Document:

exv10w3

Exhibit 10.3

FIRST AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT

     This First Amendment to Executive Employment Agreement (this “First Amendment”) is made and
entered into as of the 19th day of June, 2008, by and between Daniel P. Son, a resident
of the state of Texas (“Executive”), and Penson Worldwide, Inc., a Delaware corporation (the
“Company”).

RECITALS

     WHEREAS, Executive and the Company are parties to that certain Executive Employment Agreement,
dated April 21, 2006 (the “Employment Agreement”); and

     WHEREAS, Executive and Company desire now to amend the Employment Agreement as set forth
herein.

     NOW, THEREFORE, in consideration of the premises herein and in reliance on the covenants and
agreements hereinafter set forth and subject to the terms and conditions contained herein,
Executive and the Company agree as follows:

AGREEMENTS

I. DEFINED TERMS.

     Capitalized terms used but not defined herein shall have the meanings afforded such terms in
the Employment Agreement.

II. AMENDMENT.

     The introductory paragraph to Section III.B. of the Agreement is hereby amended in its
entirety to read as follows:

     Annual Bonus Compensation Opportunities. As a performance and retention
incentive, Executive shall be eligible to earn an annual bonus award. The terms
and conditions of each such annual bonus award opportunity shall be provided in
writing to Executive not later than January 31 of each calendar year for that
calendar year and shall be attached to this Agreement each year as Attachment 1;
provided, that the foregoing sentence shall not be applicable to any annual bonus
opportunity for Executive determined by the Compensation Committee on or prior to
June 30, 2008, for the 2008 calendar year or any portion thereof. However, the
following will apply to each annual bonus award opportunity made available to
Executive during Executive’s employment with Employer.

 

 

III. NO OTHER AMENDMENTS.

     Except as expressly herein amended, the Employment Agreement shall continue in full force and
effect in accordance with its terms.

[SIGNATURE PAGE FOLLOWS]

2

 

IN WITNESS WHEREOF, the Company and Executive have executed this Amendment to be effective as of

the date first set forth above.

	 	 	 	 	 
	 	THE COMPANY

Penson Worldwide, Inc.

 	 
	 	By:  	/s/ David Johnson
 	 
	 	 	Name:  	David  Johnson 	 
	 	 	Title:  	Chairman, Compensation Committee

Board of Directors 	 
	 

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	/s/ Daniel P. Son
 	 
	 	Name:  	Daniel P. Son 	 
	 	 	 
	 

3exv10w1

EXHIBIT 10.1

ADVANCED ENERGY INDUSTRIES, INC.

2008 OMNIBUS INCENTIVE PLAN

     Advanced Energy Industries, Inc., a Delaware corporation (the “Company”), sets forth herein
the terms of its 2008 Omnibus Incentive Plan (the “Plan”), as follows:

     1.  PURPOSE

     The Plan is intended to enhance the Company’s and its Affiliates’ (as defined herein) ability
to attract and retain highly qualified officers, directors, key employees, and other persons, and
to motivate such persons to serve the Company and its Affiliates and to expend maximum effort to
improve the business results and earnings of the Company, by providing to such persons an
opportunity to acquire or increase a direct proprietary interest in the operations and future
success of the Company. To this end, the Plan provides for the grant of stock options, stock
appreciation rights, restricted stock, stock units (including deferred stock units), unrestricted
stock, and dividend equivalent rights. Any of these awards may, but need not, be made as
performance incentives to reward attainment of annual or long-term performance goals in accordance
with the terms hereof. Stock options granted under the Plan may be non-qualified stock options or
incentive stock options, as provided herein, except that stock options granted to outside directors
and any consultants or advisers providing services to the Company or an Affiliate shall in all
cases be non-qualified stock options.

     2.  DEFINITIONS

     For purposes of interpreting the Plan and related documents (including Award Agreements), the
following definitions shall apply:

     2.1  ”Affiliate” means, with respect to the Company, any company or other trade or
business that controls, is controlled by or is under common control with the Company within the
meaning of Rule 405 of Regulation C under the Securities Act, including, without limitation, any
Subsidiary. For purposes of granting stock options or stock appreciation rights, an entity may not
be considered an Affiliate unless the Company holds a “controlling interest” in such entity, where
the term “controlling interest” has the same meaning as provided in Treasury
Regulation 1.414(c)-2(b)(2)(i), provided that the language “at least 50 percent” is used instead of
“at least 80 percent” and, provided further, that where granting of stock options or stock
appreciation rights is based upon a legitimate business criteria, the language “at least
20 percent” is used instead of “at least 80 percent” each place it appears in Treasury
Regulation 1.414(c)-2(b)(2)(i).

     2.2  ”Annual Incentive Award” means an Award made subject to attainment of performance
goals (as described in Section 14) generally over a one-year performance period (the Company’s
fiscal year, unless otherwise specified by the Committee).

     2.3  ”Award” means a grant of an Option, Stock Appreciation Right, Restricted Stock,
Unrestricted Stock, Stock Unit, Dividend Equivalent Right, Performance Share, or Performance Unit
under the Plan.

     2.4  ”Award Agreement” means the agreement between the Company and a Grantee that
evidences and sets out the terms and conditions of an Award.

     2.5  ”Benefit Arrangement” shall have the meaning set forth in Section 15 hereof.

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

     2.7  ”Cause” means, as determined by the Board and unless otherwise provided in an
applicable agreement with the Company or an Affiliate, (i) gross negligence or willful misconduct
in connection with the performance of duties; (ii) conviction of a criminal offense (other than
minor traffic offenses); or

 

 

(iii) material breach of any term of any employment, consulting or other services,
confidentiality, intellectual property or non-competition agreements, if any, between the Service
Provider and the Company or an Affiliate.

     2.8  ”Code” means the Internal Revenue Code of 1986, as now in effect or as hereafter
amended.

     2.9  ”Committee” means a committee of, and designated from time to time by resolution
of, the Board, which shall be constituted as provided in Section 3.2.

     2.10  ”Company” means Advanced Energy Industries, Inc.

     2.11  ”Corporate Transaction” means (i) the dissolution or liquidation of the Company
or a merger, consolidation, or reorganization of the Company with one or more other entities in
which the Company is not the surviving entity, (ii) a sale of substantially all of the assets of
the Company to another person or entity, or (iii) any transaction (including without limitation a
merger or reorganization in which the Company is the surviving entity) which results in any person
or entity (other than persons who are stockholders or affiliates immediately prior to the
transaction) owning 50% or more of the combined voting power of all classes of stock of the
Company.

     2.12  ”Covered Employee” means a Grantee who is a covered employee within the meaning
of Section 162(m)(3) of the Code.

     2.13  ”Disability” means the Grantee is unable to perform each of the essential duties
of such Grantee’s position by reason of a medically determinable physical or mental impairment
which is potentially permanent in character or which can be expected to last for a continuous
period of not less than 12 months; provided, however, that, with respect to rules regarding
expiration of an Incentive Stock Option following termination of the Grantee’s Service, Disability
shall mean the Grantee is unable to engage in any substantial gainful activity by reason of a
medically determinable physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not less than 12 months.

     2.14  ”Dividend Equivalent Right” means a right, granted to a Grantee under Section 13
hereof, to receive cash, Stock, other Awards or other property equal in value to dividends paid
with respect to a specified number of shares of Stock, or other periodic payments.

     2.15  ”Effective Date” means May 7, 2008, the date the Plan was approved by the
stockholders.

     2.16  ”Exchange Act” means the Securities Exchange Act of 1934, as now in effect or as
hereafter amended.

     2.17  ”Fair Market Value” means the value of a share of Stock, determined as follows:
if on the Grant Date or other determination date the Stock is listed on an established national or
regional stock exchange, or is publicly traded on an established securities market, the Fair Market
Value of a share of Stock shall be the closing price of the Stock on such exchange or in such
market (if there is more than one such exchange or market the Board shall determine the appropriate
exchange or market) on the Grant Date or such other determination date (or if there is no such
reported closing price, the Fair Market Value shall be the mean between the highest bid and lowest
asked prices or between the high and low sale prices on such trading day) or, if no sale of Stock
is reported for such trading day, on the next preceding day on which any sale shall have been
reported. If the Stock is not listed on such an exchange or traded on such a market, Fair Market
Value shall be the value of the Stock as determined by the Board by the reasonable application of a
reasonable valuation method, in a manner consistent with Code Section 409A.

