Document:

exv10w3

 

Exhibit 10.3

* Confidential Treatment Requested Under

17 C.F.R. §§ 200.80(b)(4), 200.83 and 240.24b-2

EXECUTIVE BONUS AGREEMENT

FOR

JEFFREY A. WHITNELL

     This Executive Bonus Agreement (the “Agreement”) is entered into between Akorn, Inc., a
Louisiana corporation (the “Corporation”), and Jeffrey A. Whitnell (the “Participant”), effective
April 27, 2006. The purpose of the Agreement is to reward the service, performance, productivity
and loyalty of the Participant by providing the Participant with a prospective bonus to be paid in
accordance with the terms of this Agreement.

     IN CONSIDERATION of the mutual promises made and other good and valuable consideration,
receipt of which is hereby acknowledged, the Corporation and the Participant agree as follows:

1. Amount of Payment. The Participant is eligible to receive a one-time cash bonus equal
to the sum of Sections 1.1 and 1.2, below:

     1.1 Bonus. A bonus up to $112,500 (45% of the Participant’s annual base compensation
rate (“Base Comp”)) for achieving all of the following performance measurements in 2006, or, if one
or more but not all of these performance measurements are achieved, Participant is eligible to
receive a portion of that amount in accordance with the sum of the following:

          1.1.1 Financial Results.

               (a) Earnings Per Share. $18,750 (7.5% of Base Comp) will be awarded for achieving earnings
per share of at least $0.01.

               (b) EBIDTA. $18,750 (7.5% of Base Comp) will be awarded for achieving an “EBITDA” of at least
[...***...]. “EBITDA” means earning before interest, taxes, depreciation and amortization.

               (c) Net Revenue. $18,750 (7.5% of Base Comp) will be awarded for achieving net revenue of at
least [...***...].

          1.1.2 Capital Raise. $18,750 (7.5% of Base Comp) will be awarded for conducting a
successful capital raise that is approved by the Board of Directors of the Corporation (the
“Board”).

          1.1.3 SOX Compliance/BDO Report. $18,750 (7.5% of Base Comp) will be awarded for
achieving compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (as
applicable based upon the criteria of the United States Securities Exchange Commission).

          1.1.4 Manufacturing Variance. $18,750 (7.5% of Base Comp) will be awarded for
achieving budgeted manufacturing facility variance of zero on a combined basis between

* CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities & Exchange Commission.

1

 

* Confidential Treatment Requested Under

17 C.F.R. §§ 200.80(b)(4), 200.83 and 240.24b-2

both of the Corporation’s manufacturing facilities (allowing for an overage at one facility to
be offset by an underage at the other facility).

     1.2 Over Achievement Bonus. If, and only if, all of the performance measurements (and
the entire bonus) set forth in Section 1.1 above have been achieved in full, a bonus of up to
$37,500 (15% of Base Comp) for over achievement of the EBITDA performance measures in accordance
with the sum of the following:

          1.2.1 If the Corporation’s EBITDA is at least [...***...], Participant shall receive an additional
$18,750 (7.5% of Base Comp); and

          1.2.2 If the Corporation’s EBITDA is at least [...***...], Participant will receive an additional
$18,750 (for a total of $37,500, or 15% of Base Comp).

2. Calculating the Bonus. All bonus calculations shall be made by the Chief Financial
Officer of the Corporation, subject to the review and approval of the Compensation Committee of the
Board (the “Committee”). The calculation and payment of bonuses under this Agreement shall be made
within 30 days from the Corporation’s receipt of its audited financial statements. All bonuses
under this Agreement shall be payable in cash or in other consideration as determined in the sole
discretion of the Committee.

3. No Agreement to Employ. Nothing in this Agreement shall affect any right with respect
to continuance of the Participant’s employment by the Corporation or any of its affiliates. The
right of the Corporation or any of its affiliates to terminate at will the Participant’s employment
at any time (whether by dismissal, discharge or otherwise), with or without cause, is specifically
reserved.

4. Unfunded and Unsecured Obligation. The amount payable to the Participant hereunder is
merely an unfunded and unsecured promise to pay money pursuant to this Agreement. The Corporation
is not required to segregate funds for this purpose and all amounts payable hereunder are subject
to the rights of all secured and unsecured creditors of the Corporation. The Participant shall not
have any security interest in any asset of the Corporation as a result of this Agreement, and the
Participant shall be merely an unsecured creditor of the Corporation with respect to amounts
payable hereunder.

5. Tax Consequences. The Participant acknowledges that he has considered the advisability
of consulting with his or her own tax advisors as to the specific tax consequences of participating
in the Agreement, including the applicable federal, state, local and foreign tax consequences, and
that the Corporation has no responsibility for the tax consequences related to the Participant’s
participation in the Agreement other than the Corporation’s duty to satisfy its withholding
obligations.

6. Administrator. The Committee, or such other committee or persons as the Committee may
designate from time to time, is designated as the “Administrator” with authority to control and
manage the operation and administration of this Agreement.

* CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities & Exchange Commission.

2

 

     6.1 Powers of the Administrator. The Administrator shall have full discretionary
power to administer the Agreement in all of its details. For this purpose the Administrator’s
discretionary power shall include, but shall not be limited to, the following authority:

          6.1.1 to make and enforce such rules and regulations as it deems necessary or proper for the
efficient administration of the Agreement or required to comply with applicable law;

          6.1.2 to interpret the Agreement;

          6.1.3 to decide all questions concerning the Agreement and the eligibility of any person to
participate in the Agreement;

          6.1.4 to compute the amounts to be distributed under the Agreement, and to determine the
person or persons to whom such amounts will be distributed;

          6.1.5 to authorize payments under the Agreement;

          6.1.6 to keep such records and submit such filings, elections, applications, returns or other
documents or forms as may be required under the Internal Revenue Code of 1986, as amended (the
“Code”), and applicable regulations, or under other federal, state or local law and regulations;
and

          6.1.7 to allocate and delegate its ministerial duties and responsibilities and to appoint such
agents, counsel, accountants and consultant as may be required or desired to assist in
administering the Agreement.

     6.2 Effect of Interpretation or Determination. Any interpretation of the Agreement or
other determination with respect to the Agreement by the Administrator shall be final and
conclusive on all persons in the absence of clear and convincing evidence that the Administrator
acted arbitrarily and capriciously.

     6.3 Reliance on Information or Advice. In administering the Agreement, the
Administrator shall be entitled, to the extent permitted by law, to rely conclusively on all
tables, valuations, certificates, opinions and reports which are furnished by any accountant,
counsel or other expert who is employed or engaged by the Corporation or by the Administrator on
the Corporation’s behalf.

     6.4 Limitation on Rights and Authority of Participants. The Participant expressly
acknowledges that nothing contained herein shall be construed to: (i) grant the Participant any
ownership interest or other rights as a shareholder of the Corporation or any other entity; (ii)
create a partnership; or (iii) give the Participant any right or authority with respect to the
property except as expressly provided herein.

7. Amendment. The Committee reserves the power at any time or times to amend the
provisions of the Agreement to any extent and in any manner that it may deem advisable.

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However, the Committee shall not have the power to amend the Agreement retroactively in such a
manner as would reduce the accrued vested benefit of the Participant, except as otherwise permitted
or required by law.

8. Savings Clause. The parties intend for this Agreement to comply in form and in operation
with Section 409A of the Code. Notwithstanding any other provision of this Agreement, the
Committee shall be permitted to amend or eliminate any provision or term of this Agreement to the
extent that such provision or term violates or conflicts with the requirements of Section 409A or
the compliance by the Corporation or Participant with such provision or term will result in a
violation of Section 409A.

9. Limitation of Rights. The establishment of the Agreement, any amendments thereof, the
creation of any fund or account or the payment of any benefits shall not be construed as giving to
the Participant or other person any legal or equitable right against the Corporation or the
Administrator, except as provided herein, and in no event shall the terms of employment or service
of any Participant be modified or in any way be affected hereby.

10. Entire Agreement. The Agreement constitutes the full and entire understanding and
agreement between the parties with regard to the subject matter hereof, and supersedes all prior
agreements, understandings, inducements or conditions, express or implied, oral or written,
relating to the subject matter hereof. The express terms of the Agreement control and supersede
any course of performance and/or usage of trade inconsistent with any of the terms hereof.

