8           Forfeiture Events.  The Committee may specify in an
Award Agreement that the Holder’s rights, payments, and benefits with respect
to an Award shall be subject to reduction, cancellation, forfeiture, or
recoupment upon the occurrence of certain specified events, in addition to any
otherwise applicable vesting or performance conditions of an Award.  Such events may include, but shall not be
limited to, Termination of Employment for cause, termination of the Holder’s
provision of services to the Company or its Affiliates, violation of material
policies of the Company and its Affiliates, breach of noncompetition,
confidentiality, or other restrictive covenants that may apply to the Holder,
or other conduct by the Holder that is detrimental to the business or
reputation of the Company and its Affiliates.

 

4.9           Award Agreements.  Each Award shall be embodied in a written
agreement that shall be subject to the terms and conditions of the Plan.  The Award Agreement shall be signed by  an executive officer of the Company, other
than the Holder, on behalf of the Company, and may be signed by the Holder to
the extent required by the Committee. 
The Award Agreement may specify the effect of a change in control on the
Award.  The Award Agreement may contain
any other provisions that the Committee in its discretion shall deem advisable
which are not inconsistent with the terms and provisions of the Plan.

 

4.10         Amendments of Award
Agreements.  The terms of any
outstanding Award under the Plan may be amended from time to time by the
Committee in its discretion in any manner that it deems appropriate and that is
consistent with the terms of the Plan. 
However, no such amendment shall adversely affect in a material manner
any right of a Holder without his or her written consent.  Except as specified in Section 4.5(b), the
Committee may not directly or indirectly lower the exercise price of a
previously granted Option or the grant price of a previously granted SAR.

 

4.11         Rights as
Stockholder.  A Holder shall
not have any rights as a stockholder with respect to Stock covered by an
Option, a SAR, an RSU, a Performance Stock Unit, or an Other Stock-Based Award
until the date, if any, such Stock is issued by the Company; and, except as
otherwise provided in Section 4.5, no adjustment for dividends, or
otherwise, shall be made if the record date therefor is prior to the date of
issuance of such Stock.

 

4.12         Issuance of
Shares of Stock.  Shares of
Stock, when issued, may be represented by a certificate or by book or
electronic entry.

 

8

 

4.13         Restrictions
on Stock Received.  The Committee
may impose such conditions and/or restrictions on any shares of Stock issued
pursuant to an Award as it may deem advisable or desirable.  These restrictions may include, but shall not
be limited to, a requirement that the Holder hold the shares of Stock for a
specified period of time.

 

4.14         Compliance
With Section 409A.  Awards
shall be designed and operated in such a manner that they are either exempt
from the application of, or comply with, the requirements of Section 409A.

 

ARTICLE
V

OPTIONS

 

5.1           Authority to Grant Options.  Subject to the terms and provisions of the Plan, the
Committee, at any time, and from time to time, may grant Options under the Plan
to eligible persons in such number and upon such terms as the Committee shall
determine.

 

5.2           Option Agreement.  Each Option grant under the Plan shall be evidenced by
an Award Agreement that shall specify (a) the Option Price, (b) the
duration of the Option, (c) the number of shares of Stock to which the
Option pertains, (d) the exercise restrictions, if any, applicable to the
Option and (e) such other provisions as the Committee shall determine that
are not inconsistent with the terms and provisions of the Plan.

 

5.3           Option
Price.  The price at which shares of
Stock may be purchased under an Option (the “Option Price”)
shall not be less than one hundred percent (100%) of the Fair Market Value of
the shares of Stock on the date the Option is granted.  Subject to the limitations set forth in the
preceding sentences of this Section 5.3, the Committee shall determine the
Option Price for each grant of an Option under the Plan.

 

5.4           Duration of Option.  An Option shall not be exercisable after the earlier
of (i) the general term of the Option specified in the applicable Award
Agreement (which shall not exceed ten years) or (ii) the period of time
specified in the applicable Award Agreement that follows the Holder’s
Termination of Employment or severance of affiliation relationship with the
Company.

 

5.5           Amount Exercisable.  Each Option may be exercised at the time, in the
manner and subject to the conditions the Committee specifies in the Award
Agreement in its sole discretion.