     2.18  ”Family Member” means a person who is a spouse, former spouse, child, stepchild,
grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including adoptive
relationships, of the Grantee, any person sharing the Grantee’s household (other than a tenant or
employee), a trust in which any one or more of

 

 

these persons have more than fifty percent of the beneficial interest, a foundation in which
any one or more of these persons (or the Grantee) control the management of assets, and any other
entity in which one or more of these persons (or the Grantee) own more than fifty percent of the
voting interests.

     2.19  ”Grant Date” means, as determined by the Board, the latest to occur of (i) the
date as of which the Board approves an Award, (ii) the date on which the recipient of an Award
first becomes eligible to receive an Award under Section 6  hereof, or (iii) such other date as may
be specified by the Board.

     2.20  ”Grantee” means a person who receives or holds an Award under the Plan.

     2.21  ”Incentive Stock Option” means an “incentive stock option” within the meaning of
Section 422 of the Code, or the corresponding provision of any subsequently enacted tax statute, as
amended from time to time.

     2.22  ”Non-qualified Stock Option” means an Option that is not an Incentive Stock
Option.

     2.23  ”Option” means an option to purchase one or more shares of Stock pursuant to the
Plan.

     2.24  ”Option Price” means the exercise price for each share of Stock subject to an
Option.

     2.25  ”Other Agreement” shall have the meaning set forth in Section 15 hereof.

     2.26  ”Outside Director” means a member of the Board who is not an officer or employee
of the Company.

     2.27  ”Performance Award” means an Award made subject to the attainment of performance
goals (as described in Section 14) over a performance period of up to ten (10) years.

     2.28  ”Performance-Based Compensation” means compensation under an Award that is
intended to satisfy the requirements of Code Section 162(m) for certain performance-based
compensation paid to Covered Employees. Notwithstanding the foregoing, nothing in this Plan shall
be construed to mean that an Award which does not satisfy the requirements for performance-based
compensation under Code Section 162(m) does not constitute performance-based compensation for other
purposes, including Code Section 409A.

     2.29  ”Performance Measures” means measures as described in Section 14 on which the
performance goals are based and which are approved by the Company’s shareholders pursuant to this
Plan in order to qualify Awards as Performance-Based Compensation.

     2.30  ”Performance Period” means the period of time during which the performance goals
must be met in order to determine the degree of payout and/or vesting with respect to an Award.

     2.31  ”Performance Share” means an Award under Section 14 herein and subject to the
terms of this Plan, denominated in Shares, the value of which at the time it is payable is
determined as a function of the extent to which corresponding performance criteria have been
achieved.

     2.32  ”Performance Unit” means an Award under Section 14 herein and subject to the
terms of this Plan, denominated in units, the value of which at the time it is payable is
determined as a function of the extent to which corresponding performance criteria have been
achieved.

     2.33  ”Plan” means this Advanced Energy Industries, Inc. 2008 Omnibus Incentive Plan.

     2.34  ”Prior Plans” means the Advanced Energy Industries, Inc. 2003 Stock Option Plan
and the Advanced Energy Industries, Inc. Amended and Restated 2003 Non-Employee Directors’ Stock
Option Plan, amended and restated February 15, 2006.

 

 

     2.35  ”Purchase Price” means the purchase price for each share of Stock pursuant to a
grant of Restricted Stock or Unrestricted Stock.

     2.36  ”Reporting Person” means a person who is required to file reports under
Section 16(a) of the Exchange Act.

     2.37  ”Restricted Stock” means shares of Stock, awarded to a Grantee pursuant to
Section 10 hereof.

     2.38  ”SAR Exercise Price” means the per share exercise price of a SAR granted to a
Grantee under Section 9  hereof.

     2.39  ”Securities Act” means the Securities Act of 1933, as now in effect or as
hereafter amended.

     2.40  ”Service” means service as a Service Provider to the Company or an Affiliate.
Unless otherwise stated in the applicable Award Agreement, a Grantee’s change in position or duties
shall not result in interrupted or terminated Service, so long as such Grantee continues to be a
Service Provider to the Company or an Affiliate. Subject to the preceding sentence, whether a
termination of Service shall have occurred for purposes of the Plan shall be determined by the
Board, which determination shall be final, binding and conclusive.

     2.41  ”Service Provider” means an employee, officer or director of the Company or an
Affiliate, or a consultant or adviser (who is a natural person) currently providing services to the
Company or an Affiliate.

     2.42  ”Stock” means the common stock, par value $0.001 per share, of the Company.

     2.43  ”Stock Appreciation Right” or “SAR” means a right granted to a Grantee under
Section 9 hereof.

     2.44  ”Stock Unit” means a bookkeeping entry representing the equivalent of one share
of Stock awarded to a Grantee pursuant to Section 10 hereof.

     2.45  ”Subsidiary” means any “subsidiary corporation” of the Company within the
meaning of Section 424(f) of the Code.

     2.46  ”Substitute Awards” means Awards granted upon assumption of, or in substitution
for, outstanding awards previously granted by a company or other entity acquired by the Company or
any Affiliate or with which the Company or any Affiliate combines.

     2.47  ”Ten Percent Stockholder” means an individual who owns more than ten percent
(10%) of the total combined voting power of all classes of outstanding stock of the Company, its
parent or any of its Subsidiaries. In determining stock ownership, the attribution rules of
Section 424(d) of the Code shall be applied.

     2.48  ”Unrestricted Stock” means an Award pursuant to Section 11 hereof.

     3.  ADMINISTRATION OF THE PLAN

     3.1 Board

     The Board shall have such powers and authorities related to the administration of the Plan as
are consistent with the Company’s certificate of incorporation and by-laws and applicable law. The
Board shall have full power and authority to take all actions and to make all determinations
required or provided for under the Plan, any Award or any Award Agreement, and shall have full
power and authority to take all such other actions and make all such other determinations not
inconsistent with the specific terms and provisions of the Plan that the Board deems to be
necessary or appropriate to the administration of the Plan, any Award or any Award Agreement. All
such actions and determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting or by unanimous consent of the Board

 

 

executed in writing in accordance with the Company’s certificate of incorporation and by-laws
and applicable law. The interpretation and construction by the Board of any provision of the Plan,
any Award or any Award Agreement shall be final, binding and conclusive.

     3.2  Committee.

     The Board from time to time may delegate to the Committee such powers and authorities related
to the administration and implementation of the Plan, as set forth in Section 3.1 above and other
applicable provisions, as the Board shall determine, consistent with the certificate of
incorporation and by-laws of the Company and applicable law.

     (i) Except as provided in Subsection (ii) and except as the Board may otherwise determine,
the Committee, if any, appointed by the Board to administer the Plan shall consist of two or
more Outside Directors of the Company who: (a) qualify as “outside directors” within the meaning
of Section 162(m) of the Code and who (b) meet such other requirements as may be established
from time to time by the Securities and Exchange Commission for plans intended to qualify for
exemption under Rule 16b-3 (or its successor) under the Exchange Act and who (c) comply with the
independence requirements of the stock exchange on which the Common Stock is listed.

     (ii) The Board may also appoint one or more separate committees of the Board, each composed
of one or more directors of the Company who need not be Outside Directors, who may administer
the Plan with respect to employees or other Service Providers who are not officers or directors
of the Company, may grant Awards under the Plan to such employees or other Service Providers,
and may determine all terms of such Awards.

     In the event that the Plan, any Award or any Award Agreement entered into hereunder provides
for any action to be taken by or determination to be made by the Board, such action may be taken or
such determination may be made by the Committee if the power and authority to do so has been
delegated to the Committee by the Board as provided for in this Section. Unless otherwise expressly
determined by the Board, any such action or determination by the Committee shall be final, binding
and conclusive. To the extent permitted by law, the Committee may delegate its authority under the
Plan to a member of the Board.