11. Assignment by the Corporation. The rights and obligations of the Corporation hereunder
are fully assignable at the sole discretion of the Corporation.

12. Severability. The provisions of the Agreement are severable. Except as otherwise
provided herein, in the event that one or more of the provisions contained in the Agreement or in
any other agreement referred to herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability shall not effect the
remaining provisions of the Agreement. Further a court of competent jurisdiction shall have the
authority to rewrite, interpret or construe the terms of the Agreement so as to render them
enforceable to the maximum extent allowed by law, consistent with the intent of the parties as
evidenced hereby.

13. Attorney Fees. If any legal action is necessary to enforce the terms of the Agreement,
the prevailing party shall be entitled to recover, in addition to other amounts to which the
prevailing party may be entitled, actual attorneys’ fees and costs.

14. Counterparts. The Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original as against any party whose signature appears thereon, and
all of which shall together constitute one and the same instrument.

15. Governing Law. The Agreement shall be construed, administered and enforced according
to the laws of the State of Illinois, without regard to its conflicts of laws rules.

[The remainder of this page intentionally left blank.]

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     IN WITNESS HEREOF, the parties have executed this Agreement as of the date set forth above.

	 	 	 	 	 	 	 
	AKORN, INC.:

Corporation	 	 	 	PARTICIPANT:
	 
	 	 	 	 	 	 
	By:

	 	     /s/ Arthur S. Przybyl
	 	 	 	      /s/ Jeffrey A. Whitnell
	 

	 	 
	 	 	 	 
	Its:

	 	Chief Executive Officer
	 	 	 	Jeffrey A. Whitnell

5exv4w1

 

Exhibit 4.1

Woodward Governor Company

2006 Omnibus Incentive Plan

Effective January 25, 2006

 

 

Contents

 

	 	 	 	 	 
	 
	 	 	 	 
	Article 1. Establishment, Purpose, and Duration

	 	 	1	 
	 
	 	 	 	 
	Article 2. Definitions

	 	 	1	 
	 
	 	 	 	 
	Article 3. Administration

	 	 	8	 
	 
	 	 	 	 
	Article 4. Shares Subject to this Plan and Maximum Awards

	 	 	8	 
	 
	 	 	 	 
	Article 5. Eligibility and Participation

	 	 	10	 
	 
	 	 	 	 
	Article 6. Stock Options

	 	 	10	 
	 
	 	 	 	 
	Article 7. Stock Appreciation Rights

	 	 	12	 
	 
	 	 	 	 
	Article 8. Restricted Stock and Restricted Stock Units

	 	 	13	 
	 
	 	 	 	 
	Article 9. Performance Units/Performance Shares

	 	 	15	 
	 
	 	 	 	 
	Article 10. Cash-Based Awards and Other Stock-Based Awards

	 	 	15	 
	 
	 	 	 	 
	Article 11. Transferability of Awards

	 	 	16	 
	 
	 	 	 	 
	Article 12. Performance Measures

	 	 	16	 
	 
	 	 	 	 
	Article 13. Covered Employee Annual Incentive Award

	 	 	18	 
	 
	 	 	 	 
	Article 14. Nonemployee Director Awards

	 	 	18	 
	 
	 	 	 	 
	Article 15. Dividend Equivalents

	 	 	18	 
	 
	 	 	 	 
	Article 16. Beneficiary Designation

	 	 	18	 
	 
	 	 	 	 
	Article 17. Rights of Participants

	 	 	19	 
	 
	 	 	 	 
	Article 18. Change of Control

	 	 	19	 
	 
	 	 	 	 
	Article 19. Amendment, Modification, Suspension, and Termination

	 	 	20	 
	 
	 	 	 	 
	Article 20. Withholding

	 	 	21	 
	 
	 	 	 	 
	Article 21. Successors

	 	 	21	 
	 
	 	 	 	 
	Article 22. General Provisions

	 	 	21	 
	 
	 	 	 	 

 

 

Woodward Governor Company

2006 Omnibus Incentive Plan

Article 1. Establishment, Purpose, and Duration

     1.1 Establishment. Woodward Governor Company, a Delaware corporation (hereinafter
referred to as the “Company”), establishes an incentive compensation plan to be known as the
Woodward Governor Company 2006 Omnibus Incentive Plan (hereinafter referred to as the “Plan”), as
set forth in this document.

     This Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance
Units, Covered Employee Annual Incentive Awards, Cash-Based Awards, and Other Stock-Based Awards.

     This Plan shall become effective upon shareholder approval (the “Effective Date”) and shall
remain in effect as provided in Section 1.3 hereof.

     1.2 Purpose of this Plan. The purpose of this Plan is to provide a means whereby
certain key management worker members and members of the Company’s Board of Directors who are not
also worker members of the Company develop a sense of proprietorship and personal involvement in
the development and financial success of the Company, and to encourage them to devote their best
efforts to the business of the Company, thereby advancing the interests of the Company and its
shareholders. A further purpose of this Plan is to provide a means through which the Company may
attract able individuals to become Employees or serve as Directors of the Company and to
provide a means whereby those individuals upon whom the responsibilities of the successful
administration and management of the Company are of importance, can acquire and maintain stock
ownership, thereby strengthening their concern for the welfare of the Company.

     1.3 Duration of this Plan. Unless sooner terminated as provided herein, this Plan shall
terminate ten (10) years from the Effective Date. After this Plan is terminated, no Awards may be
granted but Awards previously granted shall remain outstanding in accordance with their applicable
terms and conditions and this Plan’s terms and conditions. Notwithstanding the foregoing, no
Incentive Stock Options may be granted more than ten (10) years after the earlier of (a) adoption
of this Plan by the Board, or (b) the Effective Date.

Article 2. Definitions

     Whenever used in this Plan, the following terms shall have the meanings set forth
below, and when the meaning is intended, the initial letter of the word shall be capitalized.

	 	2.1	 	“Affiliate” means any corporation or other entity (including, but not limited to, a
partnership or a limited liability company), that is affiliated with the Company through
stock or equity ownership or otherwise, and is designated as an Affiliate for purposes of
this Plan by the Committee.

 

 

	 	2.2	 	“Annual Award Limit” or “Annual Award Limits” have the meaning set forth in Section
4.3.
	 
	 	2.3	 	“Award” means, individually or collectively, a grant under this Plan of Nonqualified
Stock Options, Incentive Stock Options, SARs, Restricted Stock, Restricted Stock Units,
Performance Shares, Performance Units, Covered Employee Annual Incentive Awards,
Cash-Based Awards, or Other Stock-Based Awards, in each case subject to the terms of this
Plan.
	 
	 	2.4	 	“Award Agreement” means either (i) an agreement entered into by the Company and a
Participant setting forth the terms and provisions applicable to an Award granted under
this Plan, or (ii) a written or electronic statement issued by the Company to a
Participant describing the terms and provisions of such Award, including any amendment or
modification thereof. The Committee may provide for the use of electronic, internet or
other non-paper Award Agreements, and the use of electronic, internet or other non-paper
means for the acceptance thereof and actions thereunder by a Participant.
	 
	 	2.5	 	“Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such
term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
	 
	 	2.6	 	“Board” or “Board of Directors” means the Board of Directors of the Company.
	 
	 	2.7	 	“Cash-Based Award” means an Award, denominated in cash, granted to a Participant as
described in Article 10.
	 
