Document:

EX-10.1

 

    Exhibit 10.1

 

    OSI
    PHARMACEUTICALS, INC.

    

 

    AMENDED
    AND RESTATED

    

    STOCK
    INCENTIVE PLAN

    (Including Amendments No. 1, 2, and 3)

 

		
	
    1. 
	
    Purpose

 

    The purpose of this Amended and Restated Stock Incentive Plan
    (formerly, the 2001 Incentive and Non-Qualified Stock Option
    Plan) (the “Plan”) is to encourage and enable selected
    management, other employees, directors (whether or not
    employees), and consultants of OSI Pharmaceuticals, Inc. (the
    “Company”) or a parent or subsidiary of the Company to
    acquire a proprietary interest in the Company through the
    ownership, directly or indirectly, of common stock, par value
    $.01 per share (the “Common Stock”), of the
    Company. Such ownership will provide such employees, directors,
    and consultants with a more direct stake in the future welfare
    of the Company and encourage them to remain with the Company or
    a parent or subsidiary of the Company. It is also expected that
    the Plan will encourage qualified persons to seek and accept
    employment with, or become associated with, the Company or a
    parent or subsidiary of the Company. As used herein, the term
    “parent” or “subsidiary” shall mean any
    present or future corporation which is or would be a
    “parent corporation” or “subsidiary
    corporation” of the Company as the term is defined in
    Section 424 of the Code (determined as if the Company were
    the employer corporation).

 

    Pursuant to the Plan, the Company may grant: (i) Incentive
    Stock Options; (ii) Non-Qualified Stock Options;
    (iii) Stock Appreciation Rights; (iv) Restricted
    Stock; and (v) Stock Bonuses, as such terms are defined in
    Section 2.

 

		
	
    2. 
	
    Definitions

 

    Capitalized terms not otherwise defined in the Plan shall have
    the following meanings:

 

    (a) “Award Agreement” shall mean a written
    agreement, in such form as the Committee shall determine, that
    evidences the terms and conditions of a Stock Award granted
    under the Plan.

 

    (b) “Fair Market Value” on a specified
    date means the value of a share of Common Stock, determined as
    follows:

 

    (i) if the Common Stock is listed on any established stock
    exchange or a national market system, including without
    limitation, The Nasdaq Global Select Market, The Nasdaq Global
    Market, or The Nasdaq Capital Market of The Nasdaq Stock Market,
    Inc., its Fair Market Value shall be the closing sales price for
    such stock (or the closing bid, if no sales were reported) as
    quoted on such exchange or system on the day of determination,
    as reported in The Wall Street Journal or such other source as
    the Committee deems reliable;

 

    (ii) if the Common Stock is regularly quoted by a
    recognized securities dealer but selling prices are not
    reported, its Fair Market Value shall be the mean between the
    high bid and low asked prices for the Common Stock on the day of
    determination, as reported in The Wall Street Journal or such
    other source as the Committee deems reliable; or

 

    (iii) in the absence of an established market for the
    Common Stock, the Fair Market Value shall be determined in good
    faith by the Committee.

 

    (c) “Code” shall mean the Internal Revenue
    Code of 1986, as amended.

 

    (d) “Incentive Stock Option” shall mean an
    option that is an “incentive stock option” within the
    meaning of Section 422 of the Code and that is identified
    as an Incentive Stock Option in the Award Agreement by which it
    is evidenced.

 

    (e) “Non-Qualified Stock Option” shall
    mean an option that is not an Incentive Stock Option within the
    meaning of Section 422 of the Code.

 

 

    (f) “Restricted Stock” shall mean an award
    of shares of Common Stock that is subject to certain conditions
    on vesting and restrictions on transferability as provided in
    Section 8 of this Plan.

 

    (g) “Stock Appreciation Right” shall mean
    a right to receive payment of the appreciated value of shares of
    Common Stock as provided in Section 7 of this Plan.

 

    (h) “Stock Award” shall mean an Incentive
    Stock Option, a Non-Qualified Stock Option, a Restricted Stock
    award, a Stock Appreciation Right or a Stock Bonus award.

 

    (i) “Stock Bonus” shall mean a bonus award
    payable in shares of Common Stock as provided in Section 9
    of this Plan.

 

		
	
    3. 
	
    Administration
    of the Plan

 

    The Plan shall be administered by a committee (the
    “Committee”) as appointed from time to time by the
    Board of Directors of the Company, which may be the Compensation
    Committee of the Board of Directors. Except as otherwise
    specifically provided herein, no person, other than members of
    the Committee, shall have any discretion as to decisions
    regarding the Plan. The Company may engage a third party to
    administer routine matters under the Plan, such as establishing
    and maintaining accounts for Plan participants and facilitating
    transactions by participants pursuant to the Plan.

 

    In administering the Plan, the Committee may adopt rules and
    regulations for carrying out the Plan. The interpretations and
    decisions made by the Committee with regard to any question
    arising under the Plan shall be final and conclusive on all
    persons participating or eligible to participate in the Plan.
    Subject to the provisions of the Plan, the Committee shall
    determine the terms of all Stock Awards granted pursuant to the
    Plan, including, but not limited to, the persons to whom, and
    the time or times at which, grants shall be made, the number of
    shares to be covered by each Stock Award, and other terms and
    conditions of the Stock Award.

 

		
	
    4. 
	
    Shares of
    Stock Subject to the Plan

 

    Except as provided in Section 10, the number of shares that
    may be issued or transferred pursuant to Stock Awards granted
    under the Plan shall not exceed 13,800,000 shares of Common
    Stock; provided, however, that any shares issued under an
    Award granted on or after June 13, 2007 other than an
    Option or Stock Appreciation Right shall count against the
    maximum number of shares reserved hereunder as two shares for
    every one share issued in connection with such Award. Shares
    reserved hereunder may be authorized and unissued shares or
    previously issued shares acquired or to be acquired by the
    Company and held in treasury. Any shares subject to a Stock
    Award which for any reason expires, is cancelled or is
    unexercised may again be subject to a Stock Award under the
    Plan. The aggregate Fair Market Value of the shares with respect
    to which Incentive Stock Options (determined at the time of
    grant of the option) are exercisable for the first time by an
    optionee during any calendar year (under the Plan and all plans
    of the Company and any parent or subsidiary of the Company)
    shall not exceed $100,000.

 

		
	
    5. 
	
    Eligibility

 

    Stock Awards may be granted to directors, officers, employees
    and consultants of the Company or a parent or subsidiary of the
    Company, except that Incentive Stock Options may not be granted
    to any such person who is not an employee of the Company or a
    parent or subsidiary of the Company.

 

		
	
    6. 
	
    Granting
    of Options

 

    The Committee may grant options to such persons eligible under
    the Plan as the Committee may select from time to time. Such
    options shall be granted at such times, in such amounts and upon
    such other terms and conditions as the Committee shall
    determine, which shall be evidenced under an Award Agreement and
    subject to the following terms and conditions:

 

    (a) Type of Option.  The Award Agreement
    shall indicate whether and to what extent the option is intended
    to be an Incentive Stock Option or a Non-Qualified Stock Option.

 

    (b) Option Price.  The purchase price
    under each Incentive Stock Option and each Non-Qualified Stock
    Option shall be not less than 100% of the Fair Market Value of
    the Common Stock at the time the option is

    

    2

 

    granted and not less than the par value of the Common Stock. In
    the case of an Incentive Stock Option granted to an employee
    owning, actually or constructively under Section 424(d) of
    the Code, more than 10% of the total combined voting power of
    all classes of stock of the Company or of any parent or
    subsidiary of the Company (a “10% Stockholder”) the
    option price shall not be less than 110% of the Fair Market
    Value of the Common Stock at the time of the grant.