     3.3  Terms of Awards.

     Subject to the other terms and conditions of the Plan, the Board shall have full and final
authority to:

     (i) designate Grantees,

     (ii) determine the type or types of Awards to be made to a Grantee,

     (iii) determine the number of shares of Stock to be subject to an Award,

     (iv) establish the terms and conditions of each Award (including, but not limited to, the
exercise price of any Option, the nature and duration of any restriction or condition (or
provision for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture of an
Award or the shares of Stock subject thereto, the treatment of an Award in the event of a change
of control, and any terms or conditions that may be necessary to qualify Options as Incentive
Stock Options),

     (v) prescribe the form of each Award Agreement evidencing an Award, and

     (vi) amend, modify, or supplement the terms of any outstanding Award. Such authority
specifically includes the authority, in order to effectuate the purposes of the Plan but without
amending the Plan, to make or modify Awards to eligible individuals who are foreign nationals or
are individuals who are employed outside the United States to recognize differences in local
law, tax policy, or custom. Notwithstanding the foregoing, no amendment, modification or supplement of any Award shall,
without the consent of the Grantee, impair the Grantee’s rights under such Award.

 

 

     The Company may retain the right in an Award Agreement to cause a forfeiture of the gain
realized by a Grantee on account of actions taken by the Grantee in violation or breach of or in
conflict with any employment agreement, non-competition agreement, any agreement prohibiting
solicitation of employees or clients of the Company or any Affiliate thereof or any confidentiality
obligation with respect to the Company or any Affiliate thereof or otherwise in competition with
the Company or any Affiliate thereof, to the extent specified in such Award Agreement applicable to
the Grantee. In addition, the Company may annul an Award if the Grantee is an employee of the
Company or an Affiliate thereof and is terminated for Cause as defined in the applicable Award
Agreement or the Plan, as applicable.

     Furthermore, if the Company is required to prepare an accounting restatement due to the
material noncompliance of the Company, as a result of misconduct, with any financial reporting
requirement under the securities laws, the individuals subject to automatic forfeiture under
Section 304 of the Sarbanes-Oxley Act of 2002 and any Grantee who knowingly engaged in the
misconduct, was grossly negligent in engaging in the misconduct, knowingly failed to prevent the
misconduct or was grossly negligent in failing to prevent the misconduct, shall reimburse the
Company the amount of any payment in settlement of an Award earned or accrued during the
twelve-(12)month period following the first public issuance or filing with the United States
Securities and Exchange Commission (whichever first occurred) of the financial document that
contained such material noncompliance.

     3.4  No Repricing.

     Notwithstanding anything in this Plan to the contrary, no amendment or modification may be
made to an outstanding Option or SAR, including, without limitation, by replacement of Options or
SARs with cash or other award type, that would be treated as a repricing under the rules of the
stock exchange on which the Stock is listed, in each case, without the approval of the stockholders
of the Company, provided, that, appropriate adjustments may be made to outstanding Options and SARs
pursuant to Section 17 or Section 5.3 and may be made to make changes to achieve compliance with
applicable law, including Code Section 409A.

     3.5  Deferral Arrangement.

     The Board may permit or require the deferral of any award payment into a deferred compensation
arrangement, subject to such rules and procedures as it may establish, which may include provisions
for the payment or crediting of interest or dividend equivalents, including converting such credits
into deferred Stock equivalents. Any such deferrals shall be made in a manner that complies with
Code Section 409A.

     3.6  No Liability.

     No member of the Board or the Committee shall be liable for any action or determination made
in good faith with respect to the Plan or any Award or Award Agreement.

     3.7  Share Issuance/Book-Entry

     Notwithstanding any provision of this Plan to the contrary, the issuance of the Stock under
the Plan may be evidenced in such a manner as the Board, in its discretion, deems appropriate,
including, without limitation, book-entry registration or issuance of one or more Stock
certificates.

     4.  STOCK SUBJECT TO THE PLAN

     4.1  Number of Shares Available for Awards

     Subject to adjustment as provided in Section 17 hereof, the number of shares of Stock
available for issuance under the Plan shall be the number of shares available for issuance under
the Prior Plans. In no

 

 

event shall the number of shares of Stock available for issuance under the Plan exceed three
million five hundred thousand (3,500,000), subject to adjustment as provided for in Section 17.
Stock issued or to be issued under the Plan shall be authorized but unissued shares; or, to the
extent permitted by applicable law, issued shares that have been reacquired by the Company.

     4.2  Adjustments in Authorized Shares

     The Board shall have the right to substitute or assume Awards in connection with mergers,
reorganizations, separations, or other transactions to which Section 424(a) of the Code applies.
The number of shares of Stock reserved pursuant to Section 4 shall be increased by the
corresponding number of Awards assumed and, in the case of a substitution, by the net increase in
the number of shares of Stock subject to Awards before and after the substitution.

     4.3  Share Usage

     Shares covered by an Award shall be counted as used as of the Grant Date. If any shares
covered by an Award granted under the Plan or a Prior Plan are not purchased or are forfeited or
expire, or if an Award otherwise terminates without delivery of any Stock subject thereto or is
settled in cash in lieu of shares, then the number of shares of Stock counted against the aggregate
number of shares available under the Plan with respect to such Award shall, to the extent of any
such forfeiture, termination or expiration, again be available for making Awards under the Plan in
the same amount as such shares were counted against the limit set forth in Section 4.1, provided
that any shares covered by an Award granted under a Prior Plan will again be available for making
Awards under the Plan in the same amount as such shares were counted against the limits set forth
in the applicable Prior Plan. The number of shares of Stock available for issuance under the Plan
shall not be increased by (i) any shares of Stock tendered or withheld or Award surrendered in
connection with the purchase of shares of Stock upon exercise of an Option as described in
Section 12.2, or (ii) any shares of Stock deducted or delivered from an Award payment in connection
with the Company’s tax withholding obligations as described in Section 18.3.

     5.  EFFECTIVE DATE, DURATION AND AMENDMENTS

     5.1  Effective Date.

     The Plan shall be effective as of the Effective Date.  Following the Effective Date no awards
will be made under the Prior Plans.

     5.2  Term.

     The Plan shall terminate automatically ten (10) years after the Effective Date and may be
terminated on any earlier date as provided in Section 0.

     5.3  Amendment and Termination of the Plan

     The Board may, at any time and from time to time, amend, suspend, or terminate the Plan as to
any shares of Stock as to which Awards have not been made. An amendment shall be contingent on
approval of the Company’s stockholders to the extent stated by the Board, required by applicable
law or required by applicable stock exchange listing requirements. In addition, an amendment will
be contingent on approval of the Company’s stockholders if the amendment would: (i) materially
increase the benefits accruing to participants under the Plan, (ii) materially increase the
aggregate number of shares of Stock that may be issued under the Plan, or (iii) materially modify
the requirements as to eligibility for participation in the Plan. No Awards shall be made after
termination of the Plan. No amendment, suspension, or termination of the Plan shall, without the
consent of the Grantee, impair rights or obligations under any Award theretofore awarded under the
Plan.

 

 

     6.  AWARD ELIGIBILITY AND LIMITATIONS

     6.1  Service Providers and Other Persons

     Subject to this Section 6, Awards may be made under the Plan to: (i) any Service Provider to
the Company or of any Affiliate, including any Service Provider who is an officer or director of
the Company, or of any Affiliate, as the Board shall determine and designate from time to time and
(ii) any other individual whose participation in the Plan is determined to be in the best interests
of the Company by the Board.

     6.2  Successive Awards and Substitute Awards.

     An eligible person may receive more than one Award, subject to such restrictions as are
provided herein. Notwithstanding Sections 8.1 and 9.1, the Option Price of an Option or the grant
price of a SAR that is a Substitute Award may be less than 100% of the Fair Market Value of a share
of Common Stock on the original date of grant; provided, that, the Option Price or grant price is
determined in accordance with the principles of Code Section 424 and the regulations thereunder; as
modified by Code Section 409A and the regulations thereunder as Options that are non-qualified
stock options and SARs.

     6.3  Limitation on Shares of Stock Subject to Awards.

     During any time when the Company has a class of equity security registered under Section 12 of
the Exchange Act:

     (i) the maximum number of shares of Stock subject to Options or SARs that can be awarded
under the Plan to any person eligible for an Award under Section 6 hereof is five hundred twenty
five thousand five hundred (525,000) per 12 month period; and

     (ii) the maximum number of shares that can be granted under the Plan, other than pursuant
to an Option or SARs, to any person eligible for an Award under Section 6 hereof is five hundred
twenty five thousand five hundred (525,000) per 12 month period.