 

5.6           Exercise of
Option.

 

(a)           General Method of Exercise.
Subject to the terms and provisions of the Plan and the applicable Award
Agreement, Options may be exercised in whole or in part from time to time by
the delivery of written notice in the manner designated by the Committee
stating (1) that the Holder wishes to exercise such Option on the date
such notice is so delivered, (2) the number of shares of Stock with
respect to which the Option is to be exercised and (3) the address to
which any certificate representing such shares of Stock should be mailed.  Except in the case of exercise by a third
party broker as provided below, in order for the notice to be effective the
notice must be accompanied by payment of the Option Price by any combination of
the following: (a) cash, certified check, bank draft or postal or express
money order for an amount equal to the Option Price under the Option,
(b) an election to make a cashless exercise through a registered
broker-dealer (if approved in advance by the Committee or an executive officer
of the Company) or (c) any other form of payment which is acceptable to
the Committee.

 

(b)           Exercise Through Third-Party
Broker.  The Committee may permit a
Holder to elect to pay the Option Price and any applicable tax withholding
resulting from such exercise by authorizing a

 

9

 

third-party broker to sell all
or a portion of the shares of Stock acquired upon exercise of the Option and
remit to the Company a sufficient portion of the sale proceeds to pay the
Option Price and any applicable tax withholding resulting from such exercise.

 

ARTICLE VI

STOCK APPRECIATION RIGHTS

 

6.1           Authority to
Grant SAR Awards.  Subject to
the terms and provisions of the Plan, the Committee, at any time, and from time
to time, may grant SARs under the Plan to eligible persons in such number and
upon such terms as the Committee shall determine.  Subject to the terms and conditions of the
Plan, the Committee shall have complete discretion in determining the number of
SARs granted to each Holder and, consistent with the provisions of the Plan, in
determining the terms and conditions pertaining to such SARs.

 

6.2           General Terms.  Subject to the terms and conditions of the
Plan, a SAR granted under the Plan shall confer on the recipient a right to
receive, upon exercise thereof, an amount equal to the excess of (a) the
Fair Market Value of one share of the Stock on the date of exercise over
(b) the grant price of the SAR, which shall not be less than one hundred
percent (100%) of the Fair Market Value of one share of the Stock on the date
of grant of the SAR.

 

6.3           SAR
Agreement.  Each Award of SARs
granted under the Plan shall be evidenced by an Award Agreement that shall
specify (a) the grant price of the SAR, (b) the term of the SAR,
(c) the vesting and termination provisions of the SAR and (d) such
other provisions as the Committee shall determine that are not inconsistent
with the terms and provisions of the Plan. 
The Committee may impose such additional conditions or restrictions on
the exercise of any SAR as it may deem appropriate.

 

6.4           Term of SAR.  The term of a SAR granted under the Plan
shall be determined by the Committee, in its sole discretion; provided that no
SAR shall be exercisable on or after the tenth anniversary date of its grant.

 

6.5           Exercise of
SAR.  A SAR may be exercised
upon whatever terms and conditions the Committee, in its sole discretion,
imposes.

 

6.6           Payment of SAR Amount.  Upon the exercise of a SAR, a Holder shall be
entitled to receive payment from the Company in an amount determined by
multiplying the excess of the Fair Market Value of a share of
Stock on the date of exercise over the grant price of the SAR by the number of shares of Stock with respect
to which the SAR is exercised.  At the
discretion of the Committee, the payment upon SAR exercise may be in cash, in
Stock of equivalent value, in some combination thereof or in any other manner
approved by the Committee in its sole discretion.  The Committee’s determination regarding the
form of SAR payout shall be set forth in the Award Agreement pertaining to the
grant of the SAR.

 

6.7           Termination of Employment.  Each Award Agreement shall set forth the
extent to which the Holder of a SAR shall have the right to exercise the SAR
following the Holder’s Termination of Employment.  Such provisions shall be determined in the
sole discretion of the Committee, may be included in the Award Agreement
entered into with the Holder, need not be uniform among all SARs issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination.

 

10

 

ARTICLE
VII

RESTRICTED STOCK AWARDS

 

7.1           Restricted Stock Awards.  The
Committee may make Awards of Restricted Stock to eligible persons selected by
it.  The amount of, the vesting and the
transferability restrictions applicable to any Restricted Stock Award shall be
determined by the Committee in its sole discretion.  If the Committee imposes vesting or
transferability restrictions on a Holder’s rights with respect to Restricted
Stock, the Committee may issue such instructions to the Company’s share
transfer agent in connection therewith as it deems appropriate.  The Committee may also cause the certificate
for shares of Stock issued pursuant to a Restricted Stock Award to be imprinted
with any legend which counsel for the Company considers advisable with respect
to the restrictions or, should the shares of Stock be represented by book or
electronic entry rather than a certificate, the Company may take such steps to
restrict transfer of the shares of Stock as counsel for the Company considers
necessary or advisable to comply with applicable law.