 

    (c) Medium and Time of Payment.  Stock
    purchased pursuant to the exercise of an option shall at the
    time of purchase be paid for in full in cash, or, upon
    conditions established by the Committee, by delivery of shares
    of Common Stock owned by the recipient. If payment is made by
    the delivery of shares, the value of the shares delivered shall
    be the Fair Market Value of such shares on the date of exercise
    of the option. In addition, if the Committee consents in its
    sole discretion, an “in the money” Non-Qualified Stock
    Option may be exercised on a “cashless” basis in
    exchange for the issuance to the optionee (or other person
    entitled to exercise the option) of the largest whole number of
    shares having an aggregate value equal to the value of such
    option on the date of exercise. For this purpose, the value of
    the shares delivered by the Company and the value of the option
    being exercised shall be determined based on the Fair Market
    Value of the Common Stock on the date of exercise of the option.
    Upon receipt of payment and such documentation as the Company
    may deem necessary to establish compliance with the Securities
    Act of 1933, as amended (the “Securities Act”), the
    Company shall, without stock transfer tax to the optionee or
    other person entitled to exercise the option, deliver to the
    person exercising the option a certificate or certificates for
    such shares.

 

    (d) Waiting Period.  The waiting period
    and time for exercising an option shall be prescribed by the
    Committee in each particular case; provided, however, that no
    option may be exercised after 10 years from the date it is
    granted. In the case of an Incentive Stock Option granted to a
    10% Stockholder, such option, by its terms, shall be exercisable
    only within five years from the date of grant.

 

    (e) Non-Assignability of Options.  No
    Incentive Stock Option and, except as may otherwise be
    specifically provided by the Committee, no Non-Qualified Stock
    Option, shall be assignable or transferable by the recipient
    except by will or by the laws of descent and distribution.
    During the lifetime of a recipient, Incentive Stock Options and,
    except as may otherwise be specifically provided by the
    Committee, Non-Qualified Stock Options, shall be exercisable
    only by such recipient. If the Committee approves provisions in
    any particular case allowing for assignment or transfer of a
    Non-Qualified Stock Option, then such option will nonetheless be
    subject to a six-month holding period commencing on the date of
    grant during which period the recipient will not be permitted to
    assign or transfer such option, unless the Committee further
    specifically provides for the assignability or transferability
    of such option during this period.

 

    (f) Effect of Termination of
    Employment.  If a recipient’s employment (or
    service as an officer, director or consultant) shall terminate
    for any reason, other than death or Retirement (as defined
    below), the right of the recipient to exercise any option
    otherwise exercisable on the date of such termination shall
    expire unless such right is exercised within a period of
    90 days after the date of such termination. For Options
    issued prior to June 15, 2005, the term
    “Retirement” shall mean the voluntary termination of
    employment (or service as an officer, director or consultant) by
    a recipient who has attained the age of 55 and who has completed
    at least five years of service with the Company. For Options
    issued on or after June 15, 2005, unless otherwise
    determined by the Committee and defined in the applicable Award
    Agreement, the term “Retirement” shall mean the
    voluntary termination of employment (or service as an officer,
    director or consultant) by a recipient who has attained the age
    of 60 and who has completed at least twenty years of service
    with the Company. If a recipient’s employment (or service
    as an officer, director or consultant) shall terminate because
    of death or Retirement, the right of the recipient to exercise
    any option otherwise exercisable on the date of such termination
    shall be unaffected by such termination and shall continue until
    the normal expiration of such option. Notwithstanding the
    foregoing, the tax treatment available pursuant to
    Section 421 of the Code upon the exercise of an Incentive
    Stock Option will not be available in connection with the
    exercise of any Incentive Stock Option more than three months
    after the date of termination of such option recipient’s
    employment due to Retirement. Option rights shall not be
    affected by any change of employment as long as the recipient
    continues to be employed by either the Company or a parent or
    subsidiary of the Company. In no event, however, shall an option
    be exercisable after the expiration of its original term as
    determined by the Committee. The Committee may, if it determines
    that to do so would be in the Company’s best interests,
    provide in a specific case or cases for the

    

    3

 

    exercise of options which would otherwise terminate upon
    termination of employment with the Company for any reason, upon
    such terms and conditions as the Committee determines to be
    appropriate. Nothing in the Plan or in any Award Agreement shall
    confer any right to continue in the employ of the Company or any
    parent or subsidiary of the Company or interfere in any way with
    the right of the Company or any parent or subsidiary of the
    Company to terminate the employment of a recipient at any time.

 

    (g) Leave of Absence.  In the case of a
    recipient on an approved leave of absence, the Committee may, if
    it determines that to do so would be in the best interests of
    the Company, provide in a specific case for continuation of
    options during such leave of absence, such continuation to be on
    such terms and conditions as the Committee determines to be
    appropriate, except that in no event shall an option be
    exercisable after 10 years from the date it is granted.

 

    (h) Sale or Reorganization.  In case the
    Company is merged or consolidated with another corporation, or
    in case the property or stock of the Company is acquired by
    another corporation, or in case of a reorganization, or
    liquidation of the Company, the Board of Directors of the
    Company, or the board of directors of any corporation assuming
    the obligations of the Company hereunder, shall either
    (i) make appropriate provisions for the protection of any
    outstanding options by the substitution on an equitable basis of
    appropriate stock of the Company, or appropriate options to
    purchase stock of the merged, consolidated, or otherwise
    reorganized corporation, provided only that such substitution of
    options shall, with respect to Incentive Stock Options, comply
    with the requirements of Section 424(a) of the Code, or
    (ii) give written notice to optionees that their options,
    which will become immediately exercisable notwithstanding any
    waiting period otherwise prescribed by the Committee, must be
    exercised within 30 days of the date of such notice or they
    will be terminated.

 

    (i) Restrictions on Sale of
    Shares.  Without the written consent of the
    Company, no stock acquired by an optionee upon exercise of an
    Incentive Stock Option granted hereunder may be disposed of by
    the optionee within two years from the date such incentive stock
    option was granted, nor within one year after the transfer of
    such stock to the optionee; provided, however, that a transfer
    to a trustee, receiver, or other fiduciary in any insolvency
    proceeding, as described in Section 422(c)(3) of the Code,
    shall not be deemed to be such a disposition. The optionee shall
    make appropriate arrangements with the Company for any taxes
    which the Company is obligated to collect in connection with any
    such disposition, including any federal, state, or local
    withholding taxes. No stock acquired by an optionee upon
    exercise of a Non-Qualified Stock Option granted hereunder may
    be disposed of by the optionee (or other person eligible to
    exercise the option) within six months from the date such
    Non-Qualified Stock Option was granted, unless otherwise
    provided by the Committee.

 

		
	
    7. 
	
    Grant of
    Stock Appreciation Rights

 

    The Committee may grant Stock Appreciation Rights to such
    persons eligible under the Plan as the Committee may select from
    time to time. Stock Appreciation Rights shall be granted at such
    times, in such amounts and under such other terms and conditions
    as the Committee shall determine, which terms and conditions
    shall be evidenced under an Award Agreement, subject to the
    terms of the Plan. Subject to the terms and conditions of the
    Award Agreement, a Stock Appreciation Right shall entitle the
    award recipient to exercise the Stock Appreciation Right, in
    whole or in part, in exchange for a payment of shares of Common
    Stock, cash or a combination thereof, as determined by the
    Committee and provided under the Award Agreement, equal in value
    to the excess of the Fair Market Value of the shares of Common
    Stock underlying the Stock Appreciation Right, determined on the
    date of exercise, over the base amount set forth in the Award
    Agreement for shares of Common Stock underlying the Stock
    Appreciation Right, which base amount shall not be less than the
    Fair Market Value of such Common Stock, determined as of the
    date the Stock Appreciation Right is granted.

 

		
	
    8. 
	