     The preceding limitations in this Section 6.3 are subject to adjustment as provided in
Section 17 hereof.

     7.  AWARD AGREEMENT

     Each Award granted pursuant to the Plan shall be evidenced by an Award Agreement, in such form
or forms as the Board shall from time to time determine. Award Agreements granted from time to time
or at the same time need not contain similar provisions but shall be consistent with the terms of
the Plan. Each Award Agreement evidencing an Award of Options shall specify whether such Options
are intended to be Non-qualified Stock Options or Incentive Stock Options, and in the absence of
such specification such options shall be deemed Non-qualified Stock Options.

     8.  TERMS AND CONDITIONS OF OPTIONS

     8.1  Option Price

     The Option Price of each Option shall be fixed by the Board and stated in the Award Agreement
evidencing such Option. Except in the case of Substitute Awards, the Option Price of each Option
shall be at least the Fair Market Value on the Grant Date of a share of Stock; provided,
however, that in the event that a Grantee is a Ten Percent Stockholder, the Option Price of
an Option granted to such Grantee that is intended to be an Incentive Stock Option shall be not
less than 110 percent of the Fair Market Value of a share of Stock on the Grant Date. In no case
shall the Option Price of any Option be less than the par value of a share of Stock.

 

 

     8.2  Vesting.

     Subject to Sections 8.3 and 17.3 hereof, each Option granted under the Plan shall become
exercisable at such times and under such conditions as shall be determined by the Board and stated
in the Award Agreement. For purposes of this Section 8.2, fractional numbers of shares of Stock
subject to an Option shall be rounded down to the next nearest whole number.

     8.3  Term.

     Each Option granted under the Plan shall terminate, and all rights to purchase shares of Stock
thereunder shall cease, upon the expiration of ten years from the date such Option is granted, or
under such circumstances and on such date prior thereto as is set forth in the Plan or as may be
fixed by the Board and stated in the Award Agreement relating to such Option; provided,
however, that in the event that the Grantee is a Ten Percent Stockholder, an Option granted
to such Grantee that is intended to be an Incentive Stock Option shall not be exercisable after the
expiration of five years from its Grant Date.

     8.4  Termination of Service.

     Each Award Agreement shall set forth the extent to which the Grantee shall have the right to
exercise the Option following termination of the Grantee’s Service. Such provisions shall be
determined in the sole discretion of the Board, need not be uniform among all Options issued
pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service.

     8.5  Limitations on Exercise of Option.

     Notwithstanding any other provision of the Plan, in no event may any Option be exercised, in
whole or in part, prior to the date the Plan is approved by the stockholders of the Company as
provided herein or after the occurrence of an event referred to in Section 17 hereof which results
in termination of the Option.

     8.6  Method of Exercise.

     Subject to the terms of Article 12 and Section 18.3, an Option that is exercisable may be
exercised by the Grantee’s delivery to the Company of notice of exercise on any business day, at
the Company’s principal office, on the form specified by the Company. Such notice shall specify the
number of shares of Stock with respect to which the Option is being exercised and shall be
accompanied by payment in full of the Option Price of the shares for which the Option is being
exercised plus the amount (if any) of federal and/or other taxes which the Company may, in its
judgment, be required to withhold with respect to an Award.

 

 

     8.7  Rights of Holders of Options

     Unless otherwise stated in the applicable Award Agreement, an individual holding or exercising
an Option shall have none of the rights of a stockholder (for example, the right to receive cash or
dividend payments or distributions attributable to the subject shares of Stock or to direct the
voting of the subject shares of Stock) until the shares of Stock covered thereby are fully paid and
issued to him. Except as provided in Section 17 hereof, no adjustment shall be made for dividends,
distributions or other rights for which the record date is prior to the date of such issuance.

     8.8  Delivery of Stock Certificates.

     Promptly after the exercise of an Option by a Grantee and the payment in full of the Option
Price, such Grantee shall be entitled to the issuance of a stock certificate or certificates
evidencing his or her ownership of the shares of Stock subject to the Option.

     8.9  Transferability of Options

     Except as provided in Section 8.10, during the lifetime of a Grantee, only the Grantee (or, in
the event of legal incapacity or incompetency, the Grantee’s guardian or legal representative) may
exercise an Option. Except as provided in Section 8.10, no Option shall be assignable or
transferable by the Grantee to whom it is granted, other than by will or the laws of descent and
distribution.

     8.10  Family Transfers.

     If authorized in the applicable Award Agreement, a Grantee may transfer, not for value, all or
part of an Option which is not an Incentive Stock Option to any Family Member. For the purpose of
this Section 8.10, a “not for value” transfer is a transfer which is (i) a gift, (ii) a transfer
under a domestic relations order in settlement of marital property rights; or (iii) a transfer to
an entity in which more than fifty percent of the voting interests are owned by Family Members (or
the Grantee) in exchange for an interest in that entity. Following a transfer under this
Section 8.10, any such Option shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer. Subsequent transfers of transferred Options are
prohibited except to Family Members of the original Grantee in accordance with this Section 8.10 or
by will or the laws of descent and distribution. The events of termination of Service of
Section 8.4 hereof shall continue to be applied with respect to the original Grantee, following
which the Option shall be exercisable by the transferee only to the extent, and for the periods
specified, in Section 8.4.

     8.11  Limitations on Incentive Stock Options.

     An Option shall constitute an Incentive Stock Option only (i) if the Grantee of such Option is
an employee of the Company or any Subsidiary of the Company; (ii) to the extent specifically
provided in the related Award Agreement; and (iii) to the extent that the aggregate Fair Market
Value (determined at the time the Option is granted) of the shares of Stock with respect to which
all Incentive Stock Options held by such Grantee become exercisable for the first time during any
calendar year (under the Plan and all other plans of the Grantee’s employer and its Affiliates)
does not exceed $100,000. This limitation shall be applied by taking Options into account in the
order in which they were granted.

     8.12  Notice of Disqualifying Disposition

     If any Grantee shall make any disposition of shares of Stock issued pursuant to the exercise
of an Incentive Stock Option under the circumstances described in Code Section 421(b) (relating to
certain disqualifying dispositions), such Grantee shall notify the Company of such disposition
within ten (10) days thereof.

 

 

     9.  TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

     9.1  Right to Payment and Grant Price.

     A SAR shall confer on the Grantee to whom it is granted a right to receive, upon exercise
thereof, the excess of (A) the Fair Market Value of one share of Stock on the date of exercise over
(B) the grant price of the SAR as determined by the Board. The Award Agreement for a SAR shall
specify the grant price of the SAR, which shall be at least the Fair Market Value of a share of
Stock on the date of grant. SARs may be granted in conjunction with all or part of an Option
granted under the Plan or at any subsequent time during the term of such Option, in conjunction
with all or part of any other Award or without regard to any Option or other Award; provided that a
SAR that is granted subsequent to the Grant Date of a related Option must have a SAR Price that is
no less than the Fair Market Value of one share of Stock on the SAR Grant Date.

     9.2  Other Terms.

     The Board shall determine at the date of grant or thereafter, the time or times at which and
the circumstances under which a SAR may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements), the time or times at which
SARs shall cease to be or become exercisable following termination of Service or upon other
conditions, the method of exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Stock will be delivered or deemed to be delivered to
Grantees, whether or not a SAR shall be in tandem or in combination with any other Award, and any
other terms and conditions of any SAR.

     9.3  Term.

     Each SAR granted under the Plan shall terminate, and all rights thereunder shall cease, upon
the expiration of ten years from the date such SAR is granted, or under such circumstances and on
such date prior thereto as is set forth in the Plan or as may be fixed by the Board and stated in
the Award Agreement relating to such SAR.

     9.4  Transferability of SARS

     Except as provided in Section 9.5, during the lifetime of a Grantee, only the Grantee (or, in
the event of legal incapacity or incompetency, the Grantee’s guardian or legal representative) may
exercise a SAR. Except as provided in Section 9.5, no SAR shall be assignable or transferable by
the Grantee to whom it is granted, other than by will or the laws of descent and distribution.

