Document:

ex10_4.htm

    Exhibit
10.4

     

    Form
of Performance Award for 2008

    

    Performance
Period: January through December 2008

     

    The
Performance Award for 2008 will be based on the attainment of Adjusted EBITDA
(40% of total), Net Sales (40% of total) and Discretionary (20% of
total).

    

    

    Part I: The Adjusted EBITDA
budget of Physicians Formula for 2008 (as approved by the Board of Directors)
according to the following criteria:

    

    Between
80 and 100% of achievement of the Adjusted EBITDA budget, the bonus will be a
straight-line percent between 0 and 20% of your base salary.

    

    Above
achievement of the Adjusted EBITDA budget between 100 and 125%, the bonus amount
will be straight-line between 20 and 40% of your base salary.

    

    

    Part II: The Net Sales budget
of Physicians Formula for 2008 (as approved by the Board of Directors) according
to the following criteria:

    

    Between
80 and 100% of achievement of the Net Sales budget, the bonus will be a
straight-line percent between 0 and 20% of your base salary.

    

    Above
achievement of the Net Sales budget between 100 and 125%, the bonus amount will
be straight-line between 20 and 40% of your base salary.

    
 

    Part III: Discretionary Annual
Performance Award

    

    You will
have an opportunity to earn a target discretionary bonus of 10% of your annual
salary.  The maximum discretionary bonus for the year will be up to
20% of your annual salary.  There will be a discretionary performance
evaluation after December 31, 2008.

    

    Your
performance will be evaluated and measured based on criteria to be determined by
the Compensation Committee.ex10_5.htm

    Exhibit 10.5

     

    PHYSICIANS
FORMULA HOLDINGS, INC.

     

    AMENDED
AND RESTATED

     

    2006 EQUITY INCENTIVE
PLAN

     

    1. Purpose.

     

    This plan
shall be known as the Physicians Formula Holdings, Inc. 2006 Equity Incentive
Plan (the “Plan”).  The purpose of the Plan shall be to promote the
long-term growth and profitability of Physicians Formula Holdings, Inc. (the
“Company”) and its Subsidiaries by (i) providing certain directors, officers and
employees of, and certain other individuals who perform services for, the
Company and its Subsidiaries with incentives to maximize stockholder value and
otherwise contribute to the success of the Company and (ii) enabling the Company
to attract, retain and reward the best available persons for positions of
responsibility.  Grants of incentive or non-qualified stock options,
stock appreciation rights (“SARs”), restricted stock, restricted stock units,
deferred stock units, performance awards, or any combination of the foregoing
may be made under the Plan.

     

    2. Definitions.

     

    (a) “Board of
Directors” and “Board” mean the board of directors of the Company.

     

    (b) “Cause”
means the occurrence of one or more of the following events:

     

    (i) Conviction
of a felony or any crime or offense lesser than a felony involving the property
of the Company or a Subsidiary; or

     

    (ii) Conduct
that has caused demonstrable and serious injury to the Company or a Subsidiary,
monetary or otherwise; or

     

    (iii) Willful
refusal to perform or substantial disregard of duties properly assigned, as
determined by the Company or a Subsidiary, as the case may be; or

     

    (iv) Breach of
duty of loyalty to the Company or a Subsidiary or any act of fraud or dishonesty
with respect to the Company or a Subsidiary.

     

    (c) “Change
in Control” means the occurrence of one of the following events:

     

    (i) if any
“person” or “group” as those terms are used in Sections 13(d) and 14(d) of the
Exchange Act or any successors thereto, other than an Exempt Person, is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act
or any successor thereto), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company’s then
outstanding securities; or

     

    (ii) during
any period of two consecutive years, individuals who at the beginning of such
period constitute the Board and any new directors whose election by the Board or
nomination for election by the Company’s stockholders was approved by at least
two-thirds of the directors then still in office who either were directors at
the beginning of the period or whose election was previously so approved, cease
for any reason to constitute a majority thereof; or

    
      
         

      

      
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    (iii) consummation
of a merger or consolidation of the Company with any other corporation, other
than a merger or consolidation (A) which would result in all or a portion of the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (B) by which the
corporate existence of the Company is not affected and following which the
Company’s chief executive officer and directors retain their positions with the
Company (and constitute at least a majority of the Board); or

     

    (iv) consummation
of a plan of complete liquidation of the Company or a sale or disposition by the
Company of all or substantially all the Company’s assets, other than a sale to
an Exempt Person.