    Grant of
    Restricted Stock

 

    The Committee may grant Restricted Stock awards to such persons
    eligible under the Plan as the Committee may select from time to
    time. Restricted Stock awards shall be granted at such times, in
    such amounts and under such other terms and conditions as the
    Committee shall determine, which terms and conditions shall be
    evidenced under an Award Agreement, subject to the terms of the
    Plan. The Award Agreement shall set forth any conditions on

    

    4

 

    vesting and restrictions on transferability that the Committee
    may determine is appropriate for the Restricted Stock award,
    including the performance of future services or satisfaction of
    performance goals established by the Committee. The books and
    records of the Company shall reflect the issuance of shares of
    Common Stock under a Restricted Stock award and any applicable
    restrictions and limitations in such manner as the Committee
    determines is appropriate. Unless otherwise provided in the
    Award Agreement, a recipient of a Restricted Stock award shall
    be the record owner of the shares of Common Stock to which the
    Restricted Stock relates and shall have all voting and dividend
    rights with respect to such shares of Common Stock.

 

		
	
    9. 
	
    Grant of
    Stock Bonus

 

    The Committee may grant Stock Bonus awards to such persons
    eligible under the Plan as the Committee may select from time to
    time. Stock Bonus awards shall be granted at such times, in such
    amounts and under such other terms and conditions as the
    Committee shall determine, which terms and conditions shall be
    evidenced under an Award Agreement, subject to the terms of the
    Plan. Upon satisfaction of any conditions, limitations and
    restrictions set forth in the Award Agreement, a Stock Bonus
    award shall entitle the recipient to receive payment of a bonus
    described under the Stock Bonus award in the form of shares of
    Common Stock of the Company. Prior to the date on which a Stock
    Bonus award is required to be paid under an Award Agreement, the
    Stock Bonus award shall constitute an unfunded, unsecured
    promise by the Company to distribute Common Stock in the future.

 

		
	
    10. 
	
    Adjustments
    in the Event of Recapitalization

 

    In the event that dividends payable in Common Stock during any
    fiscal year of the Company exceed in the aggregate five percent
    of the Common Stock issued and outstanding at the beginning of
    the year, or in the event there is during any fiscal year of the
    Company one or more splits, subdivisions, or combinations of
    shares of Common Stock resulting in an increase or decrease by
    more than five percent of the shares outstanding at the
    beginning of the year, the number of shares available under the
    Plan shall be increased or decreased proportionately, as the
    case may be, and the number of shares issuable under Stock
    Awards theretofore granted shall be increased or decreased
    proportionately, as the case may be, without change in the
    aggregate purchase price that may be applicable thereto. Common
    Stock dividends, splits, subdivisions, or combinations during
    any fiscal year that do not exceed in the aggregate five percent
    of the Common Stock issued and outstanding at the beginning of
    such year shall be ignored for purposes of the Plan. All
    adjustments shall be made as of the day such action
    necessitating such adjustment becomes effective.

 

		
	
    11. 
	
    Withholding
    of Applicable Taxes

 

    It shall be a condition to the performance of the Company’s
    obligation to issue or transfer Common Stock or make a payment
    of cash pursuant to any Stock Award that the award recipient
    pay, or make provision satisfactory to the Company for the
    payment of, any taxes (other than stock transfer taxes) the
    Company or any subsidiary is obligated to collect with respect
    to the issuance or transfer of Common Stock or the payment of
    cash under such Stock Award, including any applicable federal,
    state, or local withholding or employment taxes.

 

		
	
    12. 
	
    General
    Restrictions

 

    Each Stock Award granted under the Plan shall be subject to the
    requirement that, if at any time the Board of Directors shall
    determine, in its discretion, that the listing, registration, or
    qualification of the shares of Common Stock issuable or
    transferable under the Stock Award upon any securities exchange
    or under any state or federal law, or the consent or approval of
    any governmental regulatory body is necessary or desirable as a
    condition of, or in connection with, the granting of the Stock
    Award or the issue or transfer, of shares of Common Stock
    thereunder, shares of Common Stock issuable or transferable
    under any Stock Award shall not be issued or transferred, in
    whole or in part, unless such listing, registration,
    qualification, consent, or approval shall have been effected or
    obtained free of any conditions not acceptable to the Board of
    Directors.

 

    The Company shall not be obligated to sell or issue any shares
    of Common Stock in any manner in contravention of the Securities
    Act, the Securities Exchange Act of 1934, as amended (the
    “Exchange Act”), the rules and regulations of the
    Securities and Exchange Commission, any state securities law,
    the rules and regulations promulgated thereunder or the rules
    and regulations of any securities exchange or over the counter

    

    5

 

    market on which the Common Stock is listed or in which it is
    included for quotation. The Board of Directors may, in
    connection with the granting of Stock Awards, require the
    individual to whom the award is to be granted to enter into an
    agreement with the Company stating that as a condition precedent
    to the receipt of shares of Common Stock issuable or
    transferable under the Stock Award, in whole or in part, he
    shall, if then required by the Company, represent to the Company
    in writing that such receipt is for investment only and not with
    a view to distribution, and also setting forth such other terms
    and conditions as the Committee may prescribe. Such agreements
    may also, in the discretion of the Committee, contain provisions
    requiring the forfeiture of any Stock Awards granted
    and/or
    Common Stock held, in the event of the termination of employment
    or association, as the case may be, of the award recipient with
    the Company. Upon any forfeiture of Common Stock pursuant to an
    agreement authorized by the preceding sentence, the Company
    shall pay consideration for such Common Stock to the award
    recipient , pursuant to any such agreement, without interest
    thereon.

 

		
	
    13. 
	
    Termination
    and Amendment of the Plan

 

    The Board of Directors or the Committee shall have the right to
    amend, suspend, or terminate the Plan at any time; provided,
    however, that no such action shall affect or in any way impair
    the rights of a recipient under any Stock Award theretofore
    granted under the Plan; and, provided, further, that unless
    first duly approved by the stockholders of the Company entitled
    to vote thereon at a meeting (which may be the annual meeting)
    duly called and held for such purpose, except as provided in
    Section 10, no amendment or change shall be made in the
    Plan increasing the total number of shares which may be issued
    or transferred under the Plan, materially increasing the
    benefits to Plan participants or modifying the requirements as
    to eligibility for participation in the Plan.

 

		
	
    14. 
	
    Term of
    the Plan

 

    The Plan shall terminate on June 12, 2011, or on such
    earlier date as the Board of Directors or the Committee may
    determine. Any Stock Award outstanding at the termination date
    shall remain outstanding until it has either expired or been
    exercised or cancelled pursuant to its terms.

 

    15. Compliance
    with
    Rule 16b-3

 

    With respect to persons subject to Section 16 of the
    Exchange Act, transactions under this Plan are intended to
    comply with all applicable conditions of
    Rule 16b-3
    or its successors. To the extent any provision of the Plan or
    action by the Committee (or any other person on behalf of the
    Committee or the Company) fails to so comply, it shall be deemed
    null and void, to the extent permitted by law and deemed
    advisable by the Committee.

 

		
	
    16. 
	
    Rights as
    a Stockholder

 

    A recipient of a Stock Award shall have no rights as a
    stockholder with respect to any shares issuable or transferable
    thereunder until the date a stock certificate is issued to him
    for such shares unless otherwise provided in the Award Agreement
    under the Plan. Except as otherwise expressly provided in the
    Plan, no adjustment shall be made for dividends or other rights
    for which the record date is prior to the date such stock
    certificate is issued.

 

		
	
    17. 
	
    Options
    Granted to Employees and Directors of any Subsidiary in the
    UK

 

    In addition to the provisions above, the provisions of this
    Section 17 shall apply as herein set out to options granted
    to employees and directors of any subsidiary in the United
    Kingdom. The provisions of this Section 17 enable the Plan
    to be used in a tax efficient manner in the United Kingdom.