     9.5  Family Transfers.

     If authorized in the applicable Award Agreement, a Grantee may transfer, not for value, all or
part of a SAR to any Family Member. For the purpose of this Section 9.5, a “not for value” transfer
is a transfer which is (i) a gift, (ii) a transfer under a domestic relations order in settlement
of marital property rights; or (iii) a transfer to an entity in which more than fifty percent of
the voting interests are owned by Family Members (or the Grantee) in exchange for an interest in
that entity. Following a transfer under this Section 9.5, any such SAR shall continue to be subject
to the same terms and conditions as were applicable immediately prior to transfer. Subsequent
transfers of transferred SARs are prohibited except to Family Members of the original Grantee in
accordance with this Section 9.5 or by will or the laws of descent and distribution.

     10.  TERMS AND CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS

     10.1  Grant of Restricted Stock or Stock Units.

     Awards of Restricted Stock or Stock Units may be made for no consideration (other than par
value of the shares which is deemed paid by Services already rendered).

     10.2  Restrictions.

     At the time a grant of Restricted Stock or Stock Units is made, the Board may, in its sole
discretion, establish a period of time (a “restricted period”) applicable to such Restricted Stock
or Stock Units. Each Award of Restricted Stock or Stock Units may be subject to a different
restricted period. The Board may in

 

 

its sole discretion, at the time a grant of Restricted Stock or Stock Units is made, prescribe
restrictions in addition to or other than the expiration of the restricted period, including the
satisfaction of corporate or individual performance objectives, which may be applicable to all or
any portion of the Restricted Stock or Stock Units as described in Article 14. Neither Restricted
Stock nor Stock Units may be sold, transferred, assigned, pledged or otherwise encumbered or
disposed of during the restricted period or prior to the satisfaction of any other restrictions
prescribed by the Board with respect to such Restricted Stock or Stock Units.

     10.3  Restricted Stock Certificates.

     The Company shall issue, in the name of each Grantee to whom Restricted Stock has been
granted, stock certificates representing the total number of shares of Restricted Stock granted to
the Grantee, as soon as reasonably practicable after the Grant Date. The Board may provide in an
Award Agreement that either (i) the Secretary of the Company shall hold such certificates for the
Grantee’s benefit until such time as the Restricted Stock is forfeited to the Company or the
restrictions lapse, or (ii) such certificates shall be delivered to the Grantee, provided,
however, that such certificates shall bear a legend or legends that comply with the
applicable securities laws and regulations and makes appropriate reference to the restrictions
imposed under the Plan and the Award Agreement.

     10.4  Rights of Holders of Restricted Stock.

     Unless the Board otherwise provides in an Award Agreement, holders of Restricted Stock shall
have the right to vote such Stock and the right to receive any dividends declared or paid with
respect to such Stock. The Board may provide that any dividends paid on Restricted Stock must be
reinvested in shares of Stock, which may or may not be subject to the same vesting conditions and
restrictions applicable to such Restricted Stock. All distributions, if any, received by a Grantee
with respect to Restricted Stock as a result of any stock split, stock dividend, combination of
shares, or other similar transaction shall be subject to the restrictions applicable to the
original Grant.

     10.5  Rights of Holders of Stock Units.

     10.5.1  Voting and Dividend Rights.

     Holders of Stock Units shall have no rights as stockholders of the Company. The Board may
provide in an Award Agreement evidencing a grant of Stock Units that the holder of such Stock Units
shall be entitled to receive, upon the Company’s payment of a cash dividend on its outstanding
Stock, a cash payment for each Stock Unit held equal to the per-share dividend paid on the Stock.
Such Award Agreement may also provide that such cash payment will be deemed reinvested in
additional Stock Units at a price per unit equal to the Fair Market Value of a share of Stock on
the date that such dividend is paid.

     10.5.2  Creditor’s Rights.

     A holder of Stock Units shall have no rights other than those of a general creditor of the
Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the
terms and conditions of the applicable Award Agreement.

     10.6  Termination of Service.

     Unless the Board otherwise provides in an Award Agreement or in writing after the Award
Agreement is issued, upon the termination of a Grantee’s Service, any Restricted Stock or Stock
Units held by such Grantee that have not vested, or with respect to which all applicable
restrictions and conditions have not lapsed, shall immediately be deemed forfeited. Upon forfeiture
of Restricted Stock or Stock Units, the Grantee shall have no further rights with respect to such
Award, including but not limited to any right to vote Restricted Stock or any right to receive
dividends with respect to shares of Restricted Stock or Stock Units.

 

 

     10.7  Purchase of Restricted Stock and Shares Subject to Stock Units.

     The Grantee shall be required, to the extent required by applicable law, to purchase the
Restricted Stock or Shares subject to vested Stock Units from the Company at a Purchase Price equal
to the greater of (i) the aggregate par value of the shares of Stock represented by such Restricted
Stock or Stock Units (ii) the Purchase Price, if any, specified in the Award Agreement relating to
such Restricted Stock or Stock Units. The Purchase Price shall be payable in a form described in
Section 12 or, in the discretion of the Board, in consideration for past or future Services
rendered to the Company or an Affiliate.

     10.8  Delivery of Stock.

     Upon the expiration or termination of any restricted period and the satisfaction of any other
conditions prescribed by the Board, the restrictions applicable to shares of Restricted Stock or
Stock Units settled in Stock shall lapse, and, unless otherwise provided in the Award Agreement, a
stock certificate for such shares shall be delivered, free of all such restrictions, to the Grantee
or the Grantee’s beneficiary or estate, as the case may be. Neither the Grantee, nor the Grantee’s
beneficiary or estate, shall have any further rights with regard to a Stock Unit once the share of
Stock represented by the Stock Unit has been delivered.

     11  TERMS AND CONDITIONS OF UNRESTRICTED STOCK AWARDS

     The Board may, in its sole discretion, grant (or sell at par value or such other higher
purchase price determined by the Board) an Unrestricted Stock Award to any Grantee pursuant to
which such Grantee may receive shares of Stock free of any restrictions (“Unrestricted Stock”)
under the Plan. Unrestricted Stock Awards may be granted or sold as described in the preceding
sentence in respect of past services and other valid consideration, or in lieu of, or in addition
to, any cash compensation due to such Grantee.

     12  FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK

     12.1  General Rule.

     Payment of the Option Price for the shares purchased pursuant to the exercise of an Option or
the Purchase Price for Restricted Stock shall be made in cash or in cash equivalents acceptable to
the Company.

     12.2  Surrender of Stock.

     To the extent the Award Agreement so provides, payment of the Option Price for shares
purchased pursuant to the exercise of an Option or the Purchase Price for Restricted Stock may be
made all or in part through the tender or attestation to the Company of shares of Stock, which
shall be valued, for purposes of determining the extent to which the Option Price or Purchase Price
has been paid thereby, at their Fair Market Value on the date of exercise or surrender.

     12.3  Cashless Exercise.

     With respect to an Option only (and not with respect to Restricted Stock), to the extent
permitted by law and to the extent the Award Agreement so provides, payment of the Option Price for
shares purchased pursuant to the exercise of an Option may be made all or in part by delivery (on a
form acceptable to the Board) of an irrevocable direction to a licensed securities broker
acceptable to the Company to sell shares of Stock and to deliver all or part of the sales proceeds
to the Company in payment of the Option Price and any withholding taxes described in Section 18.3.

     12.4  Other Forms of Payment.

     To the extent the Award Agreement so provides, payment of the Option Price for shares
purchased pursuant to exercise of an Option or the Purchase Price for Restricted Stock may be made
in any other form that is consistent with applicable laws, regulations and rules, including,
without limitation, Service.

 

 

     13  TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS

     13.1  Dividend Equivalent Rights.

     A Dividend Equivalent Right is an Award entitling the recipient to receive credits based on
cash distributions that would have been paid on the shares of Stock specified in the Dividend
Equivalent Right (or other award to which it relates) if such shares had been issued to and held by
the recipient. A Dividend Equivalent Right may be granted hereunder to any Grantee. The terms and
conditions of Dividend Equivalent Rights shall be specified in the grant. Dividend equivalents
credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional shares of Stock, which may thereafter accrue additional equivalents. Any
such reinvestment shall be at Fair Market Value on the date of reinvestment. Dividend Equivalent
Rights may be settled in cash or Stock or a combination thereof, in a single installment or
installments, all determined in the sole discretion of the Board. A Dividend Equivalent Right
granted as a component of another Award may provide that such Dividend Equivalent Right shall be
settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other award,
and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same
conditions as such other award. A Dividend Equivalent Right granted as a component of another Award
may also contain terms and conditions different from such other award.