 

7.2           Restricted Stock Award Agreement. 
Each Restricted Stock Award shall be evidenced by an Award Agreement
that contains any vesting, transferability restrictions and other provisions
not inconsistent with the Plan as the Committee may specify.

 

7.3           Holder’s
Rights as Stockholder. 
Subject to the terms and conditions of the Plan, each recipient of a
Restricted Stock Award shall have all the rights of a stockholder with respect
to the shares of Restricted Stock included in the Restricted Stock Award during
the Period of Restriction established for the Restricted Stock Award.  Dividends paid with respect to Restricted
Stock in cash or property other than shares of Stock or rights to acquire
shares of Stock shall be paid to the recipient of the Restricted Stock Award
currently.  Dividends paid in shares of
Stock or rights to acquire shares of Stock shall be added to and become a part
of the Restricted Stock.  During the
Period of Restriction, certificates representing the Restricted Stock shall be
registered in the Holder’s name and bear a restrictive legend to the effect
that ownership of such Restricted Stock, and the enjoyment of all rights
appurtenant thereto, are subject to the restrictions, terms, and conditions
provided in the Plan and the applicable Award Agreement.  Such certificates shall be deposited by the
recipient with the Secretary of the Company or such other officer of the
Company as may be designated by the Committee, together with all stock powers
or other instruments of assignment, each endorsed in blank, which will permit
transfer to the Company of all or any portion of the Restricted Stock which
shall be forfeited in accordance with the Plan and the applicable Award
Agreement.

 

ARTICLE
VIII

RESTRICTED STOCK UNIT AWARDS

 

8.1           Authority to
Grant RSU Awards.  Subject to
the terms and provisions of the Plan, the Committee, at any time, and from time
to time, may grant RSU Awards under the Plan to eligible persons in such
amounts and upon such terms as the Committee shall determine.  The amount of, the vesting and the
transferability restrictions applicable to any RSU Award shall be determined by
the Committee in its sole discretion.  The
Committee shall maintain a bookkeeping ledger account which reflects the number
of RSUs credited under the Plan for the benefit of a Holder.

 

8.2           RSU Award.  An RSU Award shall be similar in nature to a
Restricted Stock Award except that no shares of Stock are actually transferred
to the Holder until a later date specified in the applicable Award
Agreement.  Each RSU shall have a value
equal to the Fair Market Value of a share of Stock.

 

11

 

8.3           RSU Award Agreement.  Each RSU Award shall be
evidenced by an Award Agreement that contains any Substantial Risk of
Forfeiture, transferability restrictions, form and time of payment provisions
and other provisions not inconsistent with the Plan as the Committee may
specify.

 

8.4           Dividend Equivalents.  An Award Agreement for an RSU Award may specify that
the Holder shall be entitled to the payment of Dividend Equivalents under the
Award.

 

8.5           Form of
Payment Under RSU Award. 
Payment under an RSU Award shall be made in either cash or shares of
Stock as specified in the applicable Award Agreement.

 

8.6           Time of
Payment Under RSU Award.  A
Holder’s payment under an RSU Award shall be made at such time as is specified
in the applicable Award Agreement.  The
Award Agreement shall specify that the payment will be made (1) by a date that
is no later than the date that is two and one-half (2 1/2) months after the end
of the Fiscal Year in which the RSU Award payment is no longer subject to a
Substantial Risk of Forfeiture or (2) at a time that is permissible under
Section 409A.

 

ARTICLE
IX

PERFORMANCE STOCK AWARDS AND PERFORMANCE UNIT AWARDS

 

9.1           Authority to
Grant Performance Stock Awards and Performance Unit Awards.  Subject to the terms and provisions of the
Plan, the Committee, at any time, and from time to time, may grant Performance
Stock Awards and Performance Unit Awards under the Plan to eligible persons in
such amounts and upon such terms as the Committee shall determine.  The amount of, the vesting and the
transferability restrictions applicable to any Performance Stock Award or
Performance Unit Award shall be based upon the attainment of such Performance
Goals as the Committee may determine.  If
the Committee imposes vesting or transferability restrictions on a Holder’s
rights with respect to Performance Stock or Performance Unit Awards, the Committee
may issue such instructions to the Company’s share transfer agent in connection
therewith as it deems appropriate.  The
Committee may also cause the certificate for shares of Stock issued pursuant to
a Performance Stock or Performance Unit Award to be imprinted with any legend
which counsel for the Company considers advisable with respect to the
restrictions or, should the shares of Stock be represented by book or
electronic entry rather than a certificate, the Company may take such steps to
restrict transfer of the shares of Stock as counsel for the Company considers
necessary or advisable to comply with applicable law.