 

    (a) In this Section 17, the following terms have the
    meanings ascribed to them:

 

    “Election” means an election in the form
    envisaged in Paragraph 3B(1) of Schedule 1 to SSCBA
    and acceptable to the UK Subsidiary to the effect that any
    Secondary NIC arising on the exercise, assignment or release of
    a UK Option shall be the liability of the recipient and not the
    liability of the UK Subsidiary

 

    “Independent Transfer Agent” means any person
    (other than the Company or any company affiliated with the
    Company or any individual affiliated with any such company) who
    is registered as a broker-dealer with the U.S. Securities
    and Exchange Commission and who is thereby able to sell and
    transfer shares in the Company on behalf of the Optionholder

    

    6

 

 

    “Optionholder” means an employee or director of
    the UK Subsidiary who is the holder of a UK Option

 

    “Secondary NIC” means secondary national
    insurance contributions as defined in the SSCBA

 

    “SSCBA” means the Social Security Contributions
    and Benefits Act 1992 of the United Kingdom

 

    “UK Option” means an option granted to an
    employee of the UK Subsidiary

 

    “UK Subsidiary” means OSI Pharmaceuticals (UK)
    Limited (a company incorporated in England under company number
    1709877) and any other UK Subsidiary of the Company from
    time to time.

 

    (b) To the extent that it is lawful to do so, a UK Option
    may be granted subject to a condition that any liability of the
    UK Subsidiary (as employer or former employer of the relevant
    Optionholder) to pay Secondary NIC in respect of the exercise,
    assignment or release of that UK Option shall be the liability
    of the relevant Optionholder and payable by that Optionholder
    and that the Optionholder shall not be entitled to exercise the
    UK Option until he has entered into an Election to that effect
    when required to do so by the UK Subsidiary provided that the
    Committee may in its discretion at any time or times release the
    Optionholder from this liability or reduce his liability
    thereunder unless that Election has been entered into between
    the UK Subsidiary and that Optionholder and that
    Election (or the legislation which provides for such an
    Election to be effective) does not allow for such an Election to
    be subsequently varied.

 

    (c) If a UK Option is granted subject to the condition
    referred to in paragraph (b) above then the
    Optionholder shall by completing the Election grant to the UK
    Subsidiary (as employer or former employer of the relevant
    Optionholder) the irrevocable authority, as agent of the
    Optionholder and on his behalf, to appoint an Independent
    Transfer Agent, to act as agent of the Optionholder and on his
    behalf, to sell or procure the sale of sufficient of the Stock
    subject to the UK Option and remit the net sale proceeds to the
    UK Subsidiary so that the net proceeds payable to the UK
    Subsidiary are so far as possible equal to but not less than the
    amount of the Secondary NIC for which the Optionholder is liable
    under the terms of the Election and the UK Subsidiary shall
    account to the Optionholder for any balance.

 

    No Stock shall be allotted or transferred to the Optionholder by
    the Company until the UK Subsidiary has received an amount in
    cash equal to the amount of the Secondary NIC for which the
    Optionholder is liable under the terms of the Election.

 

    (d) If a UK Option is exercised and the Optionholder is
    liable to tax duties or other amounts on such exercise and the
    UK Subsidiary (as his employer or former employer) is liable to
    make a payment to the appropriate authorities on account of that
    liability, then the Optionholder shall by having completed the
    option agreement grant to the UK Subsidiary (as employer or
    former employer of the relevant Optionholder) the irrevocable
    authority, as agent of the Optionholder and on his behalf, to
    appoint an Independent Transfer Agent, to act as agent of the
    Optionholder and on his behalf, to sell or procure the sale of
    sufficient of the Shares subject to the UK Option and remit the
    net sale proceeds to the UK Subsidiary so that the net proceeds
    payable to the UK Subsidiary are so far as possible equal to but
    not less than the amount payable to the appropriate authorities
    and the UK Subsidiary shall account to the Optionholder for any
    balance.

 

    No Stock shall be allotted or transferred to the Optionholder by
    the Company until the UK Subsidiary has received an amount in
    cash equal to the amount of any liability of the UK Subsidiary
    referred to in this paragraph (d).

    

    7exv4w5

 

Exhibit 4.5

VIRCO MFG. CORPORATION

2007 STOCK INCENTIVE PLAN

     1. Purpose

          The purpose of the Virco Mfg. Corporation 2007 Stock Incentive Plan (the “Plan”) is to advance
the interests of Virco Mfg. Corporation (the “Company”) by stimulating the efforts of employees,
officers and nonemployee directors, in each case who are selected to be participants, by
heightening the desire of such persons to continue working toward and contributing to the success
and progress of the Company. The Plan replaces the Company’s 1997 Stock Incentive Plan, and
provides for the grant of Incentive and Nonqualified Stock Options, Stock Appreciation Rights,
Restricted Stock and Restricted Stock Units, any of which may be performance-based, as determined
by the Committee.

     2. Definitions

          As used in the Plan, the following terms shall have the meanings set forth below:

          (a) “Award” means an Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation
Right, Restricted Stock or Restricted Stock Unit granted to a Participant pursuant to the
provisions of the Plan, any of which the Committee may structure to qualify in whole or in part as
a Performance Award.

          (b) “Award Agreement” means a written agreement or other instrument as may be approved from
time to time by the Committee implementing the grant of each Award. An Agreement may be in the form
of an agreement to be executed by both the Participant and the Company (or an authorized
representative of the Company) or certificates, notices or similar instruments as approved by the
Committee.

          (c) “Board” means the board of directors of the Company.

          (d) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the
rulings and regulations issues thereunder.

          (e) “Committee” means the Committee delegated the authority to administer the Plan in
accordance with Section 16.

          (f) “Company” means Virco Mfg. Corporation, a Delaware corporation.

          (g) “Continued Employment” refers to uninterrupted service for the Company.

 

 

          (h) “Fair Market Value” means the closing sales price on such date during normal trading
hours (or, if there are no reported sales on such date, on the last date prior to such date on
which there were sales) of the Common Stock on the principal national securities exchange on which
the Common Stock is listed or on NASDAQ, in any case, as reporting in such source as the Committee
shall select. If there is no regular public trading market for the Common Stock, the Fair Market
Value of the Common Stock shall be determined by the Committee in good faith and in compliance with
Section 409A of the Code

          (i) “Incentive Stock Option” means a stock option that is intended to qualify as an
“incentive stock option” within the meaning of Section 422 of the Code.

          (j) “Nonemployee Director” means each person who is, or is elected to be, a member of the
Board and who is not an employee of the Company or any Subsidiary.

          (k) “Nonqualified Stock Option” means a stock option that is not intended to qualify as an
“incentive stock option” within the meaning of Section 422 of the Code.

          (l) “Option” means an Incentive Stock Option and/or a Nonqualified Stock Option granted
pursuant to Section 6 of the Plan.

          (m) “Participant” means any individual described in Section 3 to whom Awards have been
granted from time to time by the Committee and any authorized transferee of such individual.

          (n) “Performance Award” means an Award, the grant, issuance, retention, vesting or settlement
of which is subject to satisfaction of one or more Qualifying Performance Criteria established
pursuant to Section 12.

          (o) “Plan” means the Virco Mfg. Corporation 2007 Stock Incentive Plan as set forth herein and
as amended from time to time.

          (p) “Qualifying Performance Criteria” has the meaning set forth in Section 12(b).

          (q) “Restricted Stock” means Shares granted pursuant to Section 8.

          (r) “Restricted Stock Unit” means an Award granted to a Participant pursuant to Section 8 for
which Shares or cash in lieu thereof may be issued in the future.

          (s) “Share” means a share of the Company’s common stock, par value $0.01, subject to
adjustment as provided in Section 11.

 

 

          (t) “Stock Appreciation Right” means a right granted pursuant to Section 7 that entitles the
Participant to receive, in cash or Shares or a combination thereof, as determined by the Committee,
value equal to or otherwise based on the excess of (i) the market price of a specified number of
Shares at the time of exercise over (ii) the exercise price of the right, as established by the
Committee on the date of grant.