     13.2  Termination of Service.

     Except as may otherwise be provided by the Board either in the Award Agreement or in writing
after the Award Agreement is issued, a Grantee’s rights in all Dividend Equivalent Rights or
interest equivalents shall automatically terminate upon the Grantee’s termination of Service for
any reason.

     14  TERMS AND CONDITIONS OF PERFORMANCE SHARES, PERFORMANCE UNITS, PERFORMANCE AWARDS AND
ANNUAL INCENTIVE AWARDS

     14.1  Grant of Performance Units/Performance Shares.

     Subject to the terms and provisions of this Plan, the Board, at any time and from time to
time, may grant Performance Units and/or Performance Shares to Participants in such amounts and
upon such terms as the Committee shall determine.

     14.2  Value of Performance Units/Performance Shares.

     Each Performance Unit shall have an initial value that is established by the Board at the time
of grant. The Board shall set performance goals in its discretion which, depending on the extent to
which they are met, will determine the value and/or number of Performance Units/Performance Shares
that will be paid out to the Participant.

     14.3  Earning of Performance Units/Performance Shares.

     Subject to the terms of this Plan, after the applicable Performance Period has ended, the
holder of Performance Units/Performance Shares shall be entitled to receive payout on the value and
number of Performance Units/Performance Shares earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the corresponding performance goals
have been achieved.

     14.4  Form and Timing of Payment of Performance Units/Performance Shares.

     Payment of earned Performance Units/Performance Shares shall be as determined by the Board and
as evidenced in the Award Agreement. Subject to the terms of this Plan, the Board, in its sole
discretion, may pay earned Performance Units/Performance Shares in the form of cash or in shares
(or in a combination thereof) equal to the value of the earned Performance Units/Performance Shares
at the close of the applicable Performance Period, or as soon as practicable after the end of the
Performance Period. Any Shares may be granted subject to any restrictions deemed appropriate by the
Committee. The determination of the Committee with respect to the form of payout of such Awards shall be set forth in the
Award Agreement pertaining to the grant of the Award.

 

 

     14.5  Performance Conditions.

     The right of a Grantee to exercise or receive a grant or settlement of any Award, and the
timing thereof, may be subject to such performance conditions as may be specified by the Board. The
Board may use such business criteria and other measures of performance as it may deem appropriate
in establishing any performance conditions. If and to the extent required under Code
Section 162(m), any power or authority relating to an Award intended to qualify under Code
Section 162(m), shall be exercised by the Committee and not the Board.

     14.6  Performance Awards or Annual Incentive Awards Granted to Designated Covered
Employees.

     If and to the extent that the Board determines that an Award to be granted to a Grantee who is
designated by the Board as likely to be a Covered Employee should qualify as “performance-based
compensation” for purposes of Code Section 162(m), the grant, exercise and/or settlement of such
Award shall be contingent upon achievement of pre-established performance goals and other terms set
forth in this Section 14.6.

     14.6.1  Performance Goals Generally.

     The performance goals for such Awards shall consist of one or more business criteria and a
targeted level or levels of performance with respect to each of such criteria, as specified by the
Committee consistent with this Section 14.6. Performance goals shall be objective and shall
otherwise meet the requirements of Code Section 162(m) and regulations thereunder including the
requirement that the level or levels of performance targeted by the Committee result in the
achievement of performance goals being “substantially uncertain.” The Committee may determine that
such Awards shall be granted, exercised and/or settled upon achievement of any one performance goal
or that two or more of the performance goals must be achieved as a condition to grant, exercise
and/or settlement of such Awards. Performance goals may differ for Awards granted to any one
Grantee or to different Grantees.

     14.6.2  Timing For Establishing Performance Goals.

     Performance goals shall be established not later than the earlier of (i) 90 days after the
beginning of any performance period applicable to such Awards and (ii) the day on which 25% of any
performance period applicable to such Awards has expired, or at such other date as may be required
or permitted for “performance-based compensation” under Code Section 162(m).

     14.6.3  Settlement of Awards; Other Terms.

     Settlement of such Awards shall be in cash, Stock, other Awards or other property, in the
discretion of the Committee. The Committee may, in its discretion, reduce the amount of a
settlement otherwise to be made in connection with such Awards. The Committee shall specify the
circumstances in which such Performance or Annual Incentive Awards shall be paid or forfeited in
the event of termination of Service by the Grantee prior to the end of a performance period or
settlement of Awards.

     14.6.4  Performance Measures.

     The performance goals upon which the payment or vesting of an Award to a Covered Employee that
is intended to qualify as Performance-Based Compensation shall be limited to the following
Performance Measures:

     (a) net earnings or net income;

     (b) operating earnings;

 

 

     (c) pretax earnings;

     (d) earnings per share;

     (e) share price, including growth measures and total stockholder return;

     (f) earnings before interest and taxes;

     (g) earnings before interest, taxes, depreciation and/or amortization;

     (h) sales or revenue growth, whether in general, by type of product or service, or by type
of customer;

     (i) gross or operating margins;

     (j) return measures, including return on assets, capital, investment, equity, sales or
revenue;

     (k) cash flow, including operating cash flow, free cash flow, cash flow return on equity
and cash flow return on investment;

     (l) productivity ratios;

     (m) expense targets;

     (n) market share;

     (o) financial ratios as provided in credit agreements of the Company and its subsidiaries;

     (p) working capital targets;

     (q) completion of acquisitions of business or companies.

     (r) completion of divestitures and asset sales; and

     (s) any combination of any of the foregoing business criteria.

     Any Performance Measure(s) may be used to measure the performance of the Company, Subsidiary,
and/or Affiliate as a whole or any business unit of the Company, Subsidiary, and/or Affiliate or
any combination thereof, as the Committee may deem appropriate, or any of the above Performance
Measures as compared to the performance of a group of comparator companies, or published or special
index that the Committee, in its sole discretion, deems appropriate, or the Company may select
Performance Measure (f) above as compared to various stock market indices. The Committee also has
the authority to provide for accelerated vesting of any Award based on the achievement of
performance goals pursuant to the Performance Measures specified in this Section 14.

     14.6.5  Evaluation of Performance.

     The Committee may provide in any such Award that any evaluation of performance may include or
exclude any of the following events that occur during a Performance Period: (a) asset write-downs;
(b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting
principles, or other laws or provisions affecting reported results; (d) any reorganization and
restructuring programs; (e) extraordinary nonrecurring items as described in Accounting Principles
Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and
results of operations appearing in the Company’s annual report to shareholders for the applicable
year; (f) acquisitions or divestitures; and (g) foreign exchange gains and losses. To the extent
such inclusions or exclusions affect Awards to Covered Employees, they shall be prescribed in a
form that meets the requirements of Code Section 162(m) for deductibility.

 

 

     14.6.6  Adjustment of Performance-Based Compensation.

     Awards that are intended to qualify as Performance-Based Compensation may not be adjusted
upward. The Board shall retain the discretion to adjust such Awards downward, either on a formula
or discretionary basis, or any combination as the Committee determines.

     14.6.7  Board Discretion.

     In the event that applicable tax and/or securities laws change to permit Board discretion to
alter the governing Performance Measures without obtaining shareholder approval of such changes,
the Board shall have sole discretion to make such changes without obtaining shareholder approval
provided the exercise of such discretion does not violate Code Section 409A. In addition, in the
event that the Committee determines that it is advisable to grant Awards that shall not qualify as
Performance-Based Compensation, the Committee may make such grants without satisfying the
requirements of Code Section 162(m) and base vesting on Performance Measures other than those set
forth in Section 14.6.4.

     14.7  Status of Section Awards Under Code Section 162(m).

     It is the intent of the Company that Awards under Section 14.6 hereof granted to persons who
are designated by the Committee as likely to be Covered Employees within the meaning of Code
Section 162(m) and regulations thereunder shall, if so designated by the Committee, constitute
“qualified performance-based compensation” within the meaning of Code Section 162(m) and
regulations thereunder. Accordingly, the terms of Section 14.6, including the definitions of
Covered Employee and other terms used therein, shall be interpreted in a manner consistent with
Code Section 162(m) and regulations thereunder. The foregoing notwithstanding, because the
Committee cannot determine with certainty whether a given Grantee will be a Covered Employee with
respect to a fiscal year that has not yet been completed, the term Covered Employee as used herein
shall mean only a person designated by the Committee, at the time of grant of an Award, as likely
to be a Covered Employee with respect to that fiscal year. If any provision of the Plan or any
agreement relating to such Awards does not comply or is inconsistent with the requirements of Code
Section 162(m) or regulations thereunder, such provision shall be construed or deemed amended to
the extent necessary to conform to such requirements.