 

9.2           Performance Goals.  A Performance Goal must be
objective such that a third party having knowledge of the relevant facts could determine
whether the goal is met.  Such a
Performance Goal may be based on one or more business criteria that apply to
the Holder, one or more business units of the Company, or the Company as a
whole, with reference to one or more of the following:  earnings per share, total shareholder return,
cash return on capitalization, increased revenue, revenue ratios (per employee
or per customer), net income, stock price, market share, return on equity,
return on assets, return on capital, return on capital compared to cost of
capital, return on capital employed, return on invested capital, shareholder
value, net cash flow, operating income, earnings before interest and taxes,
cash flow, cash flow from operations, cost reductions and cost ratios (per
employee or per customer).  Goals may
also be based on performance relative to a peer group of companies.  Unless otherwise stated, such a Performance
Goal need not be based upon an increase or positive result under a particular
business criterion and could include, for example, maintaining the status quo
or limiting economic losses (measured, in each case, by reference to specific
business criteria).  In interpreting Plan
provisions applicable to Performance Goals and Performance Stock or Performance
Unit Awards, it is intended that the Plan will conform with the standards of
section 162(m) of the Code and Treasury Regulations
§ 1.162-27(e)(2)(i), and the Committee in establishing such goals and
interpreting the Plan shall be guided by such provisions.  Prior to the payment of any compensation
based on the achievement of Performance Goals, the Committee must certify in

 

12

 

writing that applicable Performance Goals and any of the material terms
thereof were, in fact, satisfied. 
Subject to the foregoing provisions, the terms, conditions and
limitations applicable to any Performance Stock or Performance Unit Awards made
pursuant to the Plan shall be determined by the Committee.

 

9.3           Time of Establishment of
Performance Goals.  A
Performance Goal for a particular Performance Stock Award or Performance Unit
Award must be established by the Committee prior to the earlier to occur of
(a) 90 days after the commencement of the period of service to which the
Performance Goal relates or (b) the lapse of 25 percent of the period
of service, and in any event while the outcome is substantially uncertain.

 

9.4           Written Agreement. 
Each Performance Stock Award or Performance Unit Award shall be
evidenced by an Award Agreement that contains any vesting, transferability
restrictions and other provisions not inconsistent with the Plan as the
Committee may specify.

 

9.5           Form of Payment Under Performance
Unit Award.  Payment under a Performance Unit Award shall
be made in cash and/or shares of Stock as specified in the Holder’s Award
Agreement.

 

9.6           Time of
Payment Under Performance Unit Award.  A Holder’s payment under a Performance Unit
Award shall be made at such time as is specified in the applicable Award
Agreement.  The Award Agreement shall specify
that the payment will be made (1) by a date that is no later than the date that
is two and one-half (2 1/2) months after the end of the calendar year in which
the Performance Unit Award payment is no longer subject to a Substantial Risk
of Forfeiture or (2) at a time that is permissible under Section 409A.

 

9.7           Holder’s
Rights as Stockholder With Respect to a Performance Stock Award.  Subject
to the terms and conditions of the Plan, each Holder of a Performance Stock
Award shall have all the rights of a stockholder with respect to the shares of
Stock issued to the Holder pursuant to the Award during any period in which
such issued shares of Stock are subject to forfeiture and restrictions on
transfer, including without limitation, the right to vote such shares of Stock.

 

9.8           Increases Prohibited.  None of the Committee or the Board may
increase the amount of compensation payable under a Performance Stock or
Performance Unit Award.  If the time at
which a Performance Stock or Performance Unit Award will vest or be paid is
accelerated for any reason, the number of shares of Stock subject to, or the
amount payable under, the Performance Stock or Performance Unit Award shall be
reduced pursuant to Department of Treasury Regulation section 1.162-27(e)(2)(iii)
to reasonably reflect the time value of money.

 

9.9           Stockholder Approval.  No payments of Stock or cash will be made
pursuant to this Article IX unless the stockholder approval requirements
of Department of Treasury Regulation section 1.162-27(e)(4) are satisfied.

 

ARTICLE X

ANNUAL INCENTIVE AWARDS

 

10.1         Authority to
Grant Annual Incentive Awards. 
Subject to the terms and provisions of the Plan, the Committee, at any
time, and from time to time, may grant Annual Incentive Awards under the Plan
to key executive Employees who, by the nature and scope of their positions,
regularly directly make or influence policy decisions which significantly
impact the overall results or success of the Company in such amounts and upon
such terms as the Committee shall determine. 
The amount of any Annual Incentive Awards shall be based on the
attainment of such Performance Goals as the Committee may determine.