	 	2.8	 	“Change in Control” shall be deemed to have occurred if:

	 	(a)	 	any “person” (as defined in Section 13(d) and 14(d) of the Exchange Act)
(excluding for this purpose the Company or any subsidiary of the Company, or
any person who owns more than fifty percent (50%) of the voting power of the
Company’s securities as of the effective date of the Plan, or any employee
benefit plan of the Company or any subsidiary of the Company, or any person or
entity organized, appointed or established by the Company for or pursuant to
the terms of such plan which acquires beneficial ownership of voting securities
of the Company) is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act) directly or indirectly of securities of the Company
representing more than fifty percent (50%) of the combined voting power of the
Company’s then outstanding securities; provided, however, that no Change in
Control shall be deemed to have occurred:

	 	(i)	 	as the result of an acquisition of securities
of the Company by the Company which, by reducing the number of voting
securities outstanding, increases the direct or indirect beneficial
ownership interest of any person to more than fifty percent (50%) of
the combined voting power of the Company’s then outstanding securities,
but any subsequent increase in the direct or indirect

 

 

	 	 	 	beneficial ownership interest of such a person in the Company shall be deemed a
Change in Control; or
	 
	 	(ii)	 	as a result of the acquisition directly from
the Company of securities of the Company representing less than fifty
percent (50%) of the voting power of the Company; or
	 
	 	(iii)	 	if the Board determines in good faith that a
person who has become the beneficial owner directly or indirectly of
securities of the Company representing more than fifty percent (50%) of
the combined voting power of the Company’s then outstanding securities
has inadvertently reached that level of ownership interest, and if such
person divests as promptly as practicable a sufficient amount of
securities of the Company so that the person no longer has a direct or
indirect beneficial ownership interest in fifty percent (50%) or more
of the combined voting power of the Company’s then outstanding
securities; or

	 	(b)	 	during any year (not including any period prior to the original
effective date of the Plan), individuals who at the beginning of such period
constitute the Board and any new director or directors (except for any director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in paragraph (a) above or paragraph (c) below)
whose election by the Board or nomination for election by the Company’s
shareholders was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of the period
or whose election or nomination for election was previously so approved, cease
for any reason to constitute at least a majority of the Board (such individuals
and any such new directors being referred to as the “Incumbent Board”); or
	 
	 	(c)	 	approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company; or
	 
	 	(d)	 	consummation of:

	 	(i)	 	the sale or disposition of the Company of all
or substantially all of the Company’s assets,
	 
	 	(ii)	 	the merger or consolidation of the Company with
any other corporation, or
	 
	 	(iii)	 	a similar transaction or series of
transactions involving the Company (any transaction described in
subparagraphs (i) and (ii) of this paragraph (d) being referred to as a
“Business

 

 

	 	 	 	Combination”), in each case unless after such a Business
Combination:

	 	(a)	 	the shareholders of the Company
immediately prior to the Business Combination continue to own,
directly or indirectly, more than fifty-one percent (51%) of the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the
new (or continued) entity (including, but not by way of
limitation, an entity which as a result of such transaction owns
the Company or all or substantially all of the Company’s former
assets either directly or through one or more subsidiaries)
immediately after such Business Combination, in substantially
the same proportion as their ownership in the Company
immediately prior to such Business Combination, and
	 
	 	(b)	 	at least a majority of the
members of the board of directors of the entity resulting from
such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination.

	 	2.9	 	“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.
For purposes of this Plan, references to sections of the Code shall be deemed to include
references to any applicable regulations currently in effect.
	 
	 	2.10	 	“Committee” means the Compensation Committee of the Board, a subcommittee thereof, or
any successor committee thereto as determined by the Board. The Committee shall consist
of not less than two members of the Board, each of whom shall qualify as a “nonemployee
director” within the meaning of Rule 16b-3, as amended or other applicable rules under
Section 16(b) of the Exchange Act and an “outside director” within the meaning of Section
162(m) of the Code.
	 
	 	2.11	 	“Company” means Woodward Governor Company, a Delaware corporation, and any successor
thereto as provided in Article 21 herein.
	 
	 	2.12	 	“Consolidated Operating Earnings” means the consolidated earnings before income taxes
of the Company, computed in accordance with generally accepted accounting principles, but
shall exclude the effects of Extraordinary Items.
	 
	 	2.13	 	“Covered Employee” means any key Employee who is or may become a “Covered Employee,”
as defined in Code Section 162(m), and who is designated, either as an individual Employee
or class of Employees, by the Committee within the shorter of (i) ninety (90) days after
the beginning of the Performance Period, or (ii) before twenty-five

 

 

	 	 	 	percent (25%) of the
Performance Period has elapsed, as a “Covered Employee” under this Plan for such
applicable Performance Period.

	 
	 	 	 	 

	 	2.14	 	“Covered Employee Annual Incentive Award” means an Award granted to a Covered
Employee as described in Article 13.
	 
	 	2.15	 	“Director” means any individual who is a member of the Board of Directors of the
Company.
	 
	 	2.16	 	“Effective Date” has the meaning set forth in Section 1.1.
	 
	 	2.17	 	“Employee” means any individual designated as an employee of the Company, its
Affiliates, and/or its Subsidiaries on the payroll records thereof. An Employee shall not
include any individual during any period he or she is classified or treated by the
Company, Affiliate, and/or Subsidiary as an independent contractor, a consultant, or any
employee of an employment, consulting, or temporary agency or any other entity other than
the Company, Affiliate, and/or Subsidiary, without regard to whether such individual is
subsequently determined to have been, or is subsequently retroactively reclassified as a
common-law employee of the Company, Affiliate, and/or Subsidiary during such period.
	 
	 	2.18	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, or any successor act thereto.
	 
	 	2.19	 	“Extraordinary Items” means (i) extraordinary, unusual, and/or nonrecurring items of
gain or loss; (ii) gains or losses on the disposition of a business; (iii) changes in tax
or accounting regulations or laws; or (iv) the effect of a merger or acquisition, all of
which must be identified in the audited financial statements, including footnotes, or
Management Discussion and Analysis section of the Company’s annual report.
	 
	 	2.20	 	“Fair Market Value” or “FMV” of a share of Common Stock, as of any date, means the
price quoted on The Nasdaq Stock Market, or any other primary exchange on which the Common
Stock is traded on such date, at the close of the business on such date.
	 
	 	2.21	 	“Freestanding SAR” means an SAR that is granted independently of any Options, as
described in Article 7.
	 
	 	2.22	 	“Full Value Award” means an Award other than in the form of an ISO, NQSO, or SAR, and
which is settled by the issuance of Shares.
	 
	 	2.23	 	“Grant Price” means the price established at the time of grant of an SAR pursuant to
Article 7, used to determine whether there is any payment due upon exercise of the SAR.
	 
	 	2.24	 	“Incentive Stock Option” or “ISO” means an Option to purchase Shares granted under
Article 6 to an Employee and that is designated as an Incentive Stock Option and that is
intended to meet the requirements of Code Section 422, or any successor provision.

 

 

	 	2.25	 	“Insider” means an individual who is, on the relevant date, an officer, or Director
of the Company, or a more than ten percent (10%) Beneficial Owner of any class of the
Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act,
as determined by the Board in accordance with Section 16 of the Exchange Act.
	 
	 	2.26	 	“Net Income” means the consolidated net income before taxes for this Plan Year, as
reported in the Company’s annual report to shareholders or as otherwise reported to
shareholders.
	 
	 	2.27	 	“Nonemployee Director” means a Director who is not an Employee of the Company.
	 
	 	2.28	 	“Nonemployee Director Award” means any NQSO, SAR, or Full Value Award granted,
whether singly, in combination, or in tandem, to a Participant who is a Nonemployee
Director pursuant to such applicable terms, conditions, and limitations as the Board or
Committee may establish in accordance with this Plan.
	 
	 	2.29	 	“Nonqualified Stock Option” or “NQSO” means an Option that is not intended to meet
the requirements of Code Section 422, or that otherwise does not meet such requirements.
	 
	 	2.30	 	“Operating Cash Flow” means cash flow from operating activities as defined in SFAS
Number 95, Statement of Cash Flows.
	 
	 	2.31	 	“Option” means an Incentive Stock Option or a Nonqualified Stock Option, as described
in Article 6.
	 
	 	2.32	 	“Option Price” means the price at which a Share may be purchased by a Participant
pursuant to an Option.
	 
	 	2.33	 	“Other Stock-Based Award” means an equity-based or equity-related Award not otherwise
described by the terms of this Plan, granted pursuant to Article 10.
	 
	 	2.34	 	“Participant” means any eligible individual as set forth in Article 5 to whom an
Award is granted.
	 
	 	2.35	 	“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.
	 
	 	2.36	 	“Performance Measures” means measures as described in Article 12 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.

 

 

	 	2.37	 	“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.
	 
	 	2.38	 	“Performance Share” means an Award under Article 9 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.
	 
	 	2.39	 	“Performance Unit” means an Award under Article 9 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.
	 
	 	2.40	 	“Period of Restriction” means the period when Restricted Stock or Restricted Stock
Units are subject to a substantial risk of forfeiture (based on the passage of time, the
achievement of performance goals, or upon the occurrence of other events as determined by
the Committee, in its discretion), as provided in Article 8.
	 
	 	2.41	 	“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined
in Section 13(d) thereof.
	 