     

    (d) “Code”  means
the Internal Revenue Code of 1986, as amended.

     

    (e) “Committee”
means the Compensation Committee of the Board, which shall consist solely of two
or more members of the Board, and each member of the Committee shall be
(i) a “non-employee director” within the meaning of Rule 16b-3 under
the Exchange Act, unless administration of the Plan by “non-employee directors”
is not then required in order for exemptions under Rule 16b-3 to apply to
transactions under the Plan, (ii) an “outside director” within the meaning
of Section 162(m) of the Code, unless administration of the Plan by
“outside directors” is not then required in order to qualify for tax
deductibility under Section 162(m) of the Code, and (iii) independent,
as defined by the rules of the Nasdaq Stock Market or any national securities
exchange on which any securities of the Company are listed for trading, and if
not listed for trading, by the rules of the Nasdaq Stock Market.

     

    (f) “Common
Stock” means the Common Stock, par value $0.01 per share, of the Company, and
any other shares into which such stock may be changed by reason of a
recapitalization, reorganization, merger, consolidation or any other change in
the corporate structure or capital stock of the Company.

     

    (g) “Competition”
is deemed to occur if a person whose employment with the Company or its
Subsidiaries has terminated obtains a position as a full-time or part-time
employee of, as a member of the board of directors of, or as a consultant or
advisor with or to, or acquires an ownership interest in excess of 5% of, a
corporation, partnership, firm or other entity that engages in any of the
businesses of the Company or any Subsidiary with which the person was involved
in a management role at any time during his or her last five years of employment
with or other service for the Company or any Subsidiaries.

     

    (h) “Disability”
means a disability that would entitle an eligible participant to payment of
monthly disability payments under any Company disability plan or as otherwise
determined by the Committee.

     

    
      
         

      

      
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    (i) “Exchange
Act” means the Securities Exchange Act of 1934, as amended.

     

    (j) “Exempt
Person” means (i) Summit Master Company, LLC, Summit Partners, LLC, Summit
Partners, L.P. or any of their affiliates, (ii) any person, entity or group
under the control of any party included in clause (i), or (iii) any employee
benefit plan of the Company or any Subsidiary or a trustee or other
administrator or fiduciary holding securities under an employee benefit plan of
the Company or any Subsidiary.

     

    (k) “Family
Member” has the meaning given to such term in General Instructions A.1(a)(5) to
Form S-8 under the Securities Act of 1933, as amended, and any successor
thereto.

     

    (l) “Fair
Market Value” of a share of Common Stock of the Company means, as of the date in
question, the officially-quoted closing selling price of the stock (or if no
selling price is quoted, the bid price) on the principal securities exchange on
which the Common Stock is then listed for trading (including for this purpose
the Nasdaq Global Select Market) (the “Market”) for the applicable trading day
or, if the Common Stock is not then listed or quoted in the Market, the Fair
Market Value shall be the fair value of the Common Stock determined in good
faith by the Board; provided, however, that when shares received upon exercise
of an option are immediately sold in the open market, the net sale price
received may be used to determine the Fair Market Value of any shares used to
pay the exercise price or applicable withholding taxes and to compute the
withholding taxes.

     

    (m) “Incentive
Stock Option” means an option conforming to the requirements of Section 422 of
the Code and any successor thereto.

     

    (n) “Non-Employee
Director” has the meaning given to such term in Rule 16b-3 under the Exchange
Act and any successor thereto.

     

    (o) “Non-qualified
Stock Option” means any stock option other than an Incentive Stock
Option.