     15  PARACHUTE LIMITATIONS

     Notwithstanding any other provision of this Plan or of any other agreement, contract, or
understanding heretofore or hereafter entered into by a Grantee with the Company or any Affiliate,
except an agreement, contract, or understanding that expressly addresses Section 280G or
Section 4999 of the Code (an “Other Agreement”), and notwithstanding any formal or informal plan or
other arrangement for the direct or indirect provision of compensation to the Grantee (including
groups or classes of Grantees or beneficiaries of which the Grantee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of a benefit to or for the Grantee (a
“Benefit Arrangement”), if the Grantee is a “disqualified individual,” as defined in
Section 280G(c) of the Code, any Option, Restricted Stock, Stock Unit, Performance Share or
Performance Unit held by that Grantee and any right to receive any payment or other benefit under
this Plan shall not become exercisable or vested (i) to the extent that such right to exercise,
vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for
the Grantee under this Plan, all Other Agreements, and all Benefit Arrangements, would cause any
payment or benefit to the Grantee under this Plan to be considered a “parachute payment” within the
meaning of Section 280G(b)(2) of the Code as then in effect (a “Parachute Payment”) and
(ii) if, as a result of receiving a Parachute Payment, the aggregate after-tax amounts received by
the Grantee from the Company under this Plan, all Other Agreements, and all Benefit Arrangements
would be less than the maximum after-tax amount that could be received by the Grantee without
causing any such payment or benefit to be considered a Parachute Payment. In the event that the
receipt of any such right to exercise, vesting, payment, or benefit under this Plan, in conjunction
with all other rights, payments, or benefits to or for the Grantee under any Other Agreement or any
Benefit Arrangement would cause the Grantee to be considered to have received a Parachute Payment
under this Plan that would have the effect of decreasing the after-tax amount received

 

 

by the Grantee as described in clause (ii) of the preceding sentence, then the Grantee shall
have the right, in the Grantee’s sole discretion, to designate those rights, payments, or benefits
under this Plan, any Other Agreements, and any Benefit Arrangements that should be reduced or
eliminated so as to avoid having the payment or benefit to the Grantee under this Plan be deemed to
be a Parachute Payment; provided, however, that in order to comply with Code Section 409A, the
reduction or elimination will be performed in the order in which each dollar of value subject to an
Award reduces the Parachute Payment to the greatest extent.

     16  REQUIREMENTS OF LAW

     16.1  General.

     The Company shall not be required to sell or issue any shares of Stock under any Award if the
sale or issuance of such shares would constitute a violation by the Grantee, any other individual
exercising an Option, or the Company of any provision of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or regulations. If at
any time the Company shall determine, in its discretion, that the listing, registration or
qualification of any shares subject to an Award upon any securities exchange or under any
governmental regulatory body is necessary or desirable as a condition of, or in connection with,
the issuance or purchase of shares hereunder, no shares of Stock may be issued or sold to the
Grantee or any other individual exercising an Option pursuant to such Award unless such listing,
registration, qualification, consent or approval shall have been effected or obtained free of any
conditions not acceptable to the Company, and any delay caused thereby shall in no way affect the
date of termination of the Award. Without limiting the generality of the foregoing, in connection
with the Securities Act, upon the exercise of any Option or any SAR that may be settled in shares
of Stock or the delivery of any shares of Stock underlying an Award, unless a registration
statement under such Act is in effect with respect to the shares of Stock covered by such Award,
the Company shall not be required to sell or issue such shares unless the Board has received
evidence satisfactory to it that the Grantee or any other individual exercising an Option may
acquire such shares pursuant to an exemption from registration under the Securities Act. Any
determination in this connection by the Board shall be final, binding, and conclusive. The Company
may, but shall in no event be obligated to, register any securities covered hereby pursuant to the
Securities Act. The Company shall not be obligated to take any affirmative action in order to cause
the exercise of an Option or a SAR or the issuance of shares of Stock pursuant to the Plan to
comply with any law or regulation of any governmental authority. As to any jurisdiction that
expressly imposes the requirement that an Option (or SAR that may be settled in shares of Stock)
shall not be exercisable until the shares of Stock covered by such Option (or SAR) are registered
or are exempt from registration, the exercise of such Option (or SAR) under circumstances in which
the laws of such jurisdiction apply shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.

     16.2  Rule 16b-3.

     During any time when the Company has a class of equity security registered under Section 12 of
the Exchange Act, it is the intent of the Company that Awards pursuant to the Plan and the exercise
of Options and SARs granted hereunder will qualify for the exemption provided by Rule 16b-3 under
the Exchange Act. To the extent that any provision of the Plan or action by the Board does not
comply with the requirements of Rule 16b-3, it shall be deemed inoperative to the extent permitted
by law and deemed advisable by the Board, and shall not affect the validity of the Plan. In the
event that Rule 16b-3 is revised or replaced, the Board may exercise its discretion to modify this
Plan in any respect necessary to satisfy the requirements of, or to take advantage of any features
of, the revised exemption or its replacement.

     17  EFFECT OF CHANGES IN CAPITALIZATION

     17.1  Changes in Stock.

     If the number of outstanding shares of Stock is increased or decreased or the shares of Stock
are changed into or exchanged for a different number or kind of shares or other securities of the
Company on account of

 

 

any recapitalization, reclassification, stock split, reverse split, combination of shares,
exchange of shares, stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration by the Company
occurring after the Effective Date, the number and kinds of shares for which grants of Options and
other Awards may be made under the Plan, including, without limitation, the limits set forth in
Section 6.3, shall be adjusted proportionately and accordingly by the Company. In addition, the
number and kind of shares for which Awards are outstanding shall be adjusted proportionately and
accordingly so that the proportionate interest of the Grantee immediately following such event
shall, to the extent practicable, be the same as immediately before such event. Any such adjustment
in outstanding Options or SARs shall not change the aggregate Option Price or SAR Exercise Price
payable with respect to shares that are subject to the unexercised portion of an outstanding Option
or SAR, as applicable, but shall include a corresponding proportionate adjustment in the Option
Price or SAR Exercise Price per share. The conversion of any convertible securities of the Company
shall not be treated as an increase in shares effected without receipt of consideration.
Notwithstanding the foregoing, in the event of any distribution to the Company’s stockholders of
securities of any other entity or other assets (including an extraordinary dividend but excluding a
non-extraordinary dividend of the Company) without receipt of consideration by the Company, the
Company shall, in such manner as the Company deems appropriate, adjust (i) the number and kind of
shares subject to outstanding Awards and/or (ii) the exercise price of outstanding Options and
Stock Appreciation Rights to reflect such distribution.

     17.2  Reorganization in Which the Company Is the Surviving Entity Which does not
Constitute a Corporate Transaction.

     Subject to Section 17.3 hereof, if the Company shall be the surviving entity in any
reorganization, merger, or consolidation of the Company with one or more other entities which does
not constitute a Corporate Transaction, any Option or SAR theretofore granted pursuant to the Plan
shall pertain to and apply to the securities to which a holder of the number of shares of Stock
subject to such Option or SAR would have been entitled immediately following such reorganization,
merger, or consolidation, with a corresponding proportionate adjustment of the Option Price or SAR
Exercise Price per share so that the aggregate Option Price or SAR Exercise Price thereafter shall
be the same as the aggregate Option Price or SAR Exercise Price of the shares remaining subject to
the Option or SAR immediately prior to such reorganization, merger, or consolidation. Subject to
any contrary language in an Award Agreement evidencing an Award, any restrictions applicable to
such Award shall apply as well to any replacement shares received by the Grantee as a result of the
reorganization, merger or consolidation. In the event of a transaction described in this
Section 17.2, Stock Units shall be adjusted so as to apply to the securities that a holder of the
number of shares of Stock subject to the Stock Units would have been entitled to receive
immediately following such transaction.