	 	2.42	 	“Plan” means the Woodward Governor Company 2006 Omnibus Incentive Plan.
	 
	 	2.43	 	“Plan Year” means the Company’s fiscal year, which begins October 1 and ends
September 30.
	 
	 	2.44	 	“Prior Plans” means the Woodward Governor Company 2002 Stock Option Plan and the
Woodward Long-Term Management Incentive Compensation Plan.
	 
	 	2.45	 	“Restricted Stock” means an Award granted to a Participant pursuant to Article 8.
	 
	 	2.46	 	“Restricted Stock Unit” means an Award granted to a Participant pursuant to Article
8, except no Shares are actually awarded to the Participant on the date of grant.
	 
	 	2.47	 	“Share” means a share of common stock of the Company.
	 
	 	2.48	 	“Stock Appreciation Right” or “SAR” means an Award, designated as a SAR, pursuant to
the terms of Article 7 herein.
	 
	 	2.49	 	“Subsidiary” means any corporation or other entity, whether domestic or foreign, in
which the Company has or obtains, directly or indirectly, a proprietary interest of more
than fifty percent (50%) by reason of stock ownership or otherwise.

 

 

Article 3. Administration

     3.1 General. The Committee shall be responsible for administering this Plan, subject to
this Article 3 and the other provisions of this Plan. The Committee may employ attorneys,
consultants, accountants, agents, and other individuals, any of whom may be an Employee, and the
Committee, the Company, and its officers and Directors shall be entitled to rely upon the advice,
opinions, or valuations of any such individuals. All actions taken and all interpretations and
determinations made by the Committee shall be final and binding upon the Participants, the Company,
and all other interested individuals.

     3.2 Authority of the Committee. The Committee shall have full and exclusive discretionary
authority to interpret the terms and the intent of this Plan and any Award Agreement or other
agreement or document ancillary to or in connection with this Plan, to determine eligibility for
Awards and to adopt such rules, regulations, forms, instruments, and guidelines for administering
this Plan as the Committee may deem necessary or proper. Such authority shall include, but not be
limited to, selecting Award recipients, establishing all Award terms and conditions, including the
terms and conditions set forth in Award Agreements, granting Awards as an alternative to or as the
form of payment for grants or rights earned or due under compensation plans or arrangements of the
Company, construing any ambiguous provision of the Plan or any Award Agreement, and, subject to
Article 19, adopting modifications and amendments to this Plan or any Award Agreement, including
without limitation, any that are necessary to comply with the laws of the countries and other
jurisdictions in which the Company, its Affiliates, and/or its Subsidiaries operate.

     3.3 Delegation. The Committee may delegate to one or more of its members or to one or more
officers of the Company, and/or its Subsidiaries and Affiliates or to one or more agents or
advisors such administrative duties or powers as it may deem advisable, and the Committee or any
individuals to whom it has delegated duties or powers as aforesaid may employ one or more
individuals to render advice with respect to any responsibility the Committee or such individuals
may have under this Plan.

Article 4. Shares Subject to this Plan and Maximum Awards

	 	4.1	 	Number of Shares Available for Awards.
	 
	 	(a)	 	Subject to adjustment as provided in Section 4.4, the maximum number of Shares
available for grant to Participants under this Plan on or after the Effective Date shall
be one million two hundred thirty-five thousand (1,235,000) Shares (the “Share
Authorization”), which shall consist of (i) a number of shares not previously authorized
for issuance under any plan, plus (ii) the number of shares remaining available for
issuance under the Prior Plans but not subject to outstanding awards as of the Effective
Date, plus (iii) the number of shares subject to awards outstanding under the Prior Plans
as of the Effective Date, but only to the extent that such outstanding awards are
forfeited, expire, or otherwise terminate without the issuance of such Shares.
	 
	 	(b)	 	No more than three hundred seventy thousand five hundred (370,500) Shares of the
Share Authorization may be granted as Full Value Awards.

 

 

	 	(c)	 	The maximum number of Shares of the Share Authorization that may be issued pursuant
to ISOs under this Plan shall be one million two hundred thirty-five thousand (1,235,000)
Shares.

     4.2 Share Usage. Shares covered by an Award shall only be counted as used to the extent they
are actually issued; however, the full number of Stock Appreciation Rights granted that are to be
settled by the issuance of Shares shall be counted against the number of Shares available for award
under the Plan, regardless of the number of Shares actually issued upon settlement of such Stock
Appreciation Rights. Any Shares related to Awards which terminate by expiration, forfeiture,
cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of
Shares, or are exchanged with the Committee’s permission, prior to the issuance of Shares, for
Awards not involving Shares, shall be available again for grant under this Plan. The Shares
available for issuance under this Plan may be authorized and unissued Shares or treasury Shares.

     4.3 Annual Award Limits. Unless and until the Committee determines that an Award to a Covered
Employee shall not be designed to qualify as Performance-Based Compensation, the following limits
(each an “Annual Award Limit” and, collectively, “Annual Award Limits”) shall apply to grants of
such Awards under this Plan:

	 	(a)	 	Options: The maximum aggregate number of Shares subject to Options
granted in any one Plan Year to any one Participant shall be one hundred thousand
(100,000). Notwithstanding this limitation the Committee may grant Stock Options
covering up to five hundred thousand (500,000) Shares to the Chief Executive
Officer during the twelve (12) month period following such individual’s date of
hire.
	 
	 	(b)	 	SARs: The maximum number of Shares subject to Stock Appreciation Rights
granted in any one Plan Year to any one Participant shall be one hundred thousand
(100,000).
	 
	 	(c)	 	Restricted Stock or Restricted Stock Units: The maximum aggregate grant
with respect to Awards of Restricted Stock or Restricted Stock Units in any one
Plan Year to any one Participant shall be one hundred thousand (100,000).
	 
	 	(d)	 	Performance Units or Performance Shares: The maximum aggregate Award of
Performance Units or Performance Shares that a Participant may receive in any one
Plan Year shall be one hundred thousand (100,000) Shares, or equal to the value of
one hundred thousand (100,000) Shares determined as of the date of vesting or
payout, as applicable.
	 
	 	(e)	 	Covered Employee Annual Incentive Award: The maximum aggregate amount
awarded or credited in any one Plan Year with respect to a Covered Employee Annual
Incentive Award shall be determined in accordance with Article 13.
	 
	 	(f)	 	Cash-Based Awards: The maximum aggregate amount awarded or credited
with respect to Cash-Based Awards to any one Participant in any one Plan Year may
not exceed the value of three million dollars ($3,000,000) or one hundred thousand
(100,000) Shares determined as of the date of vesting or payout, as applicable.

 

 

	 	(g)	 	Other Stock-Based Awards: The maximum aggregate grant with respect to
Other Stock-Based Awards pursuant to Section 10.2 in any one Plan Year to any one
Participant shall be one hundred thousand (100,000).

     4.4 Adjustments in Authorized Shares. In the event of any corporate event or transaction
(including, but not limited to, a change in the Shares of the Company or the capitalization of the
Company) such as a merger, consolidation, reorganization, recapitalization, separation, partial or
complete liquidation, stock dividend, stock split, reverse stock split, split up, spin-off, or
other distribution of stock or property of the Company, combination of Shares, exchange of Shares,
dividend in kind, or other like change in capital structure, number of outstanding Shares or
distribution (other than normal cash dividends) to shareholders of the Company, or any similar
corporate event or transaction, the Committee, in its sole discretion, in order to prevent dilution
or enlargement of Participants’ rights under this Plan, shall substitute or adjust, as applicable,
the number and kind of Shares that may be issued under this Plan or under particular forms of
Awards, the number and kind of Shares subject to outstanding Awards, the Option Price or Grant
Price applicable to outstanding Awards, the Annual Award Limits, and other value determinations
applicable to outstanding Awards.

     The Committee, in its sole discretion, may also make appropriate adjustments in the terms of
any Awards under this Plan to reflect or relate to such changes or distributions and to modify any
other terms of outstanding Awards, including modifications of performance goals and changes in the
length of Performance Periods. The determination of the Committee as to the foregoing adjustments,
if any, shall be conclusive and binding on Participants under this Plan.