     

    (p) “Other
Company Securities” mean securities of the Company other than Common Stock,
which may include, without limitation, unbundled stock units or components
thereof, debentures, preferred stock, warrants and securities convertible into
or exchangeable for Common Stock or other property.

     

    (q) “Retirement”
means retirement as defined under any Company pension plan or retirement program
or termination of one’s employment on retirement with the approval of the
Committee.

     

    (r) “Subsidiary”
means a corporation or other entity of which outstanding shares or ownership
interests representing 50% or more of the combined voting power of such
corporation or other entity entitled to elect the management thereof, or such
lesser percentage as may be approved by the Committee, are owned directly or
indirectly by the Company.

     

    
      
         

      

      
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    3. Administration.

     

    The Plan shall be
administered by the Committee; provided that the Board may, in its discretion,
at any time and from time to time, resolve to administer the Plan, in which case
the term “Committee” shall be deemed to mean the Board for all purposes
herein.  Subject to the provisions of the Plan, the Committee shall be
authorized to (i) select persons to participate in the Plan, (ii)
determine the form and substance of grants made under the Plan to each
participant, and the conditions and restrictions, if any, subject to which such
grants will be made, (iii) certify that the conditions and restrictions
applicable to any grant have been met, (iv) modify the terms of grants made
under the Plan, (v) interpret the Plan and grants made thereunder, (vi) make any
adjustments necessary or desirable in connection with grants made under the Plan
to eligible participants located outside the United States and (vii) adopt,
amend, or rescind such rules and regulations, and make such other
determinations, for carrying out the Plan as it may deem
appropriate.  Decisions of the Committee on all matters relating to
the Plan shall be in the Committee’s sole discretion and shall be conclusive and
binding on all parties.  The validity, construction, and effect of the
Plan and any rules and regulations relating to the Plan shall be determined in
accordance with applicable federal and state laws and rules and regulations
promulgated pursuant thereto and the rules and regulations of the principal
securities exchange on which the Common Stock is then listed for
trading.  No member of the Committee and no officer of the Company
shall be liable for any action taken  or omitted to be taken by such
member, by any other member of the Committee or by any officer of the Company in
connection with the performance of duties under the Plan, except for such
person’s own willful misconduct or as expressly provided by
statute.

     

    The
expenses of the Plan shall be borne by the Company.  The Plan shall
not be required to establish any special or separate fund or make any other
segregation of assets to assume the payment of any award under the Plan, and
rights to the payment of such awards shall be no greater than the rights of the
Company’s general creditors.

     

    4. Shares Available for the
Plan.

     

    Subject
to adjustments as provided in Section 16 hereof, an aggregate of nine hundred
thousand (900,000) shares of Common Stock
may be issued pursuant to the Plan, plus an automatic annual increase on the
first day of each of the Company’s fiscal years beginning in 2007 and ending in
2016 equal to the lesser of (i) two percent (2%) of the shares of Common Stock
outstanding on the last day of the immediately preceding fiscal year or (ii)
such lesser number of shares of Common Stock as determined by the Committee
(collectively, the “Shares”).  Notwithstanding the foregoing, the
maximum aggregate number of Shares that may be issued pursuant to Incentive
Stock Options under the Plan shall not exceed two million nine hundred eighty
four thousand three hundred and eighty three (2,984,383) (subject to adjustments
as provided in Section 16 hereof), and such number shall not be subject to
annual adjustment as described in the preceding sentence.

     

    Such
Shares may be in whole or in part authorized and unissued or held by the Company
as treasury shares.  If any grant under the Plan expires or terminates
unexercised, becomes unexercisable or is forfeited as to any Shares, or is
tendered or withheld as to any shares in payment of the exercise price of the
grant or the taxes payable with respect to the exercise, then such unpurchased,
forfeited, tendered or withheld Shares shall thereafter be available for further
grants under the Plan.