          (u) “Subsidiary” means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company where each of the corporations in the unbroken chain other
than the last corporation owns stock possessing at least 50 percent or more of the total combined
voting power of all classes of stock in one of the other corporations in the chain, and if
specifically determined by the Committee in the context other than with respect to Incentive Stock
Options, may include an entity in which the Company has a significant ownership interest or that is
directly or indirectly controlled by the Company.

          (v) “Termination of Employment” means ceasing to serve as a full-time employee of the Company
and its Subsidiaries or, with respect to a Nonemployee Director, ceasing to serve as such for the
Company, except that with respect to all or any Awards held by a Participant (i) the Committee may
determine, subject to Section 6(d), that an approved leave of absence or approved employment on a
less than full-time basis is not considered a Termination of Employment, (ii) the Committee may
determine that a transition of employment to service with a partnership, joint venture or
corporation not meeting the requirements of a Subsidiary in which the Company or a Subsidiary is a
party is not considered a Termination of Employment, (iii) service as a member of the Board shall
constitute Continued Employment with respect to Awards granted to a Participant while he or she
served as an employee and (iv) service as an employee of the Company or a Subsidiary shall
constitute Continued Employment with respect to Awards granted to a Participant while he or she
served as a member of the Board. The Committee shall determine whether any corporate transaction,
such as a sale or spin-off of a division or subsidiary that employs a Participant, shall be deemed
to result in a termination of employment with the Company and its Subsidiaries for purposes of any
affected Participant’s Options, and the Committee’s decision shall be final and binding.

     3. Eligibility

          Any person who is a current or prospective officer or employee of the Company or of any
Subsidiary and each member of the Board shall be eligible for selection by the Committee for the
grant of Awards hereunder. Options intending to qualify as Incentive Stock Options may only be
granted to employees of the Company or any Subsidiary within the meaning of the Code, as selected
by the Committee.

     4. Effective Date and Termination of Plan

          This Plan was adopted by the Board as of April 17, 2007, and it will become effective (the
“Effective Date”) when it is approved by the Company’s stockholders. All Awards granted

 

 

under this Plan are subject to, and may not be exercised before, the approval of this Plan by
the stockholders prior to the first anniversary date of the effective date of the Plan, by the
affirmative vote of the holders of a majority of the outstanding Shares of the Company present, or
represented by proxy, and entitled to vote, at a meeting of the Company’s stockholders or by
written consent in accordance with the laws of the State of Delaware; provided that if such
approval by the stockholders of the Company is not forthcoming, all Awards previously granted under
this Plan shall be void. The Plan shall remain available for the grant of Awards until the tenth
(10th) anniversary of the Effective Date. Notwithstanding the foregoing, the Plan may be terminated
at such earlier time as the Board may determine. Termination of the Plan will not affect the rights
and obligations of the Participants and the Company arising under Awards theretofore granted and
then in effect.

     5. Shares Subject to the Plan and to Awards

          (a) Aggregate Limits. The aggregate number of Shares issuable pursuant to all Awards shall
not exceed 1,000,000. The aggregate number of Shares available for grant under this Plan and the
number of Shares subject to outstanding Awards shall be subject to adjustment as provided in
Section 11. The Shares issued pursuant to Awards granted under this Plan may be shares that are
authorized and unissued or shares that were reacquired by the Company, including shares purchased
in the open market.

          (b) Issuance of Shares. For purposes of Section 5(a), the aggregate number of Shares issued
under this Plan at any time shall equal only the number of Shares actually issued upon exercise or
settlement of an Award. Notwithstanding the foregoing, Shares subject to an Award under the Plan
may not again be made available for issuance under the Plan if such Shares are: (i) Shares that
were subject to a stock-settled Stock Appreciation Right and were not issued upon the net
settlement or net exercise of such Stock Appreciation Right, (ii) Shares used to pay the exercise
price of an Option, (iii) Shares delivered to or withheld by the Company to pay the withholding
taxes related to an Option or a Stock Appreciation Right, or (iv) Shares repurchased on the open
market with the proceeds of an Option exercise. Shares subject to Awards that have been canceled,
expired, forfeited or otherwise not issued under an Award and Shares subject to Awards settled in
cash shall not count as Shares issued under this Plan.

          (c) Code Limits. The aggregate number of Shares subject to Option Awards granted under this
Plan during any calendar year to any one Participant shall not exceed 50,000; which number shall be
calculated and adjusted pursuant to Section 11 only to the extent that such calculation or
adjustment will not affect the status of any Award intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, but which number shall not count any tandem Stock
Appreciation Rights (as defined in Section 7). The aggregate number of Shares that may be issued
pursuant to the exercise of Incentive Stock Options granted under this Plan shall not exceed
1,000,000 which number shall be calculated and adjusted pursuant to Section 11 only to the extent
that such calculation or adjustment will not affect the status of any option intended to qualify as
an Incentive Stock Option under Section 422 of the Code.

 

 

     6. Options

          (a) Option Awards. Options may be granted at any time and from time to time prior to the
termination of the Plan to Participants as determined by the Committee. No Participant shall have
any rights as a stockholder with respect to any Shares subject to Option hereunder until said
Shares have been issued. Each Option shall be evidenced by an Award Agreement. Options granted
pursuant to the Plan need not be identical but each Option must contain and be subject to the terms
and conditions set forth below.

          (b) Price. The Committee will establish the exercise price per Share under each Option,
which, in no event will be less than the Fair Market Value of the Shares on the date of grant;
provided, however, that the exercise price per Share with respect to an Option that is granted in
connection with a merger or other acquisition as a substitute or replacement award for options held
by optionees of the acquired entity may be less than 100% of the market price of the Shares on the
date such Option is granted if such exercise price is based on a formula set forth in the terms of
the options held by such optionees or in the terms of the agreement providing for such merger or
other acquisition. The exercise price of any Option may be paid in Shares, cash or a combination
thereof, as determined by the Committee, including an irrevocable commitment by a broker to pay
over such amount from a sale of the Shares issuable under an Option, the delivery of previously
owned Shares and withholding of Shares deliverable upon exercise.

          (c) No Repricing without Stockholder Approval. Other than in connection with a change in
the Company’s capitalization (as described in Section 11) the exercise price of an Option may not
be reduced without stockholder approval (including canceling previously awarded Options and
regranting them with a lower exercise price).

          (d) Provisions Applicable to Options. The date on which Options become exercisable shall be
determined at the sole discretion of the Committee and set forth in an Award Agreement. Unless
provided otherwise in the applicable Award Agreement, to the extent that the Committee determines
that an approved leave of absence or employment on a less than full-time basis is not a Termination
of employment, the vesting period and/or exercisability of an Option shall be adjusted by the
Committee during or to reflect the effects of any period during which the Participant is on an
approved leave of absence or is employed on a less than full-time basis.

          (e) Term of Options and Termination of Employment. The Committee shall establish the term
of each Option, which in no case shall exceed a period of ten (10) years from the date of grant.
Unless an Option earlier expires upon the expiration date established pursuant to the foregoing
sentence, upon the termination of the Participant’s employment, his or her rights to exercise an
Option then held shall be determined by the Committee and set forth in an Award Agreement.

 

 

          (f) Incentive Stock Options. Notwithstanding anything to the contrary in this Section 6, in
the case of the grant of an Option intending to qualify as an Incentive Stock Option: (i) if the
Participant owns stock possessing more than 10 percent of the combined voting power of all classes
of stock of the Company (a “10% Shareholder”), the exercise price of such Option must be at least
110 percent of the fair market value of the Shares on the date of grant and the Option must expire
within a period of not more than five (5) years from the date of grant, and (ii) termination of
employment will occur when the person to whom an Award was granted ceases to be an employee (as
determined in accordance with Section 3401(c) of the Code and the regulations promulgated
thereunder) of the Company and its Subsidiaries. Notwithstanding anything in this Section 6 to the
contrary, options designated as Incentive Stock Options shall not be eligible for treatment under
the Code as Incentive Stock Options (and will be deemed to be Nonqualified Stock Options) to the
extent that either (a) the aggregate fair market value of Shares (determined as of the time of
grant) with respect to which such Options are exercisable for the first time by the Participant
during any calendar year (under all plans of the Company and any Subsidiary) exceeds $100,000,
taking Options into account in the order in which they were granted, or (b) such Options otherwise
remain exercisable but are not exercised within three (3) months of Termination of employment (or
such other period of time provided in Section 422 of the Code).