     Subject to the provisions of Article 19 and notwithstanding anything else herein to the
contrary, without affecting the number of Shares reserved or available hereunder, the Committee may
authorize the issuance or assumption of benefits under this Plan in connection with any merger,
consolidation, acquisition of property or stock, or reorganization upon such terms and conditions
as it may deem appropriate (including, but not limited to, a conversion of equity awards into
Awards under this Plan in a manner consistent with paragraph 53 of FASB Interpretation No. 44),
subject to compliance with the rules under Code Sections 422 and 424, as and where applicable.

Article 5. Eligibility and Participation

     5.1 Eligibility. Individuals eligible to participate in this Plan include all Employees
and Directors who are not also worker members of the Company.

     5.2 Actual Participation. Subject to the provisions of this Plan, the Committee may, from time
to time, select from all eligible individuals, those individuals to whom Awards shall be granted
and shall determine, in its sole discretion, the nature of, any and all terms permissible by law,
and the amount of each Award.

Article 6. Stock Options

     6.1 Grant of Options. Subject to the terms and provisions of this Plan, Options may be
granted to Participants in such number, and upon such terms, and at any time and from time to time
as shall be determined by the Committee, in its sole discretion and in accordance with Article 4.3;
provided that ISOs may be granted only to eligible Employees of the Company or of any parent or

 

 

subsidiary corporation (as permitted under Code Sections 422 and 424). However, an Employee who is
employed by an Affiliate and/or Subsidiary and is subject to Code Section 409A, may only be granted
Options to the extent the Affiliate and/or Subsidiary is part of the Company’s controlled group of
corporations as determined within the meaning of Code Section 414(b) or 414(c).

     6.2 Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall
specify the Option Price, the maximum duration of the Option, the number of Shares to which the
Option pertains, the conditions upon which an Option shall become vested and exercisable, and such
other provisions as the Committee shall determine which are not inconsistent with the terms of this
Plan. The Award Agreement also shall specify whether the Option is intended to be an ISO or a NQSO.

     6.3 Option Price. The Option Price for each grant of an Option under this Plan shall be
determined by the Committee in its sole discretion and shall be specified in the Award Agreement;
provided, however, the Option Price must be at least equal to one hundred percent (100%) of the FMV
of the Shares as determined on the date of grant.

     6.4 Term of Options. Each Option granted to a Participant shall expire at such time as the
Committee shall determine at the time of grant; provided, however, no Option shall be exercisable
later than the tenth (10th) anniversary date of its grant.

     6.5 Exercise of Options. Options granted under this Article 6 shall be exercisable at such
times and be subject to such restrictions and conditions as the Committee shall in each instance
approve, which terms and restrictions need not be the same for each grant or for each Participant.

     6.6 Payment. Options granted under this Article 6 shall be exercised by the delivery of a
notice of exercise to the Company or an agent designated by the Company in a form specified or
accepted by the Committee, or by complying with any alternative procedures which may be authorized
by the Committee, setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares.

     A condition of the issuance of the Shares as to which an Option shall be exercised shall be
the payment of the Option Price. The Option Price of any Option shall be payable to the Company in
full either: (a) in cash or its equivalent; (b) by tendering (either by actual delivery or
attestation) previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the Option Price (provided that except as otherwise determined by the Committee,
the Shares that are tendered must have been held by the Participant for at least six (6) months (or
such other period, if any, as the Committee may permit) prior to their tender to satisfy the Option
Price if acquired under this Plan or any other compensation plan maintained by the Company or have
been purchased on the open market); (c) by a cashless (broker-assisted) exercise; (d) by a
combination of (a), (b) and/or (c); or (e) any other method approved or accepted by the Committee
in its sole discretion.

     Subject to any governing rules or regulations, as soon as practicable after receipt of written
notification of exercise and full payment (including satisfaction of any applicable tax
withholding), the Company shall deliver to the Participant evidence of book entry Shares, or upon
the Participant’s request, Share certificates in an appropriate amount based upon the number of
Shares purchased under the Option(s).

 

 

     Unless otherwise determined by the Committee, all payments under all of the methods indicated
above shall be paid in United States dollars.

     6.7 Restrictions on Share Transferability. The Committee may impose such restrictions on any
Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem
advisable, including, without limitation, minimum holding period requirements, restrictions under
applicable federal securities laws, under the requirements of any stock exchange or market upon
which such Shares are then listed and/or traded, or under any blue sky or state securities laws
applicable to such Shares.

     6.8 Termination of Employment. Each Participant’s Award Agreement shall set forth the extent
to which the Participant shall have the right to exercise the Option following termination of the
Participant’s employment or provision of services to the Company, its Affiliates, and/or its
Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement entered into with each Participant, need not be
uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on
the reasons for termination.

     6.9 Notification of Disqualifying Disposition. If any Participant shall make any disposition
of Shares issued pursuant to the exercise of an ISO under the circumstances described in Code
Section 421(b) (relating to certain disqualifying dispositions), such Participant shall notify the
Company of such disposition within ten (10) days thereof.

Article 7. Stock Appreciation Rights

     7.1 Grant of SARs. Subject to the terms and conditions of this Plan, SARs may be
granted to Participants at any time and from time to time as shall be determined by the Committee.
The Committee may grant Freestanding SARs. However, an Employee who is employed by an Affiliate
and/or Subsidiary and is subject to Code Section 409A, may only be granted SARs to the extent the
Affiliate and/or Subsidiary is part of the Company’s controlled group of corporations as determined
within the meaning of Code Section 414(b) or 414(c).

     Subject to the terms and conditions of this Plan, the Committee shall have complete discretion
in determining the number of SARs granted to each Participant and, consistent with the provisions
of this Plan, in determining the terms and conditions pertaining to such SARs.

     The Grant Price for each grant of a Freestanding SAR shall be determined by the Committee and
shall be specified in the Award Agreement; provided, however, the Grant Price on the date of grant
must be at least equal to one hundred percent (100%) of the FMV of the Shares as determined on the
date of grant.

     7.2 SAR Agreement. Each SAR Award shall be evidenced by an Award Agreement that shall specify
the Grant Price, the term of the SAR, and such other provisions as the Committee shall determine.

     7.3 Term of SAR. The term of an SAR granted under this Plan shall be determined by the
Committee, in its sole discretion, and except as determined otherwise by the Committee and

 

 

specified in the SAR Award Agreement, no SAR shall be exercisable later than the tenth (10th)
anniversary date of its grant.

     7.4 Exercise of Freestanding SARs. Freestanding SARs may be exercised upon whatever terms and
conditions the Committee, in its sole discretion, imposes.

     7.5 Settlement of SAR Amount. Upon the exercise of an SAR, a Participant shall be entitled to
receive payment from the Company in an amount determined by multiplying:

	 	(a)	 	The excess of the Fair Market Value of a Share on the date of exercise
over the Grant Price; by
	 
	 	(b)	 	The number of Shares with respect to which the SAR is exercised.

     At the discretion of the Committee, the payment upon SAR exercise may be in cash, Shares, or
any combination thereof, or in any other manner approved by the Committee in its sole discretion.
The Committee’s determination regarding the form of SAR payout shall be set forth in the Award
Agreement pertaining to the grant of the SAR.

     7.6 Termination of Employment. Each Award Agreement shall set forth the extent to which the
Participant shall have the right to exercise the SAR following termination of the Participant’s
employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries,
as the case may be. Such provisions shall be determined in the sole discretion of the Committee,
shall be included in the Award Agreement entered into with Participants, need not be uniform among
all SARs issued pursuant to this Plan, and may reflect distinctions based on the reasons for
termination.

     7.7 Other Restrictions. The Committee shall impose such other conditions and/or restrictions
on any Shares received upon exercise of an SAR granted pursuant to this Plan as it may deem
advisable or desirable. These restrictions may include, but shall not be limited to, a requirement
that the Participant hold the Shares received upon exercise of an SAR for a specified period of
time.

Article 8. Restricted Stock and Restricted Stock Units

     8.1 Grant of Restricted Stock or Restricted Stock Units. Subject to the terms and
provisions of this Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock and/or Restricted Stock Units to Participants in such amounts as the Committee
shall determine. Restricted Stock Units shall be similar to Restricted Stock except that no Shares
are actually awarded to the Participant on the date of grant.

     8.2 Restricted Stock or Restricted Stock Unit Agreement. Each Restricted Stock and/or
Restricted Stock Unit grant shall be evidenced by an Award Agreement that shall specify the
Period(s) of Restriction, the number of Shares of Restricted Stock or the number of Restricted
Stock Units granted, and such other provisions as the Committee shall determine.