 

13

 

10.2         Performance Goals.  A Performance Goal must be
objective such that a third party having knowledge of the relevant facts could
determine whether the goal is met.  Such
a Performance Goal may be based on one or more business criteria that apply to
the Holder, one or more business units of the Company, or the Company as a
whole, with reference to one or more of the following:  earnings per share, total shareholder return,
cash return on capitalization, increased revenue, revenue ratios (per employee
or per customer), net income, stock price, market share, return on equity,
return on assets, return on capital, return on capital compared to cost of
capital, return on capital employed, return on invested capital, shareholder
value, net cash flow, operating income, earnings before interest and taxes,
cash flow, cash flow from operations, cost reductions and cost ratios (per
employee or per customer).  Goals may
also be based on performance relative to a peer group of companies.  Unless otherwise stated, such a Performance
Goal need not be based upon an increase or positive result under a particular
business criterion and could include, for example, maintaining the status quo
or limiting economic losses (measured, in each case, by reference to specific
business criteria).  In interpreting Plan
provisions applicable to Performance Goals and Performance Stock or Performance
Unit Awards, it is intended that the Plan will conform with the standards of
section 162(m) of the Code and Treasury Regulations
§ 1.162-27(e)(2)(i), and the Committee in establishing such goals and
interpreting the Plan shall be guided by such provisions.  Prior to the payment of any compensation
based on the achievement of Performance Goals, the Committee must certify in
writing that applicable Performance Goals and any of the material terms thereof
were, in fact, satisfied.  Subject to the
foregoing provisions, the terms, conditions and limitations applicable to any
Annual Incentive Awards made pursuant to the Plan shall be determined by the
Committee.

 

10.3         Time of Establishment of
Performance Goals.  A Performance
Goal for a particular Annual Incentive Award must be established by the Committee prior to
the earlier to occur of (a) 90 days after the commencement of the period
of service to which the Performance Goal relates or (b) the lapse of
25 percent of the period of service, and in any event while the outcome is
substantially uncertain.

 

10.4         Written Agreement. 
Each Annual Incentive Award shall be evidenced by an Award Agreement that
contains any vesting, transferability restrictions and other provisions not
inconsistent with the Plan as the Committee may specify.

 

10.5         Form of Payment Under Annual
Incentive Award.  Payment under an Annual Incentive Award shall be made in cash.

 

10.6         Time of
Payment Under Annual Incentive Award.  A Holder’s payment under an Annual Incentive
Award shall be made at such time as is specified in the applicable Award
Agreement.  The Award Agreement shall
specify that the payment will be made (1) by a date that is no later than the
date that is two and one-half (2 1/2) months after the end of the calendar year
in which the Annual Incentive Award payment is no longer subject to a
Substantial Risk of Forfeiture or (2) at a time that is permissible under
Section 409A.

 

10.7         Increases Prohibited.  None of the Committee or the Board may
increase the amount of compensation payable under an Annual Incentive
Award.  If the time at which an Annual
Incentive Award will be paid is accelerated for any reason, the amount payable
under the Annual Incentive Award shall be reduced pursuant to Department of
Treasury Regulation section 1.162-27(e)(2)(iii) to reasonably reflect the time
value of money.

 

10.8         Stockholder Approval.  No payments of cash will be made pursuant to
this Article X unless the stockholder approval requirements of Department
of Treasury Regulation section 1.162-27(e)(4) are satisfied.

 

14

 

ARTICLE
XI

OTHER STOCK-BASED AWARDS

 

11.1         Authority to
Grant Other Stock-Based Awards. 
The Committee may grant to eligible persons other types of equity-based
or equity-related Awards not otherwise described by the terms and provisions of
the Plan (including the grant or offer for sale of unrestricted shares of
Stock) in such amounts and subject to such terms and conditions, as the Committee
shall determine. Such Awards may involve the transfer of actual shares of Stock
to Holders, or payment in cash or otherwise of amounts based on the value of
shares of Stock and may include, without limitation, Awards designed to comply
with or take advantage of the applicable local laws of jurisdictions other than
the United States.

 

11.2         Value of
Other Stock-Based Award.  Each
Other Stock-Based Award shall be expressed in terms of shares of Stock or units
based on shares of Stock, as determined by the Committee.

 

11.3         Payment of
Other Stock-Based Award. 
Payment, if any, with respect to an Other Stock-Based Award shall be
made in accordance with the terms of the Award, in cash or shares of Stock as
the Committee determines.