     7. Stock Appreciation Rights

          Stock Appreciation Rights may be granted to Participants from time to time either in tandem
with or as a component of other Awards granted under the Plan (“tandem Stock Appreciation Rights”)
or not in conjunction with other Awards (“freestanding Stock Appreciation Rights”) and may, but
need not, relate to a specific Option granted under Section 6. The provisions of Stock Appreciation
Rights need not be the same with respect to each grant or each recipient. Any Stock Appreciation
Right granted in tandem with an Award may be granted at the same time such Award is granted or at
any time thereafter before exercise or expiration of such Award. All freestanding Stock
Appreciation Rights shall be granted subject to the same terms and conditions applicable to Options
as set forth in Section 6 and all tandem Stock Appreciation Rights shall have the same exercise
price, vesting, exercisability, forfeiture and termination provisions as the Award to which they
relate. Subject to the provisions of Section 6 and the immediately preceding sentence, the
Committee may impose such other conditions or restrictions on any Stock Appreciation Right as it
shall deem appropriate. Stock Appreciation Rights may be settled in Shares, cash or a combination
thereof, as determined by the Committee and set forth in the applicable Award Agreement. Other than
in connection with a change in the Company’s capitalization (as described in Section 11) the
exercise price of Stock Appreciation Rights may not be reduced without stockholder approval
(including canceling previously awarded Stock Appreciation Rights and regranting them with a lower
exercise price).

     8. Restricted Stock and Restricted Stock Units

          (a) Restricted Stock and Restricted Stock Unit Awards. Restricted Stock and Restricted
Stock Units may be granted at any time and from time to time prior to the termination of the Plan
to Participants as determined by the Committee. Restricted Stock is an award or issuance of

 

 

Shares the grant, issuance, retention, vesting and/or transferability of which is subject during
specified periods of time to such conditions (including Continued Employment or performance
conditions) and terms as the Committee deems appropriate. Restricted Stock Units are Awards
denominated in units of Shares under which the issuance of Shares is subject to such conditions
(including continued employment or performance conditions) and terms as the Committee deems
appropriate. Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by an
Award Agreement. Unless determined otherwise by the Committee, each Restricted Stock Unit will be
equal to one Share and will entitle a Participant to either the issuance of Shares or payment of an
amount of cash determined with reference to the value of Shares. To the extent determined by the
Committee, Restricted Stock and Restricted Stock Units may be satisfied or settled in Shares, cash
or a combination thereof. Restricted Stock and Restricted Stock Units granted pursuant to the Plan
need not be identical but each grant of Restricted Stock and Restricted Stock Units must contain
and be subject to the terms and conditions set forth below.

          (b) Contents of Agreement. Each Award Agreement shall contain provisions regarding (i) the
number of Shares or Restricted Stock Units subject to such Award or a formula for determining such
number, (ii) the purchase price of the Shares, if any, and the means of payment, (iii) the
performance criteria, if any, and level of achievement versus these criteria that shall determine
the number of Shares or Restricted Stock Units granted, issued, retainable and/or vested, (iv) such
terms and conditions on the grant, issuance, vesting and/or forfeiture of the Shares or Restricted
Stock Units as may be determined from time to time by the Committee, (v) the term of the
performance period, if any, as to which performance will be measured for determining the number of
such Shares or Restricted Stock Units, and (vi) restrictions on the transferability of the Shares
or Restricted Stock Units. Shares issued under a Restricted Stock Award may be issued in the name
of the Participant and held by the Participant or held by the Company, in each case as the
Committee may provide.

          (c) Vesting and Performance Criteria. The grant, issuance, retention, vesting and/or
settlement of shares of Restricted Stock and Restricted Stock Units will occur when and in such
installments as the Committee determines or under criteria the Committee establishes, which may
include Qualifying Performance Criteria. Notwithstanding anything in this Plan to the contrary, the
performance criteria for any Restricted Stock or Restricted Stock Unit that is intended to satisfy
the requirements for “performance-based compensation” under Section 162(m) of the Code will be a
measure based on one or more Qualifying Performance Criteria selected by the Committee and
specified when the Award is granted.

          (d) Discretionary Adjustments and Limits. Subject to the limits imposed under Section
162(m) of the Code for Awards that are intended to qualify as “performance-based compensation,”
notwithstanding the satisfaction of any performance goals, the number of Shares granted, issued,
retainable and/or vested under an Award of Restricted Stock or Restricted Stock Units on account of
either financial performance or personal performance evaluations may, to the extent specified in
the Award Agreement, be reduced, but not increased, by the Committee on the basis of such further
considerations as the Committee shall determine.

 

 

          (e) Voting Rights. Unless otherwise determined by the Committee, Participants holding
shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those
shares during the period of restriction. Participants shall have no voting rights with respect to
Shares underlying Restricted Stock Units unless and until such Shares are reflected as issued and
outstanding shares on the Company’s stock ledger.

          (f) Dividends and Distributions. Participants in whose name Restricted Stock is granted
shall be entitled to receive all dividends and other distributions paid with respect to those
Shares, unless determined otherwise by the Committee. The Committee will determine whether any such
dividends or distributions will be automatically reinvested in additional shares of Restricted
Stock and subject to the same restrictions on transferability as the Restricted Stock with respect
to which they were distributed or whether such dividends or distributions will be paid in cash.
Shares underlying Restricted Stock Units shall be entitled to dividends or dividend equivalents
only to the extent provided by the Committee.

     9. Deferral of Gains

          The Committee may, in an Award Agreement or otherwise, provide for the deferred delivery of
Shares upon settlement, vesting or other events with respect to Restricted Stock or Restricted
Stock Units. Notwithstanding anything herein to the contrary, in no event will any deferral of the
delivery of Shares or any other payment with respect to any Award be allowed if the Committee
determines, in its sole discretion, that the deferral would result in the imposition of the
additional tax under Section 409A(a)(1)(B) of the Code. The Company shall have no liability to a
Participant, or any other party, if an Award that is intended to be exempt from, or compliant with,
Section 409A of the Code is not so exempt or compliant or for any action taken by the Board.

     10. Conditions and Restrictions Upon Securities Subject to Awards

          The Committee may provide that the Shares issued upon exercise of an Option or Stock
Appreciation Right or otherwise subject to or issued under an Award shall be subject to such
further agreements, restrictions, conditions or limitations as the Committee in its discretion may
specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting or
settlement of such Award, including without limitation, conditions on vesting or transferability,
forfeiture or repurchase provisions and method of payment for the Shares issued upon exercise,
vesting or settlement of such Award (including the actual or constructive surrender of Shares
already owned by the Participant) or payment of taxes arising in connection with an Award. Without
limiting the foregoing, such restrictions may address the timing and manner of any resales by the
Participant or other subsequent transfers by the Participant of any Shares issued under an Award,
including without limitation (i) restrictions under an insider trading policy or pursuant to
applicable law, (ii) restrictions designed to delay and/or coordinate the timing and manner of
sales by Participant and holders of other Company equity compensation arrangements, (iii)
restrictions as to the use of a specified brokerage firm for such resales or other transfers and
(iv) provisions requiring Shares to be sold on the open market or to the Company in order to
satisfy tax withholding or other obligations.