     8.3 Other Restrictions. The Committee shall impose such other conditions and/or restrictions
on any Shares of Restricted Stock or Restricted Stock Units granted pursuant to this Plan as it may
deem advisable including, without limitation, a requirement that Participants pay a stipulated
purchase price for each Share of Restricted Stock or each Restricted Stock Unit,

 

 

restrictions based
upon the achievement of specific performance goals, time-based restrictions on vesting following
the attainment of the performance goals, time-based restrictions, and/or restrictions under
applicable laws or under the requirements of any stock exchange or market upon which such Shares
are listed or traded, or holding requirements or sale restrictions placed on the Shares by the
Company upon vesting of such Restricted Stock or Restricted Stock Units.

     To the extent deemed appropriate by the Committee, the Company may retain the certificates
representing Shares of Restricted Stock in the Company’s possession until such time as all
conditions and/or restrictions applicable to such Shares have been satisfied or lapse.

     Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each
Restricted Stock Award shall become freely transferable by the Participant after all conditions and
restrictions applicable to such Shares have been satisfied or lapse (including satisfaction of any
applicable tax withholding obligations), and Restricted Stock Units shall be paid in cash, Shares,
or a combination of cash and Shares as the Committee, in its sole discretion shall determine.

     8.4 Certificate Legend. In addition to any legends placed on certificates pursuant to Section
8.3, each certificate representing Shares of Restricted Stock granted pursuant to this Plan may
bear a legend such as the following or as otherwise determined by the Committee in its sole
discretion:

     The sale or transfer of Shares of stock represented by this certificate, whether voluntary,
involuntary, or by operation of law, is subject to certain restrictions on transfer as set forth in
the Woodward Governor Company 2006 Omnibus Incentive Plan, and in the associated Award Agreement. A
copy of this Plan and such Award Agreement may be obtained from Woodward Governor Company.

     8.5 Voting Rights. Unless otherwise determined by the Committee and set forth in a
Participant’s Award Agreement, to the extent permitted or required by law, as determined by the
Committee, Participants holding Shares of Restricted Stock granted hereunder may be granted the
right to exercise full voting rights with respect to those Shares during the Period of Restriction.
A Participant shall have no voting rights with respect to any Restricted Stock Units granted
hereunder.

     8.6 Termination of Employment. Each Award Agreement shall set forth the extent to which the
Participant shall have the right to retain Restricted Stock and/or Restricted Stock Units following
termination of the Participant’s employment with or provision of services to the Company, its
Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award Agreement entered into with each
Participant, need not be uniform among all Shares of Restricted Stock or Restricted Stock Units
issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination.

     8.7 Section 83(b) Election. The Committee may provide in an Award Agreement that the Award of
Restricted Stock is conditioned upon the Participant making or refraining from making an election
with respect to the Award under Code Section 83(b). If a Participant makes an election pursuant to
Code Section 83(b) concerning a Restricted Stock Award, the Participant shall be required to file
promptly a copy of such election with the Company.

 

 

Article 9. Performance Units/Performance Shares

     9.1 Grant of Performance Units/Performance Shares. Subject to the terms and provisions
of this Plan, the Committee, 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.

     9.2 Value of Performance Units/Performance Shares. Each Performance Unit shall have an initial
value that is established by the Committee at the time of grant. Each Performance Share shall have
an initial value equal to the Fair Market Value of a Share on the date of grant. The Committee
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.

     9.3 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.

     9.4 Form and Timing of Payment of Performance Units/Performance Shares. Payment of earned
Performance Units/Performance Shares shall be as determined by the Committee and as evidenced in
the Award Agreement. Subject to the terms of this Plan, the Committee, 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 within 2-1/2 months 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.

     9.5 Termination of Employment. Each Award Agreement shall set forth the extent to which the
Participant shall have the right to retain Performance Units and/or Performance Shares following
termination of the Participant’s employment with or provision of services to the Company, its
Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award Agreement entered into with each
Participant, need not be uniform among all Awards of Performance Units or Performance Shares issued
pursuant to this Plan, and may reflect distinctions based on the reasons for termination.

Article 10. Cash-Based Awards and Other Stock-Based Awards

     10.1 Grant of Cash-Based Awards. Subject to the terms and provisions of the Plan, the
Committee, at any time and from time to time, may grant Cash-Based Awards to Participants in such
amounts and upon such terms as the Committee may determine.

     10.2 Other Stock-Based Awards. The Committee may grant other types of equity-based or
equity-related Awards not otherwise described by the terms of this Plan (including the grant or
offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions, as
the Committee shall determine. Such Awards may involve the transfer of actual Shares to
Participants, or

 

 

payment in cash or otherwise of amounts based on the value of Shares and may
include, without limitation, Awards designed to comply with or take advantage of the applicable
local laws of jurisdictions other than the United States.

     10.3 Value of Cash-Based and Other Stock-Based Awards. Each Cash-Based Award shall specify a
payment amount or payment range as determined by the Committee. Each Other Stock-Based Award shall
be expressed in terms of Shares or units based on Shares, as determined by the Committee. The
Committee may establish performance goals in its discretion. If the Committee exercises its
discretion to establish performance goals, the number and/or value of Cash-Based Awards or Other
Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the
performance goals are met.

     10.4 Payment of Cash-Based Awards and Other Stock-Based Awards. Payment, if any, with respect
to a Cash-Based Award or an Other Stock-Based Award shall be made in accordance with the terms of
the Award, in cash or Shares as the Committee determines.

     10.5 Termination of Employment. The Committee shall determine the extent to which the
Participant shall have the right to receive Cash-Based Awards or Other Stock-Based Awards following
termination of the Participant’s employment with or provision of services to the Company, its
Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the
sole discretion of the Committee, such provisions may be included in an agreement entered into with
each Participant, but need not be uniform among all Awards of Cash-Based Awards or Other
Stock-Based Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons
for termination.

Article 11. Transferability of Awards

     11.1 Transferability. Except as provided in Section 11.2 below, during a Participant’s
lifetime, his or her Awards shall be exercisable only by the Participant. Awards shall not be
transferable other than by will or the laws of descent and distribution; no Awards shall be
subject, in whole or in part, to attachment, execution, or levy of any kind; and any purported
transfer in violation hereof shall be null and void. The Committee may establish such procedures
as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable or
Shares deliverable in the event of, or following, the Participant’s death, may be provided.

     11.2 Committee Action. The Committee may, in its discretion, determine that notwithstanding
Section 11.1, any or all Awards (other than ISOs) shall be transferable to and exercisable by such
transferees, and subject to such terms and conditions, as the Committee may deem appropriate;
provided, however, no Award may be transferred for value (as defined in the General Instructions to
Form S-8).

Article 12. Performance Measures

     12.1 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 (before or after income taxes) and/or cumulative effect of
accounting changes;

 

 

	 	(b)	 	Earnings per share before or after cumulative effect of accounting changes;
	 
	 	(c)	 	Net sales or revenue growth;
	 
	 	(d)	 	Net operating profit;
	 
	 	(e)	 	Return measures (including, but not limited to, return on assets, capital, invested
capital, equity, sales, or revenue);
	 
	 	(f)	 	Cash flow (including, but not limited to, operating cash flow, free cash flow, cash
flow return on equity, and cash flow return on investment);
	 
	 	(g)	 	Earnings before or after taxes, interest, depreciation, and/or amortization;
	 
	 	(h)	 	Gross or operating margins;
	 
	 	(i)	 	Productivity ratios;
	 
	 	(j)	 	Share price (including, but not limited to, growth measures and total shareholder
return);
	 
	 	(k)	 	Expense targets;
	 
	 	(l)	 	Margins;
	 
	 	(m)	 	Operating efficiency;
	 
	 	(n)	 	Market share;
	 
	 	(o)	 	Customer satisfaction;
	 
	 	(p)	 	Working capital targets; and
	 
	 	(q)	 	Economic value added or EVA® (net operating profit after tax minus the sum
of capital multiplied by the cost of capital).

     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 (j) 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 Article 12.

     12.2 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 occurs 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.

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

     12.4 Committee Discretion. In the event that applicable tax and/or securities laws change to
permit Committee discretion to alter the governing Performance Measures without obtaining

 

 

shareholder approval of such changes, the Committee shall have sole discretion to make such changes
without obtaining shareholder approval. 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 12.1.