    
      
        
           

        

        
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    Without
limiting the generality of the foregoing provisions of this Section 4 or the
generality of the provisions of Sections 3, 6 or 18 or any other section of this
Plan, the Committee may, at any time or from time to time, and on such terms and
conditions (that are consistent with and not in contravention of the other
provisions of this Plan) as the Committee may, in its sole discretion,
determine, enter into agreements (or take other actions with respect to the
options) for new options containing terms (including exercise prices) more (or
less) favorable than the outstanding options.

     

    5. Participation.

     

    Participation
in the Plan shall be limited to those directors (including Non-Employee
Directors), officers (including non-employee officers) and employees of, and
other individuals performing services for, the Company and its Subsidiaries
selected by the Committee (including participants located outside the United
States).  Nothing in the Plan or in any grant thereunder shall confer
any right on a participant to continue in the service or employ as a director or
officer of or in the performance of services for the Company or a Subsidiary or
shall interfere in any way with the right of the Company or a Subsidiary to
terminate the employment or performance of services or to reduce the
compensation or responsibilities of a participant at any time.  By
accepting any award under the Plan, each participant and each person claiming
under or through him or her shall be conclusively deemed to have indicated his
or her acceptance and ratification of, and consent to, any action taken under
the Plan by the Company, the Board or the Committee.

     

    Incentive
Stock Options or Non-qualified Stock Options, SARs, restricted stock awards,
restricted stock unit or deferred stock unit awards, performance awards, or any
combination thereof, may be granted to such persons and for such number of
Shares as the Committee shall determine (such individuals to whom grants are
made being sometimes herein called “optionees” or “grantees,” as the case may
be).  Determinations made by the Committee under the Plan need not be
uniform and may be made selectively among eligible individuals under the Plan,
whether or not such individuals are similarly situated.  A grant of
any type made hereunder in any one year to an eligible participant shall neither
guarantee nor preclude a further grant of that or any other type to such
participant in that year or subsequent years.

     

    6. Incentive and Non-qualified
Options.

     

    The
Committee may from time to time grant to eligible participants Incentive Stock
Options, Non-qualified Stock Options, or any combination thereof; provided that
the Committee may grant Incentive Stock Options only to eligible employees of
the Company or its subsidiaries (as defined for this purpose in Section
422(a)(2) of the Code or any successor thereto).  In any one calendar
year, the Committee shall not grant to any one participant options to purchase a
number of shares of Common Stock in excess of eight hundred thousand (800,000) (as adjusted
pursuant to Section 16 hereof).  The options granted shall take such
form as the Committee shall determine, subject to the following terms and
conditions.

     

    
      
        
           

        

        
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    It is the
Company’s intent that Non-qualified Stock Options granted under the Plan not be
classified as Incentive Stock Options, that Non-qualified Stock Options not give
rise to plan failure income inclusion under Section 409A(a)(1) of the Code, that
Incentive Stock Options be consistent with and contain or be deemed to contain
all provisions required under Section 422 of the Code and any successor thereto,
and that any ambiguities in construction be interpreted in order to effectuate
such intent.  If an Incentive Stock Option granted under the Plan does
not qualify as such for any reason, then to the extent of such
non-qualification, the stock option represented thereby shall be regarded as a
Non-qualified Stock Option duly granted under the Plan, provided that such stock
option otherwise meets the Plan’s requirements for Non-qualified Stock
Options.

     

    (a) Price.  The price per
Share deliverable upon the exercise of each option (“exercise price”) may not be
less than 100% of the Fair Market Value of a share of Common Stock as of the
date of grant of the option, and in the case of the grant of any Incentive Stock
Option to an employee who, at the time of the grant, owns more than 10% of the
total combined voting power of all classes of stock of the Company or any of its
Subsidiaries, the exercise price may not be less than 110% of the Fair Market
Value of a share of Common Stock as of the date of grant of the option, in each
case unless otherwise permitted by Section 422 of the Code or any successor
thereto.