 

11.4         Termination
of Employment.  The Committee
shall determine the extent to which a Holder’s rights with respect to Other
Stock-Based Awards shall be affected by the Holder’s Termination of
Employment.  Such provisions shall be
determined in the sole discretion of the Committee and need not be uniform
among all Other Stock-Based Awards issued pursuant to the Plan

 

ARTICLE XII

CASH-BASED AWARDS

 

12.1         Authority to Grant
Cash-Based Awards.  Subject to
the terms and provisions of the Plan, the Committee, at any time, and from time
to time, may grant Cash-Based Awards under the Plan to eligible persons in such
amounts and upon such terms as the Committee shall determine.

 

12.2         Value of Cash-Based Award.  Each Cash-Based Award shall specify a payment
amount or payment range as determined by the Committee.

 

12.3         Payment of Cash-Based
Award.  Payment, if any, with
respect to a Cash-Based Award shall be made in accordance with the terms of the
Award, in cash.

 

12.4         Termination of Employment.  The Committee shall determine the extent to
which a Holder’s rights with respect to Cash-Based Awards shall be affected by
the Holder’s Termination of Employment. 
Such provisions shall be determined in the sole discretion of the
Committee and need not be uniform among all Cash-Based Awards issued pursuant
to the Plan.

 

ARTICLE
XIII

SUBSTITUTION AWARDS

 

Awards may be granted under the Plan from
time to time in substitution for stock options and other awards held by
employees of other entities who are about to become Employees, or whose
employer is about to become an Affiliate as the result of a merger or
consolidation of the Company with another corporation, or the

 

15

 

acquisition by the Company of substantially all the assets of another
corporation, or the acquisition by the Company of at least fifty percent (50%)
of the issued and outstanding stock of another corporation as the result of
which such other corporation will become a subsidiary of the Company.  The terms and conditions of the substitute
Awards so granted may vary from the terms and conditions set forth in the Plan
to such extent as the Board at the time of grant may deem appropriate to
conform, in whole or in part, to the provisions of the Award in substitution
for which they are granted.

 

ARTICLE
XIV

ADMINISTRATION

 

14.1         Awards.  The Plan shall be administered by the
Committee or, in the absence of the Committee, the Plan shall be administered
by the Board.  The members of the
Committee shall serve at the discretion of the Board.  The Committee shall have full and exclusive
power and authority to administer the Plan and to take all actions that the
Plan expressly contemplates or are necessary or appropriate in connection with
the administration of the Plan with respect to Awards granted under the Plan.

 

14.2         Authority of the Committee. 
The Committee shall have full and exclusive power to interpret and apply
the terms and provisions of the Plan and Awards made under the Plan, and to
adopt such rules, regulations and guidelines for implementing the Plan as the
Committee may deem necessary or proper, all of which powers shall be exercised
in the best interests of the Company and in keeping with the objectives of the
Plan.  A majority of the members of the
Committee shall constitute a quorum for the transaction of business, and the
vote of a majority of those members present at any meeting shall decide any
question brought before that meeting. 
Any decision or determination reduced to writing and signed by a majority
of the members shall be as effective as if it had been made by a majority vote
at a meeting properly called and held. 
All questions of interpretation and application of the Plan, or as to
Awards granted under the Plan, shall be subject to the determination, which
shall be final and binding, of a majority of the whole Committee.  No member of the Committee shall be liable
for any act or omission of any other member of the Committee or for any act or
omission on his own part, including but not limited to the exercise of any
power or discretion given to him under the Plan, except those resulting from
his own gross negligence or willful misconduct. 
In carrying out its authority under the Plan, the Committee shall have
full and final authority and discretion, including but not limited to the
following rights, powers and authorities to (a) determine the persons to whom
and the time or times at which Awards will be made; (b) determine the
number and exercise price of shares of Stock covered in each Award subject to
the terms and provisions of the Plan; (c) determine the terms, provisions and
conditions of each Award, which need not be identical and need not match the
default terms set forth in the Plan; (d) accelerate the time at which any outstanding
Award will vest; (e) prescribe,
amend and rescind rules and regulations relating to administration of the Plan;
and (f) make all other
determinations and take all other actions deemed necessary, appropriate or
advisable for the proper administration of the Plan.

 

The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any Award to a Holder in the
manner and to the extent the Committee deems necessary or desirable to further
the Plan’s objectives. Further, the Committee shall make all other
determinations that may be necessary or advisable for the administration of the
Plan.  As permitted by law and the terms
and provisions of the Plan, the Committee may delegate its authority as
identified in this Section 14.2. 
The Committee may employ attorneys, consultants, accountants, agents,
and other persons, any of whom may be an Employee, and the Committee, the
Company, and its officers and Board shall be entitled to rely upon the advice,
opinions, or valuations of any such persons.