Article 13. Covered Employee Annual Incentive Award

     13.1 Establishment of Incentive Pool. The Committee may designate Covered Employees who
are eligible to receive a monetary payment in any Plan Year based on a percentage of an incentive
pool equal to the greater of: (i) three percent (3%) of the Company’s Consolidated Operating
Earnings for this Plan Year, (ii) two percent (2%) of the Company’s Operating Cash Flow for this
Plan Year, or (iii) five percent (5%) of the Company’s Net Income for this Plan Year. The Committee
shall allocate an incentive pool percentage to each designated Covered Employee for each Plan Year.
In no event may (1) the incentive pool percentage for any one Covered Employee exceed fifty percent
(50%) of the total pool and (2) the sum of the incentive pool percentages for all Covered Employees
cannot exceed one hundred percent (100%) of the total pool.

     13.2 Determination of Covered Employees’ Portions. As soon as possible after the determination
of the incentive pool for a Plan Year, the Committee shall calculate each Covered Employee’s
allocated portion of the incentive pool based upon the percentage established at the beginning of
this Plan Year. Each Covered Employee’s incentive award then shall be determined by the Committee
based on the Covered Employee’s allocated portion of the incentive pool subject to adjustment in
the sole discretion of the Committee. In no event may the portion of the incentive pool allocated
to a Covered Employee be increased in any way, including as a result of the reduction of any other
Covered Employee’s allocated portion. The Committee shall retain the discretion to adjust such
Awards downward.

Article 14. Nonemployee Director Awards

     The Nominating and Governance Committee of the Board shall determine all Awards to
Nonemployee Directors. The terms and conditions of any grant to any such Nonemployee Director shall
be set forth in an Award Agreement.

Article 15. Dividend Equivalents

     Any Participant selected by the Committee may be granted dividend equivalents based on
the dividends declared on Shares that are subject to any Award, to be credited as of dividend
payment dates, during the period between the date the Award is granted and the date the Award is
exercised, vests or expires, as determined by the Committee. Such dividend equivalents shall be
converted to cash or additional Shares by such formula and at such time and subject to such
limitations as may be determined by the Committee.

Article 16. Beneficiary Designation

     Each Participant under this Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any benefit under this Plan
is to be paid in case of his death before he receives any or all of such benefit. Each such
designation shall revoke all prior designations by the same Participant, shall be in a form
prescribed by the Committee, and will be effective only when filed by the Participant in writing
with the Company during the Participant’s lifetime. In the absence of any such beneficiary
designation, benefits remaining unpaid

 

 

or rights remaining unexercised at the Participant’s death
shall be paid or exercised by the Participant’s executor, administrator, or legal representative.

Article 17. Rights of Participants

     17.1 Employment. Nothing in this Plan or an Award Agreement shall interfere with or
limit in any way the right of the Company, its Affiliates, and/or its Subsidiaries, to terminate
any Participant’s employment or service on the Board or to the Company at any time or for any
reason not prohibited by law, nor confer upon any Participant any right to continue his employment
or service as a Director for any specified period of time.

     Neither an Award nor any benefits arising under this Plan shall constitute an employment
contract with the Company, its Affiliates, and/or its Subsidiaries and, accordingly, subject to
Articles 3 and 19, this Plan and the benefits hereunder may be terminated at any time in the sole
and exclusive discretion of the Committee without giving rise to any liability on the part of the
Company, its Affiliates, and/or its Subsidiaries.

     17.2 Participation. No individual shall have the right to be selected to receive an Award
under this Plan, or, having been so selected, to be selected to receive a future Award.

     17.3 Rights as a Shareholder. Except as otherwise provided herein, a Participant shall have
none of the rights of a shareholder with respect to Shares covered by any Award until the
Participant becomes the record holder of such Shares.

Article 18. Change of Control

     18.1 Change of Control of the Company. Notwithstanding any other provision of this Plan
to the contrary, the provisions of this Article 18 shall apply in the event of a Change of Control,
unless otherwise determined by the Committee in connection with the grant of an Award as reflected
in the applicable Award Agreement.

     Upon a Change of Control, except to the extent that another Award meeting the requirements of
Section 18.2 (a “Replacement Award”) is provided to the Participant to replace such Award (the
“Replaced Award”), all then-outstanding Stock Options and Stock Appreciation Rights shall
immediately become fully vested and exercisable, and all other then-outstanding Awards whose
exercisability depends merely on the satisfaction of a service obligation by a Participant to the
Company, Subsidiary, or Affiliate shall vest in full and be free of restrictions related to the
vesting of such Awards. The treatment of any other Awards shall be as determined by the Committee
in connection with the grant thereof, as reflected in the applicable Award Agreement.

     Except to the extent that a Replacement Award is provided to the Participant, the Committee
may, in its sole discretion, (i) determine that any or all outstanding Awards granted under the
Plan, whether or not exercisable, will be canceled and terminated and that in connection with such
cancellation and termination the holder of such Award may receive for each Share of Common Stock
subject to such Awards a cash payment (or the delivery of shares of stock, other securities or a
combination of cash, stock and securities equivalent to such cash payment) equal to the difference,
if any, between the consideration received by shareholders of the Company in respect of a Share of
Common Stock in connection with such transaction and the purchase price per share, if any, under
the Award multiplied by the number of Shares of Common Stock subject to such Award; provided

 

 

that
if such product is zero or less or to the extent that the Award is not then exercisable, the Awards
will be canceled and terminated without payment therefore or (ii) provide that the period to
exercise Options or Stock Appreciation Rights granted under the Plan shall be extended (but not
beyond the expiration of such Option or Stock Appreciation Right).

     18.2 Replacement Awards. An Award shall meet the conditions of this Section 18.2 (and hence
qualify as a Replacement Award) if: (i) it has a value at least equal to the value of the Replaced
Award as determined by the Committee in its sole discretion; (ii) it relates to publicly traded
equity securities of the Company or its successor in the Change of Control or another entity that
is affiliated with the Company or its successor following the Change of Control; and (iii) its
other terms and conditions are not less favorable to the Participant than the terms and conditions
of the Replaced Award (including the provisions that would apply in the event of a subsequent
Change of Control). Without limiting the generality of the foregoing, the Replacement Award may
take the form of a continuation of the Replaced Award if the requirements of the preceding sentence
are satisfied. The determination of whether the conditions of this Section 18.2 are satisfied shall
be made by the Committee, as constituted immediately before the Change of Control, in its sole
discretion.

     18.3 Termination of Employment. Upon a termination of employment or termination of
directorship of a Participant occurring in connection with or during the period of two (2) years
after such Change of Control, other than for Cause, (i) all Replacement Awards held by the
Participant shall become fully vested and (if applicable) exercisable and free of restrictions, and
(ii) all Stock Options and Stock Appreciation Rights held by the Participant immediately before the
termination of employment or termination of directorship that the Participant held as of the date
of the Change of Control or that constitute Replacement Awards shall remain exercisable for not
less than one (1) year following such termination or until the expiration of the stated term of
such Stock Option or SAR, whichever period is shorter; provided, that if the applicable Award
Agreement provides for a longer period of exercisability, that provision shall control.

Article 19. Amendment, Modification, Suspension, and Termination

     19.1 Amendment, Modification, Suspension, and Termination. Subject to Section 19.3, the
Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate this
Plan and any Award Agreement in whole or in part; provided, however, that, without the prior
approval of the Company’s shareholders and except as provided in Section 4.4, Options or SARs
issued under this Plan will not be repriced, replaced, or regranted through cancellation, or by
lowering the Option Price of a previously granted Option or the Grant Price of a previously granted
SAR, and no material amendment of this Plan shall be made without shareholder approval if
shareholder approval is required by law, regulation, or stock exchange.

     19.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The
Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards
in recognition of unusual or nonrecurring events (including, without limitation, the events
described in Section 4.4 hereof) affecting the Company or the financial statements of the Company
or of changes in applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent unintended dilution or
enlargement of the benefits or potential benefits intended to be made available under this Plan.
The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and
binding on Participants under this Plan.

 

 

     19.3 Awards Previously Granted. Notwithstanding any other provision of this Plan to the
contrary (other than Section 19.4), no termination, amendment, suspension, or modification of this
Plan or an Award Agreement shall adversely affect in any material way any Award previously granted
under this Plan, without the written consent of the Participant holding such Award.