     

    (b) Payment.  Options
may be exercised, in whole or in part, upon payment of the exercise price of the
Shares to be acquired. Unless otherwise determined by the Committee, payment
shall be made (i) in cash (including check, bank draft, money order or wire
transfer of immediately available funds), (ii) by delivery of outstanding shares
of Common Stock with a Fair Market Value on the date of exercise equal to the
aggregate exercise price payable with respect to the options’ exercise, (iii) by
simultaneous sale through a broker reasonably acceptable to the Committee of
Shares acquired on exercise, as permitted under Regulation T of the Federal
Reserve Board or (iv) by any combination of the foregoing.

     

    In the
event a grantee elects to pay the exercise price payable with respect to an
option pursuant to clause (ii) above, (A) only a whole number of share(s) of
Common Stock (and not fractional shares of Common Stock) may be tendered in
payment, (B) such grantee must present evidence acceptable to the Company that
he or she has owned any such shares of Common Stock tendered in payment of the
exercise price (and that such tendered shares of Common Stock have not been
subject to any substantial risk of forfeiture) for at least six months prior to
the date of exercise, and (C) Common Stock must be delivered to the
Company.  Delivery for this purpose may, at the election of the
grantee, be made either by (1) physical delivery of the certificate(s) for all
such shares of Common Stock tendered in payment of the price, accompanied by
duly executed instruments of transfer in a form acceptable to the Company, or
(2) direction to the grantee’s broker to transfer, by book entry, such shares of
Common Stock from a brokerage account of the grantee to a brokerage account
specified by the Company.  When payment of the exercise price is made
by delivery of Common Stock, the difference, if any, between the aggregate
exercise price payable with respect to the option being exercised and the Fair
Market Value of the shares of Common Stock tendered in payment (plus any
applicable taxes) shall be paid in cash.  No grantee may tender shares
of Common Stock having a Fair Market Value exceeding the aggregate exercise
price payable with respect to the option being exercised (plus any applicable
taxes).

     

    
      
         

      

      
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    (c) Terms of
Options.  The term
during which each option may be exercised shall be determined by the Committee,
but if required by the Code and except as otherwise provided herein, no option
shall be exercisable in whole or in part more than ten years from the date it is
granted, and no Incentive Stock Option granted to an employee who at the time of
the grant owns more than 10% of the total combined voting power of all classes
of stock of the Company or any of its Subsidiaries shall be exercisable more
than five years from the date it is granted.  All rights to purchase
Shares pursuant to an option shall, unless sooner terminated, expire at the date
designated by the Committee.  The Committee shall determine the date
on which each option shall become exercisable and may provide that an option
shall become exercisable in installments.  The Shares constituting
each installment may be purchased in whole or in part at any time after such
installment becomes exercisable, subject to such minimum exercise requirements
as may be designated by the Committee.  Prior to the exercise of an
option and delivery of the Shares represented thereby, the optionee shall have
no rights as a stockholder with respect to any Shares covered by such
outstanding option (including any dividend or voting rights).

     

    (d) Limitations on Grants. 
If
required by the Code, the aggregate Fair Market Value (determined as of the
grant date) of Shares for which an Incentive Stock Option is exercisable for the
first time by any individual during any calendar year under all equity incentive
plans of the Company and its Subsidiaries (as defined in Section 422 of the Code
or any successor thereto) may not exceed $100,000.

     

    (e) Termination.

     

    (i) Death or Disability. 
If a
participant ceases to be a director, officer or employee of, or to perform other
services for, the Company or any Subsidiary due to death or Disability, all of
the participant’s options and SARs shall become fully vested and exercisable and
shall remain so for a period of 180 days from the date of such death or
Disability, but in no event after the expiration date of the options and SARs;
provided that the participant does not engage in Competition during such 180-day
period unless he or she received written consent to do so from the Board or the
Committee; provided further that the Board or Committee may extend such exercise
period (and related non-competition period) in its discretion, but in no event
may such extended exercise period extend beyond the expiration date of the
options.  Notwithstanding the foregoing, if the Disability giving rise
to the termination of employment is not within the meaning of Section 22(e)(3)
of the Code or any successor thereto, Incentive Stock Options not exercised by
such participant within 90 days after the date of termination of employment will
cease to qualify as Incentive Stock Options and will be treated as Non-qualified
Stock Options under the Plan if required to be so treated under the
Code.