 

14.3         Decisions
Binding.  All determinations
and decisions made by the Committee or the Board, as the case may be, pursuant
to the provisions of the Plan and all related orders and resolutions of the
Committee or

 

16

 

the Board, as the case may be, shall be final, conclusive and binding
on all persons, including the Company, its stockholders, Holders and the
estates and beneficiaries of Holders.

 

14.4         No
Liability.  Under no
circumstances shall the Company, the Board or the Committee incur liability for
any indirect, incidental, consequential or special damages (including lost
profits) of any form incurred by any person, whether or not foreseeable and
regardless of the form of the act in which such a claim may be brought, with
respect to the Plan or the Company’s, the Committee’s or the Board’s roles in
connection with the Plan.

 

ARTICLE
XV

AMENDMENT OR TERMINATION OF PLAN

 

15.1         Amendment,
Modification, Suspension, and Termination.  Subject to Section 15.2, the Committee
may, at any time and from time to time, alter, amend, modify, suspend, or
terminate the Plan and any Award Agreement in whole or in part; provided,
however, that, without the prior approval of the Company’s stockholders and
except as provided in Section 4.5, the Committee shall not directly or
indirectly lower the Option Price of a previously granted Option, and no
amendment of the Plan shall be made without stockholder approval if stockholder
approval is required by applicable law or stock exchange rules.

 

15.2         Awards
Previously Granted. 
Notwithstanding any other provision of the Plan to the contrary, no
termination, amendment, suspension, or modification of the Plan or an Award
Agreement shall adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the Holder holding such
Award.

 

ARTICLE
XVI

MISCELLANEOUS

 

16.1         Unfunded
Plan/No Establishment of a Trust Fund.  Holders
shall have no right, title, or interest whatsoever in or to any investments
that the Company or any of its Affiliates may make to aid in meeting
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 Holder, 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.  No
property shall be set aside nor shall a trust fund of any kind be established
to secure the rights of any Holder under the Plan.  The Plan is not intended to be subject to the
Employee Retirement Income Security Act of 1974, as amended.

 

16.2         No
Employment Obligation.  The
granting of any Award shall not constitute an employment contract, express or
implied, nor impose upon the Company or any Affiliate any obligation to employ
or continue to employ, or utilize the services of, any Holder.  The right of the Company or any Affiliate to
terminate the employment of any person shall not be diminished or affected by
reason of the fact that an Award has been granted to him, and nothing in the
Plan or an Award Agreement shall interfere with or limit in any way the right
of the Company or its Affiliates to terminate any Holder’s employment at any
time or for any reason not prohibited by law.

 

17

 

16.3         Tax
Withholding.  The Company or
any Affiliate shall be entitled to deduct from other compensation payable to
each Holder any sums required by federal, state or local tax law to be withheld
with respect to the vesting or exercise of an Award or lapse of restrictions on
an Award.  In the alternative, the
Company may require the Holder (or other person validly exercising the Award)
to pay such sums for taxes directly to the Company or any Affiliate in cash or
by check within one day after the date of vesting, exercise or lapse of
restrictions. In the discretion of the Committee, and with the consent of the
Holder, the Company may reduce the number of shares of Stock issued to the
Holder upon such Holder’s exercise of an Option to satisfy the tax withholding
obligations of the Company or an Affiliate; provided that the Fair Market Value
of the shares of Stock held back shall not exceed the Company’s or the
Affiliate’s Minimum Statutory Tax Withholding Obligation.  The Committee may, in its discretion, permit
a Holder to satisfy any Minimum Statutory Tax Withholding Obligation arising
upon the vesting of  an Award by
delivering to the Holder a reduced number of shares of Stock in the manner
specified herein.  If permitted by the
Committee and acceptable to the Holder, at the time of vesting of shares under
the Award, the Company shall (a) calculate the amount of the Company’s or
an Affiliate’s Minimum Statutory Tax Withholding Obligation on the assumption
that all such shares of Stock vested under the Award are made available for
delivery, (b) reduce the number of such shares of Stock made available for
delivery so that the Fair Market Value of the shares of Stock withheld on the
vesting date approximates the Company’s or an Affiliate’s Minimum Statutory Tax
Withholding Obligation and (c) in lieu of the withheld shares of Stock,
remit cash to the United States Treasury and/or other applicable governmental
authorities, on behalf of the Holder, in the amount of the Minimum Statutory
Tax Withholding Obligation.  The Company
shall withhold only whole shares of Stock to satisfy its Minimum Statutory Tax
Withholding Obligation.  Where the Fair
Market Value of the withheld shares of Stock does not equal the amount of the
Minimum Statutory Tax Withholding Obligation, the Company shall withhold shares
of Stock with a Fair Market Value slightly less than the amount of the Minimum
Statutory Tax Withholding Obligation and the Holder must satisfy the remaining
minimum withholding obligation in some other manner permitted under this
Section 16.3.  The withheld shares of
Stock not made available for delivery by the Company shall be retained as
treasury shares or will be cancelled and the Holder’s right, title and interest
in such shares of Stock shall terminate. 
The Company shall have no obligation upon vesting or exercise of any Award
or lapse of restrictions on an Award until the Company or an Affiliate has
received payment sufficient to cover the Minimum Statutory Tax Withholding
Obligation with respect to that vesting, exercise or lapse of restrictions.  Neither the Company nor any Affiliate shall
be obligated to advise a Holder of the existence of the tax or the amount which
it will be required to withhold.