 

 

     11. Adjustment of and Changes in the Stock

          The number and kind of Common Shares available for issuance under this Plan (including under
any Awards then outstanding), and the number and kind of Common Shares subject to the limits set
forth in Sections 5 of this Plan, shall be equitably adjusted by the Committee to reflect any
reorganization, reclassification, combination of shares, stock split, reverse stock split,
spin-off, dividend or distribution of securities, property or cash (other than regular, quarterly
cash dividends), or any other event or transaction that affects the number or kind of Shares
outstanding. Such adjustment may be designed to comply with Section 424 of the Code or, except as
otherwise expressly provided in Section 5(c) of this Plan, may be designed to treat the Shares
available under the Plan and subject to Awards as if they were all outstanding on the record date
for such event or transaction or to increase the number of such Shares to reflect a deemed
reinvestment in Shares of the amount distributed to the Company’s securityholders. The terms of any
outstanding Award shall also be equitably adjusted by the Committee as to price, number or kind of
Shares subject to such Award, vesting, and other terms to reflect the foregoing events, which
adjustments need not be uniform as between different Awards or different types of Awards.

          In the event there shall be any other change in the number or kind of outstanding Shares, or
any stock or other securities into which such Shares shall have been changed, or for which it shall
have been exchanged, by reason of a change of control, other merger, consolidation or otherwise,
then the Committee shall determine the appropriate and equitable adjustment to be effected. In
addition, in the event of such change described in this paragraph, the Committee may accelerate the
time or times at which any Award may be exercised and may provide for cancellation of such
accelerated Awards that are not exercised within a time prescribed by the Committee in its sole
discretion.

          No right to purchase fractional shares shall result from any adjustment in Awards pursuant to
this Section 11. In case of any such adjustment, the Shares subject to the Award shall be rounded
down to the nearest whole share. The Company shall notify Participants holding Awards subject to
any adjustments pursuant to this Section 11 of such adjustment, but (whether or not notice is
given) such adjustment shall be effective and binding for all purposes of the Plan.

     12. Qualifying Performance-Based Compensation

          (a) General. The Committee may establish performance criteria and the level of achievement
versus such criteria that shall determine the number of Shares to be granted, retained, vested,
issued or issuable under or in settlement of or the amount payable pursuant to an Award, which
criteria may be based on Qualifying Performance Criteria or other standards of financial
performance and/or personal performance evaluations. In addition, the Committee may specify that an
Award or a portion of an Award is intended to satisfy the requirements for
“performance-based compensation” under Section 162(m) of the Code, provided that the
performance criteria for such Award or portion of an Award that is intended by the Committee to
satisfy the requirements for “performance-based compensation” under Section 162(m) of the

 

 

Code shall be a measure based on one or more Qualifying Performance Criteria selected by the Committee
and specified at the time the Award is granted, or within the time prescribed by Section 162(m) and
shall otherwise be in compliance with Section 162(m). The Committee shall certify the extent to
which any Qualifying Performance Criteria has been satisfied, and the amount payable as a result
thereof, prior to payment, settlement or vesting of any Award that is intended to satisfy the
requirements for “performance-based compensation” under Section 162(m) of the Code. Notwithstanding
satisfaction of any performance goals, the number of Shares issued under or the amount paid under
an award may, to the extent specified in the Award Agreement, be reduced, but not increased, by the
Committee on the basis of such further considerations as the Committee in its sole discretion shall
determine.

          (b) Qualifying Performance Criteria. For purposes of this Plan, the term “Qualifying
Performance Criteria” shall mean any one or more of the following performance criteria, or
derivations of such performance criteria, either individually, alternatively or in any combination,
applied to either the Company as a whole or to a business unit or Subsidiary, either individually,
alternatively or in any combination, and measured either annually or cumulatively over a period of
years, on an absolute basis or relative to a pre-established target, to previous years’ results or
to a designated comparison group, in each case as specified by the Committee: (i) cash flow, (ii)
earnings per share (including earnings before interest, taxes and amortization), (iii) return on
equity, (iv) total stockholder return, (v) return on capital, (vi) return on assets or net assets,
(vii) revenue, (viii) income or net income, (ix) operating income or net operating income, (x)
operating profit or net operating profit, (xi) operating margin, (xii) return on operating revenue,
and (xiii) market share. To the extent consistent with Section 162(m) of the Code, the Committee
(A) shall appropriately adjust any evaluation of performance under a Qualifying Performance
Criteria to eliminate the effects of charges for restructurings, discontinued operations,
extraordinary items and all items of gain, loss or expense determined to be extraordinary or
unusual in nature or related to the disposal of a segment of a business or related to a change in
accounting principle all as determined in accordance with standards established by opinion No. 30
of the Accounting Principles Board (APA Opinion No. 30) or other applicable or successor accounting
provisions, as well as the cumulative effect of accounting changes, in each case as determined in
accordance with generally accepted accounting principles or identified in the Company’s financial
statements or notes to the financial statements, and (B) may appropriately adjust any evaluation of
performance under a Qualifying Performance Criteria to exclude any of the following events that
occurs during a performance period: (i) asset write-downs, (ii) litigation, claims, judgments or
settlements, (iii) the effect of changes in tax law or other such laws or provisions affecting
reported results, (iv) accruals for reorganization and restructuring programs and (v) accruals of
any amounts for payment under this Plan or any other compensation arrangement maintained by the
Company.

     13. Transferability

          Unless the Committee provides otherwise, each Award may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated by a Participant other than by will or the laws of
descent and distribution or pursuant to a domestic relations order, and each Option or

 

 

Stock Appreciation Right shall be exercisable only by the Participant during his or her lifetime or the
transferee under a domestic relations order.

      14. Compliance with Laws and Regulations

          This Plan, the grant, issuance, vesting, exercise and settlement of Awards thereunder, and the
obligation of the Company to sell, issue or deliver Shares under such Awards, shall be subject to
all applicable foreign, federal, state and local laws, rules and regulations, stock exchange rules
and regulations, and to such approvals by any governmental or regulatory agency as may be required.
The Company shall not be required to register in a Participant’s name or deliver any Shares prior
to the completion of any registration or qualification of such shares under any foreign, federal,
state or local law or any ruling or regulation of any government body which the Committee shall
determine to be necessary or advisable. To the extent the Company is unable to or the Committee
deems it infeasible 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 hereunder, the Company and its Subsidiaries shall be relieved of any liability with respect
to the failure to issue or sell such Shares as to which such requisite authority shall not have
been obtained. No Option shall be exercisable and no Shares shall be issued and/or transferable
under any other Award unless a registration statement with respect to the Shares underlying such
Option is effective and current or the Company has determined that such registration is
unnecessary.

          In the event an Award is granted to or held by a Participant who is employed or providing
services outside the United States, the Committee may, in its sole discretion, modify the
provisions of the Plan or of such Award as they pertain to such individual to comply with
applicable foreign law or to recognize differences in local law, currency or tax policy. The
Committee may also impose conditions on the grant, issuance, exercise, vesting, settlement or
retention of Awards in order to comply with such foreign law and/or to minimize the Company’s
obligations with respect to tax equalization for Participants employed outside their home country.

     15. Withholding

          To the extent required by applicable federal, state, local or foreign law, a Participant shall
be required to satisfy, in a manner satisfactory to the Company, any withholding tax obligations
that arise by reason of an Option exercise, disposition of Shares issued under an Incentive Stock
Option, the vesting of or settlement of an Award, an election pursuant to Section 83(b) of the Code
or otherwise with respect to an Award. To the extent a Participant makes an election under section
83(b), within ten days of filing such election with the Internal Revenue Service, the Participant
must notify the Company in writing of such election. The Company and its Subsidiaries shall not be
required to issue Shares, make any payment or to recognize the transfer or disposition of Shares
until all such obligations are satisfied. The Committee may provide for
or permit these obligations to be satisfied through the mandatory or elective sale of Shares
and/or by having the Company withhold a portion of the Shares that otherwise would be issued to him
or her upon exercise of the Option or the vesting or settlement of an Award, or by tendering

 

 

Shares previously acquired. To the extent a Participant makes an election under section 83(b), within ten
days of filing such election with the Internal Revenue Service, the Participant must notify the
Company in writing of such election.