     

    (ii) Retirement.  If a
participant ceases to be a director, officer or employee of, or to perform other
services for, the Company or any Subsidiary upon the occurrence of his or her
Retirement, (A) all of the participant’s options and SARs that were exercisable
on the date of Retirement shall remain exercisable for, and shall otherwise
terminate at the end of, a period of 90 days after the date of Retirement, but
in no event after the expiration date of the options or SARs; provided that the
participant does not engage in Competition during such 90 day period unless he
or she receives written consent to do so from the Board or the Committee;
provided further that the Board or Committee may extend such exercise period
(and related non-competition period) in its discretion, but in no event may such
extended exercise period extend beyond the expiration date of the options, and
(B) all of the participant’s options and SARs that were not exercisable on the
date of Retirement shall be forfeited immediately upon such Retirement;
provided, however, that such options and SARs may become fully vested and
exercisable in whole or in part in the discretion of the
Committee.  Notwithstanding the foregoing, Incentive Stock Options not
exercised by such participant within 90 days after Retirement will cease to
qualify as Incentive Stock Options and will be treated as Non-qualified Stock
Options under the Plan if required to be so treated under the Code.

     

    
      
         

      

      
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    (iii) Discharge for Cause. 
If a
participant ceases to be a director, officer or employee of, or to perform other
services for, the Company or a Subsidiary due to Cause, all of the participant’s
options and SARs shall expire and be forfeited immediately upon such cessation,
whether or not then exercisable.

     

    (iv) Other Termination. 
Unless
otherwise determined by the Committee, if a participant ceases to be a director,
officer or employee of, or to otherwise perform services for, the Company or a
Subsidiary for any reason other than death, Disability, Retirement or Cause, (A)
all of the participant’s options and SARs that were exercisable on the date of
such cessation shall remain exercisable for, and shall otherwise terminate at
the end of, a period of 30 days after the date of such cessation, but in no
event after the expiration date of the options or SARs; provided that the
participant does not engage in Competition during such 30-day period unless he
or she receives written consent to do so from the Board or the Committee;
provided further that the Board or Committee may extend such exercise period
(and related non-competition period) in its discretion, but in no event may such
extended exercise period extend beyond the expiration date of the options, and
(B) all of the participant’s options and SARs that were not exercisable on the
date of such cessation shall be forfeited immediately upon such
cessation.  Notwithstanding the foregoing, Incentive Stock Options not
exercised within 90 days after termination will cease to qualify as an Incentive
Stock Option and will be treated as a Non-qualified Stock Option under the Plan
if required to be so treated under the Code.

     

    (v) Change in Control. 
If there
is a Change in Control of the Company and a participant is terminated other than
for Cause from being a director, officer or employee of, or from performing
other services for, the Company or a Subsidiary within one year after such
Change in Control, all of the participant’s options and SARs shall become fully
vested and exercisable upon such termination and shall remain so for up to one
year after the date of termination, but in no event after the expiration date of
the options or SARs.  In addition, the Committee shall have the
authority to grant options and SARs that become fully vested and exercisable
automatically upon a Change in Control, whether or not the grantee is
subsequently terminated.  Notwithstanding the foregoing, Incentive
Stock Options not exercised within 90 days after a participant’s termination
will cease to qualify as an Incentive Stock Option and will be treated as a
Non-qualified Stock Option under the Plan if required to be so treated under the
Code.