     17.3  Corporate Transaction in which Awards are not Assumed.

     Upon the occurrence of a Corporate Transaction in which outstanding Options, SARs, Stock Units
and Restricted Stock are not being assumed or continued:

     (i) all outstanding shares of Restricted Stock shall be deemed to have vested, and all
Stock Units shall be deemed to have vested and the shares of Stock subject thereto shall be
delivered, immediately prior to the occurrence of such Corporate Transaction, and

     (ii) either of the following two actions shall be taken:

     (A) fifteen days prior to the scheduled consummation of a Corporate Transaction, all
Options and SARs outstanding hereunder shall become immediately exercisable and shall remain
exercisable for a period of fifteen days, or

     (B) the Board may elect, in its sole discretion, to cancel any outstanding Awards of
Options, Restricted Stock, Stock Units, and/or SARs and pay or deliver, or cause to be paid
or delivered, to the holder thereof an amount in cash or securities having a value (as
determined by the Board acting in good faith), in the case of Restricted Stock or Stock
Units, equal to the formula or fixed price per

 

 

share paid to holders of shares of Stock and, in the case of Options or SARs, equal to
the product of the number of shares of Stock subject to the Option or SAR (the “Award
Shares”) multiplied by the amount, if any, by which (I) the formula or fixed price per share
paid to holders of shares of Stock pursuant to such transaction exceeds (II) the Option Price
or SAR Exercise Price applicable to such Award Shares.

     With respect to the Company’s establishment of an exercise window, (i) any exercise of an
Option or SAR during such fifteen-day period shall be conditioned upon the consummation of the
event and shall be effective only immediately before the consummation of the event, and (ii) upon
consummation of any Corporate Transaction, the Plan and all outstanding but unexercised Options and
SARs shall terminate. The Board shall send notice of an event that will result in such a
termination to all individuals who hold Options and SARs not later than the time at which the
Company gives notice thereof to its stockholders.

     17.4  Corporation Transaction in which Awards are Assumed.

     The Plan, Options, SARs, Stock Units and Restricted Stock theretofore granted shall continue
in the manner and under the terms so provided in the event of any Corporate Transaction to the
extent that provision is made in writing in connection with such Corporate Transaction for the
assumption or continuation of the Options, SARs, Stock Units and Restricted Stock theretofore
granted, or for the substitution for such Options, SARs, Stock Units and Restricted Stock for new
common stock options and stock appreciation rights and new common stock units and restricted stock
relating to the stock of a successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number of shares (disregarding any consideration that is not common stock)
and option and stock appreciation right exercise prices.

     17.5  Adjustments

     Adjustments under this Section 17 related to shares of Stock or securities of the Company
shall be made by the Board, whose determination in that respect shall be final, binding and
conclusive. No fractional shares or other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case
by rounding downward to the nearest whole share. The Board shall determine the effect of a
Corporate Transaction upon Awards other than Options, SARs, Stock Units and Restricted Stock, and
such effect shall be set forth in the appropriate Award Agreement. The Board may provide in the
Award Agreements at the time of grant, or any time thereafter with the consent of the Grantee, for
different provisions to apply to an Award in place of those described in Sections 17.1, 17.2, 17.3
and 17.4. This Section 17 does not limit the Company’s ability to provide for alternative treatment
of Awards outstanding under the Plan in the event of change of control events that are not
Corporate Transactions.

     17.6  No Limitations on Company.

     The making of Awards pursuant to the Plan shall not affect or limit in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations, or changes of its
capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or
transfer all or any part of its business or assets.

     18  GENERAL PROVISIONS

     18.1  Disclaimer of Rights.

     No provision in the Plan or in any Award or Award Agreement shall be construed to confer upon
any individual the right to remain in the employ or service of the Company or any Affiliate, or to
interfere in any way with any contractual or other right or authority of the Company either to
increase or decrease the compensation or other payments to any individual at any time, or to
terminate any employment or other relationship between any individual and the Company. In addition,
notwithstanding anything contained in the Plan to the contrary, unless otherwise stated in the
applicable Award Agreement, no Award granted

 

 

under the Plan shall be affected by any change of duties or position of the Grantee, so long
as such Grantee continues to be a director, officer, consultant or employee of the Company or an
Affiliate. The obligation of the Company to pay any benefits pursuant to this Plan shall be
interpreted as a contractual obligation to pay only those amounts described herein, in the manner
and under the conditions prescribed herein. The Plan shall in no way be interpreted to require the
Company to transfer any amounts to a third party trustee or otherwise hold any amounts in trust or
escrow for payment to any Grantee or beneficiary under the terms of the Plan.

     18.2  Nonexclusivity of the Plan.

     Neither the adoption of the Plan nor the submission of the Plan to the stockholders of the
Company for approval shall be construed as creating any limitations upon the right and authority of
the Board to adopt such other incentive compensation arrangements (which arrangements may be
applicable either generally to a class or classes of individuals or specifically to a particular
individual or particular individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options otherwise than under the Plan.

     18.3  Withholding Taxes.

     The Company or an Affiliate, as the case may be, shall have the right to deduct from payments
of any kind otherwise due to a Grantee any federal, state, or local taxes of any kind required by
law to be withheld with respect to the vesting of or other lapse of restrictions applicable to an
Award or upon the issuance of any shares of Stock upon the exercise of an Option or pursuant to an
Award. At the time of such vesting, lapse, or exercise, the Grantee shall pay to the Company or the
Affiliate, as the case may be, any amount that the Company or the Affiliate may reasonably
determine to be necessary to satisfy such withholding obligation. Subject to the prior approval of
the Company or the Affiliate, which may be withheld by the Company or the Affiliate, as the case
may be, in its sole discretion, the Grantee may elect to satisfy such obligations, in whole or in
part, (i) by causing the Company or the Affiliate to withhold shares of Stock otherwise issuable to
the Grantee or (ii) by delivering to the Company or the Affiliate shares of Stock already owned by
the Grantee. The shares of Stock so delivered or withheld shall have an aggregate Fair Market Value
equal to such withholding obligations. The Fair Market Value of the shares of Stock used to satisfy
such withholding obligation shall be determined by the Company or the Affiliate as of the date that
the amount of tax to be withheld is to be determined. A Grantee who has made an election pursuant
to this Section 18.3 may satisfy his or her withholding obligation only with shares of Stock that
are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements.
The maximum number of shares of Stock that may be withheld from any Award to satisfy any federal,
state or local tax withholding requirements upon the exercise, vesting, lapse of restrictions
applicable to such Award or payment of shares pursuant to such Award, as applicable, cannot exceed
such number of shares having a Fair Market Value equal to the minimum statutory amount required by
the Company to be withheld and paid to any such federal, state or local taxing authority with
respect to such exercise, vesting, lapse of restrictions or payment of shares.

     18.4  Captions.

     The use of captions in this Plan or any Award Agreement is for the convenience of reference
only and shall not affect the meaning of any provision of the Plan or such Award Agreement.

     18.5  Other Provisions.

     Each Award granted under the Plan may contain such other terms and conditions not inconsistent
with the Plan as may be determined by the Board, in its sole discretion.

     18.6  Number and Gender.

     With respect to words used in this Plan, the singular form shall include the plural form, the
masculine gender shall include the feminine gender, etc., as the context requires.

 

 

     18.7  Severability.

     If any provision of the Plan or any Award Agreement shall be determined to be illegal or
unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof
shall be severable and enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.

     18.8  Governing Law.

     The validity and construction of this Plan and the instruments evidencing the Awards hereunder
shall be governed by the laws of the State of Colorado, other than any conflicts or choice of law
rule or principle that might otherwise refer construction or interpretation of this Plan and the
instruments evidencing the Awards granted hereunder to the substantive laws of any other
jurisdiction.

     18.9  Code Section 409A.

     The Board intends to comply with Code Section 409A, or an exemption to Code Section 409A, with
regard to Awards hereunder that constitute nonqualified deferred compensation within the meaning of
Code Section 409A. To the extent that the Board determines that a Grantee would be subject to the
additional 20% tax imposed on certain nonqualified deferred compensation plans pursuant to Code
Section 409A as a result of any provision of any Award granted under this Plan, such provision
shall be deemed amended to the minimum extent necessary to avoid application of such additional
tax. The nature of any such amendment shall be determined by the Board.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00145-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00145-of-00352.parquet"}]]