     19.4 Amendment to Conform to Law. Notwithstanding any other provision of this Plan to the
contrary, the Board of Directors may amend the Plan or an Award Agreement, to take effect
retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan
or an Award Agreement to any present or future law relating to plans of this or similar nature
(including, but not limited to, Code Section 409A), and to the administrative regulations and
rulings promulgated thereunder.

Article 20. Withholding

     20.1 Tax Withholding. The Company shall have the power and the right to deduct or
withhold, or require a Participant to remit to the Company, the minimum statutory amount to satisfy
federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld
with respect to any taxable event arising as a result of this Plan.

     20.2 Share Withholding. With respect to withholding required upon the exercise of Options or
SARs, upon the lapse of restrictions on Restricted Stock and Restricted Stock Units, or upon the
achievement of performance goals related to Performance Shares, or any other taxable event arising
as a result of an Award granted hereunder, Participants may elect, subject to the approval of the
Committee, to satisfy the withholding requirement, in whole or in part, by having the Company
withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the
minimum statutory total tax that could be imposed on the transaction. All such elections shall be
irrevocable, made in writing, and signed by the Participant, and shall be subject to any
restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

Article 21. Successors

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

Article 22. General Provisions

	 	22.1	 	Forfeiture Events.

	 	(a)	 	The Committee may specify in an Award Agreement that the Participant’s
rights, payments, and benefits with respect to an Award shall be subject to
reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain
specified events, in addition to any otherwise applicable vesting or performance
conditions of an Award. Such events may include, but shall not be limited to,
termination of employment for cause, termination of the Participant’s provision of
services to the Company, Affiliate, and/or Subsidiary, violation of material
Company, Affiliate, and/or Subsidiary policies, breach of noncompetition,
confidentiality, or other restrictive covenants that may apply to the Participant,
or other conduct by the

 

 

	 	 	 	Participant that is detrimental to the business or
reputation of the Company, its Affiliates, and/or its Subsidiaries.
	 
	 	(b)	 	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, if the Participant is
one of the individuals subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002, the Participant 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 just occurred) of the financial
document embodying such financial reporting requirement.

     22.2 Legend. The certificates for Shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer of such Shares.

     22.3 Gender and Number. Except where otherwise indicated by the context, any masculine term
used herein also shall include the feminine, the plural shall include the singular, and the
singular shall include the plural.

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

     22.5 Requirements of Law. The granting of Awards and the issuance of Shares under this Plan
shall be subject to all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

     22.6 Delivery of Title. The Company shall have no obligation to issue or deliver evidence of
title for Shares issued under this Plan prior to:

	 	(a)	 	Obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable; and
	 
	 	(b)	 	Completion of any registration or other qualification of the Shares
under any applicable national or foreign law or ruling of any governmental body
that the Company determines to be necessary or advisable.

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

     22.8 Investment Representations. The Committee may require any individual receiving Shares
pursuant to an Award under this Plan to represent and warrant in writing that the individual is

 

 

acquiring the Shares for investment and without any present intention to sell or distribute such
Shares.

     22.9 Employees Based Outside of the United States. Notwithstanding any provision of this Plan
to the contrary, in order to comply with the laws in other countries in which the Company, its
Affiliates, and/or its Subsidiaries operate or have Employees or Directors, the Committee, in its
sole discretion, shall have the power and authority to:

	 	(a)	 	Determine which Affiliates and Subsidiaries shall be covered by this
Plan;
	 
	 	(b)	 	Determine which Employees and/or Directors outside the United States
are eligible to participate in this Plan;
	 
	 	(c)	 	Modify the terms and conditions of any Award granted to Employees
and/or Directors outside the United States to comply with applicable foreign laws;
	 
	 	(d)	 	Establish subplans and modify exercise procedures and other terms and
procedures, to the extent such actions may be necessary or advisable. Any
subplans and modifications to Plan terms and procedures established under this
Section 22.9 by the Committee shall be attached to this Plan document as
appendices; and
	 
	 	(e)	 	Take any action, before or after an Award is made, that it deems
advisable to obtain approval or comply with any necessary local government
regulatory exemptions or approvals.

          Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards
shall be granted, that would violate applicable law.

     22.10 Uncertificated Shares. To the extent that this Plan provides for issuance of
certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a
noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock
exchange.

     22.11 Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to
any investments that the Company, and/or its Subsidiaries, and/or its Affiliates may make to aid it
in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Participant, beneficiary, legal representative,
or any other individual. To the extent that any individual acquires a right to receive payments
from the Company, its Subsidiaries, and/or its Affiliates under this Plan, such right shall be no
greater than the right of an unsecured general creditor of the Company, a Subsidiary, or an
Affiliate, as the case may be. All payments to be made hereunder shall be paid from the general
funds of the Company, a Subsidiary, or an Affiliate, as the case may be and no special or separate
fund shall be established and no segregation of assets shall be made to assure payment of such
amounts except as expressly set forth in this Plan.

 

 

     22.12 No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to this
Plan or any Award. The Committee shall determine whether cash, Awards, or other property shall be
issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto
shall be forfeited or otherwise eliminated.

     22.13 Retirement and Welfare Plans. Neither Awards made under this Plan nor Shares or cash
paid pursuant to such Awards, except pursuant to Covered Employee Annual Incentive Awards, may be
included as “compensation” for purposes of computing the benefits payable to any Participant under
the Company’s or any Subsidiary’s or Affiliate’s retirement plans (both qualified and
non-qualified) or welfare benefit plans unless such other plan expressly provides that such
compensation shall be taken into account in computing a Participant’s benefit.

     22.14 Deferred Compensation. No deferral of compensation (as defined under Code Section 409A
or guidance thereto) is intended under this Plan. Notwithstanding this intent, if any Award would
be considered deferred compensation as defined under Code Section 409A and if this Plan fails to
meet the requirements of Code Section 409A with respect to such Award, then such Award shall be
null and void. However, the Committee may permit deferrals of compensation pursuant to the terms of
a Participant’s Award Agreement, a separate plan or a subplan which meets the requirements of Code
Section 409A and any related guidance. Additionally, to the extent any Award is subject to Code
Section 409A, notwithstanding any provision herein to the contrary, the Plan does not permit the
acceleration of the time or schedule of any distribution related to such Award, except as permitted
by Code Section 409A, the regulations thereunder, and/or the Secretary of the United States
Treasury.

     22.15 Nonexclusivity of this Plan. The adoption of this Plan shall not be construed as
creating any limitations on the power of the Board or Committee to adopt such other compensation
arrangements as it may deem desirable for any Participant.

     22.16 No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (i)
limit, impair, or otherwise affect the Company’s or a Subsidiary’s or an Affiliate’s right or power
to make adjustments, reclassifications, reorganizations, or changes of its capital or business
structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of
its business or assets; or, (ii) limit the right or power of the Company or a Subsidiary or an
Affiliate to take any action which such entity deems to be necessary or appropriate.

     22.17 Governing Law. The Plan and each Award Agreement shall be governed by the laws of the
State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise
refer construction or interpretation of this Plan to the substantive law of another jurisdiction.
Unless otherwise provided in the Award Agreement, recipients of an Award under this Plan are deemed
to submit to the exclusive jurisdiction and venue of the federal or state courts of Delaware, to
resolve any and all issues that may arise out of or relate to this Plan or any related Award
Agreement.

     22.18 Indemnification. Subject to requirements of Delaware law, each individual who is or
shall have been a member of the Board, or a Committee appointed by the Board, or an officer of the
Company to whom authority was delegated in accordance with Article 3, shall be indemnified and held
harmless by the Company against and from any loss, cost, liability, or expense that may be imposed
upon or reasonably incurred by the Participant in connection with or resulting from any

 

 

claim,
action, suit, or proceeding to which the Participant may be a party or in which the Participant may
be involved by reason of any action taken or failure to act under this Plan and against and from
any and all amounts paid by the Participant in settlement thereof, with the Company’s approval, or
paid by the Participant in satisfaction of any judgement in any such action, suit, or proceeding
against the Participant, provided the Participant shall give the Company an opportunity, at its own
expense, to handle and defend the same before the Participant undertakes to handle and defend it on
the Participant’s own behalf, unless such loss, cost, liability, or expense is a result of the
Participant’s own willful misconduct or except as expressly provided by statute.

     The foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such individuals may be entitled under the Company’s Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have
to indemnify them or hold them harmless.

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