 

16.4         Gender
and Number.  If the
context requires, words of one gender when used in the Plan shall include the
other and words used in the singular or plural shall include the other.

 

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

 

16.6         Headings.  Headings of Articles and Sections are
included for convenience of reference only and do not constitute part of the
Plan and shall not be used in construing the terms and provisions of the Plan.

 

16.7         Other
Compensation Plans.  The
adoption of the Plan shall not affect any other option, incentive or other
compensation or benefit plans in effect for the Company or any Affiliate, nor
shall the Plan preclude the Company from establishing any other forms of
incentive compensation arrangements for Employees or Directors.

 

16.8         Other
Awards.  The grant of an Award
shall not confer upon the Holder the right to receive any future or other
Awards under the Plan, whether or not Awards may be granted to similarly
situated Holders, or the right to receive future Awards upon the same terms or
conditions as previously granted.

 

18

 

16.9         Successors.  All obligations of the Company
under the Plan with respect to Awards granted hereunder shall be binding on any
successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation, or otherwise, of all
or substantially all of the business and/or assets of the Company.

 

16.10       Law
Limitations/Governmental Approvals.  The granting of Awards and the
issuance of shares of Stock under the Plan shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.

 

16.11       Delivery of Title.  The Company shall have no
obligation to issue or deliver evidence of title for shares of Stock issued
under the Plan prior to (a)obtaining any approvals from governmental agencies
that the Company determines are necessary or advisable; and (b)completion of
any registration or other qualification of the Stock under any applicable
national or foreign law or ruling of any governmental body that the Company
determines to be necessary or advisable.

 

16.12       Inability to
Obtain Authority.  The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company’s counsel to be necessary to the lawful issuance and
sale of any shares of Stock hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such shares of Stock as to
which such requisite authority shall not have been obtained.

 

16.13       Investment
Representations.  The Committee may require any
person receiving Stock pursuant to an Award under the Plan to represent and
warrant in writing that the person is acquiring the shares of Stock for
investment and without any present intention to sell or distribute such Stock.

 

16.14       Persons Residing Outside of the
United States.  Notwithstanding any provision of the Plan to
the contrary, in order to comply with the laws in other countries in which the
Company or any of its Affiliates operates or has Employees, the Committee, in
its sole discretion, shall have the power and authority to (a)determine which
Affiliates shall be covered by the Plan; (b)determine which persons
employed outside the United States are eligible to participate in the Plan; (c)amend or vary the terms and
provisions of the Plan and the terms and conditions of any Award granted to
persons who reside outside the United States; (d)establish subplans and modify exercise
procedures and other terms and procedures to the extent such actions may be
necessary or advisable — any subplans and modifications to Plan terms and
procedures established under this Section 16.14 by the Committee shall be
attached to the Plan document as Appendices; and (e)take any action, before or after an Award is
made, that it deems advisable to obtain or comply with any necessary local
government regulatory exemptions or approvals. Notwithstanding the above, the
Committee may not take any actions hereunder, and no Awards shall be granted,
that would violate the Securities Exchange Act of 1934, as amended, the Code,
any securities law or governing statute or any other applicable law.

 

16.15       Arbitration
of Disputes.  Any controversy
arising out of or relating to the Plan or an Award Agreement shall be resolved
by arbitration conducted pursuant to the arbitration rules of the American
Arbitration Association.  The arbitration
shall be final and binding on the parties.

 

16.16       Governing
Law.  The provisions of the
Plan and the rights of all persons claiming thereunder shall be construed,
administered and governed under the laws of the State of Texas.

 

19

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