     16. Administration of the Plan

          (a) Committee of the Plan. The Plan shall be administered by the Committee who shall be the
Compensation Committee of the Board or, in the absence of a Compensation Committee, a properly
constituted Compensation Committee or the Board itself. Any power of the Committee may also be
exercised by the Board, except to the extent that the grant or exercise of such authority would
cause any Award or transaction to become subject to (or lose an exemption under) the short-swing
profit recovery provisions of Section 16 of the Securities Exchange Act of 1934 or cause an Award
designated as a Performance Award not to qualify for treatment as performance-based compensation
under Section 162(m) of the Code. To the extent that any permitted action taken by the Board
conflicts with action taken by the Committee, the Board action shall control.

          (b) Powers of Committee. Subject to the express provisions of this Plan, the Committee
shall be authorized and empowered to do all things that it determines to be necessary or
appropriate in connection with the administration of this Plan, including, without limitation: (i)
to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms not
otherwise defined herein; (ii) to determine which persons are Participants, to which of such
Participants, if any, Awards shall be granted hereunder and the timing of any such Awards; (iii) to
grant Awards to Participants and determine the terms and conditions thereof, including the number
of Shares subject to Awards and the exercise or purchase price of such Shares and the circumstances
under which Awards become exercisable or vested or are forfeited or expire, which terms may but
need not be conditioned upon the passage of time, Continued Employment, the satisfaction of
performance criteria, the occurrence of certain events (including a change in control), or other
factors; (iv) to establish and verify the extent of satisfaction of any performance goals or other
conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any
Award; (v) to prescribe and amend the terms of the agreements or other documents evidencing Awards
made under this Plan (which need not be identical) and the terms of or form of any document or
notice required to be delivered to the Company by Participants under this Plan; (vi) to determine
the extent to which adjustments are required pursuant to Section 11; (vii) to interpret and
construe this Plan, any rules and regulations under this Plan and the terms and conditions of any
Award granted hereunder, and to make exceptions to any such provisions in if the Committee, in good
faith, determines that it is necessary to do so in light of extraordinary circumstances and for the
benefit of the Company; and (viii) to make all other determinations deemed necessary or advisable
for the administration of this Plan. The Committee may, in its sole and absolute discretion,
without amendment to the Plan, waive or amend the operation of Plan provisions respecting exercise
after termination of employment or service to the Company
or an Affiliate and, except as otherwise provided herein, adjust any of the terms of any
Award. The Committee may also (a) accelerate the date on which any Award granted under the Plan
becomes exercisable or (b) accelerate the Vesting Date or waive or adjust any condition imposed
hereunder with respect to the vesting or exercisability of an Award,

 

 

provided that the Committee,
in good faith, determines that such acceleration, waiver or other adjustment is necessary or
desirable in light of extraordinary circumstances. Notwithstanding anything in the Plan to the
contrary, no Award outstanding under the Plan may be repriced, regranted through cancellation or
otherwise amended to reduce the exercise price applicable thereto (other than with respect to
adjustments made in connection with a change in the Company’s capitalization) without the approval
of the Company’s stockholders.

          (c) Determinations by the Committee. All decisions, determinations and interpretations by
the Committee regarding the Plan, any rules and regulations under the Plan and the terms and
conditions of or operation of any Award granted hereunder, shall be final and binding on all
Participants, beneficiaries, heirs, assigns or other persons holding or claiming rights under the
Plan or any Award. The Committee shall consider such factors as it deems relevant, in its sole and
absolute discretion, to making such decisions, determinations and interpretations including,
without limitation, the recommendations or advice of any officer or other employee of the Company
and such attorneys, consultants and accountants as it may select.

          (d) Subsidiary Awards. In the case of a grant of an Award to any Participant employed by a
Subsidiary, such grant may, if the Committee so directs, be implemented by the Company issuing any
subject Shares to the Subsidiary, for such lawful consideration as the Committee may determine,
upon the condition or understanding that the Subsidiary will transfer the Shares to the Participant
in accordance with the terms of the Award specified by the Committee pursuant to the provisions of
the Plan. Notwithstanding any other provision hereof, such Award may be issued by and in the name
of the Subsidiary and shall be deemed granted on such date as the Committee shall determine.

     17. Amendment of the Plan or Awards

          The Board may amend, alter or discontinue this Plan and the Committee may amend, or alter any
agreement or other document evidencing an Award made under this Plan but, except as provided
pursuant to the provisions of Section 11, no such amendment shall, without the approval of the
stockholders of the Company:

          (a) increase the maximum number of Shares for which Awards may be granted under this Plan;

          (b) reduce the price at which Options may be granted below the price provided for in Section
6(a);

          (c) reduce the exercise price of outstanding Options;

          (d) extend the term of this Plan;

          (e) change the class of persons eligible to be Participants;

 

 

          (f) otherwise amend the Plan in any manner requiring stockholder approval by law or under the
listing requirements of any national securities exchange on which the Shares are listed; or

          (g) increase the individual maximum limits in Section 5(c).

          No amendment or alteration to the Plan or an Award or Award Agreement shall be made which
would impair the rights of the holder of an Award, without such holder’s consent, provided that no
such consent shall be required if the Committee determines in its sole discretion and prior to the
date of any change in control that such amendment or alteration either is required or advisable in
order for the Company, the Plan or the Award to satisfy any law or regulation or to meet the
requirements of or avoid adverse financial accounting consequences under any accounting standard.

     18. No Liability of Company

          The Company and any Subsidiary or affiliate which is in existence or hereafter comes into
existence shall not be liable to a Participant or any other person as to: (i) the non-issuance or
sale of Shares as to which the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance
and sale of any Shares hereunder; and (ii) any tax consequence expected, but not realized, by any
Participant or other person due to the receipt, exercise or settlement of any Award granted
hereunder.

     19. Non-Exclusivity of Plan

          Neither the adoption of this Plan by the Board nor the submission of this Plan to the
stockholders of the Company for approval shall be construed as creating any limitations on the
power of the Board or the Committee to adopt such other incentive arrangements as either may deem
desirable, including without limitation, the granting of restricted stock or stock options
otherwise than under this Plan or an arrangement not intended to qualify under Code Section 162(m),
and such arrangements may be either generally applicable or applicable only in specific cases.

     20. Governing Law

          This Plan and any agreements or other documents hereunder shall be interpreted and construed
in accordance with the laws of the Delaware and applicable federal law. Any reference in this Plan
or in the agreement or other document evidencing any Awards to a provision of law or to a rule or
regulation shall be deemed to include any successor law, rule or regulation of similar effect or
applicability.

 

 

     21. No Right to Employment, Reelection or Continued Service

          Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right
of the Company, its Subsidiaries and/or its affiliates to terminate any Participant’s employment,
service on the Board or service for the Company at any time or for any reason not prohibited by
law, nor shall this Plan or an Award itself confer upon any Participant any right to continue his
or her employment or service for any specified period of time. Neither an Award nor any benefits
arising under this Plan shall constitute an employment contract with the Company, any Subsidiary
and/or its affiliates. Subject to Sections 4 and 19, this Plan and the benefits hereunder may be
terminated at any time in the sole and exclusive discretion of the Board without giving rise to any
liability on the part of the Company, its Subsidiaries and/or its affiliates.

     22. Unfunded Plan

          The Plan is intended to be an unfunded plan. Participants are and shall at all times be
general creditors of the Company with respect to their Awards. If the Committee or the Company
chooses to set aside funds in a trust or otherwise for the payment of Awards under the Plan, such
funds shall at all times be subject to the claims of the creditors of the Company in the event of
its bankruptcy or insolvency.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}]]