     

    (f) Forfeiture.  If a
participant exercises any of his or her options and SARs and, within one year
thereafter, either (i) is terminated from the Company or a Subsidiary for any of
the reasons specified in the definition of “Cause” set forth in Section 2(b), or
(ii) engages in Competition without having received written consent to do so
from the Board or the Committee, then the participant may, in the discretion of
the Committee, be required to pay the Company the gain represented by the
difference between the aggregate selling price of the Shares acquired upon the
exercise of options or SARs (or, if the Shares were not then sold, their
aggregate Fair Market Value on the date of exercise) and the aggregate exercise
price of the options or SARs exercised (the “Option Gain”), without regard to
any subsequent increase or decrease in the Fair Market Value of the Common
Stock.  In addition, the Company may, in its discretion, deduct from
any payment of any kind (including salary or bonus) otherwise due to any such
participant an amount equal to the Option Gain.

    
      
        
           

        

        
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    (g) Grant of Reload Options. 
The
Committee may provide (either at the time of grant or exercise of an option), in
its discretion, for the grant to a grantee who exercises all or any portion of
an option  (“Exercised Options”) and who pays all or part of such
exercise price with shares of Common Stock, of an additional option (a “Reload
Option”) for a number of shares of Common Stock equal to the sum (the “Reload
Number”) of the number of shares of Common Stock tendered for the Exercised
Options plus, if so provided by the Committee, the number of shares of Common
Stock, if any, tendered by the grantee in connection with the exercise of the
Exercised Options to satisfy any federal, state or local tax withholding
requirements.  The terms of each Reload Option, including the date of
its expiration and the terms and conditions of its exercisability and
transferability, shall be the same as the terms of the Exercised Option to which
it relates, except that (i) the grant date for each Reload Option shall be the
date of exercise of the Exercised Option to which it relates and (ii) the
exercise price for each Reload Option shall be the Fair Market Value of the
Common Stock on the grant date of the Reload Option.

     

    7. Stock Appreciation
Rights.

     

    The
Committee shall have the authority to grant SARs under this
Plan.  SARs shall be subject to such terms and conditions as the
Committee may specify; provided that (1) the exercise price of an SAR may never
be less than the Fair Market Value of the Shares subject to the SAR on the date
the SAR is granted, (2) the Shares are traded on an established securities
market, and (3) no SAR may include any feature for the deferral of
compensation other than the deferral of recognition of income until the exercise
of the SAR.

     

    Prior to
the exercise of the SAR, the participant shall have no rights as a stockholder
with respect to Shares covered by such outstanding SAR (including any dividend
or voting rights).

     

    Upon the
exercise of an SAR, the participant shall be entitled to a distribution in an
amount equal to (A) the difference between the Fair Market Value of a share
of Common Stock on the date of exercise and the exercise price of the SAR
multiplied by (B) the number of Shares as to which the SAR is
exercised.

     

    All SARs
will be exercised automatically on the last day prior to the expiration date of
the SAR so long as the Fair Market Value of a share of Common Stock on that date
exceeds the exercise price of the SAR.

     

    8. Restricted
Stock.

     

          The Committee may at any time and from
time to time grant Shares of restricted stock under the Plan to such
participants and in such amounts as it determines.  Each grant of
Shares of restricted stock shall specify the applicable restrictions on such
Shares, the duration of such restrictions (which shall be at least six months
except as otherwise determined by the Committee or provided in the third
paragraph of this Section 8), and the time or times at which such restrictions
shall lapse with respect to all or a specified number of Shares that are part of
the grant.

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    The
participant will be required to pay the Company the aggregate par value of any
Shares of restricted stock (or such larger amount as the Board may determine to
constitute capital under Section 154 of the Delaware General Corporation Law, as
amended, or any successor thereto) within ten days of the date of grant, unless
such Shares of restricted stock are treasury shares.  Unless otherwise
determined by the Committee, certificates representing Shares of restricted
stock granted under the Plan will be held in escrow by the Company on the
participant’s behalf during any period of restriction thereon and will bear an
appropriate legend specifying the applicable restrictions thereon, and the
participant will be required to execute a blank stock power
therefor.  Except as otherwise provided by the Committee, during such
period of restriction the participant shall have all of the rights of a holder
of Common Stock, including but not limited to the rights to receive dividends
(so long as such dividends are paid by March 15 of the year following the year
in which the participant’s right to receive the dividend vests) and to vote, and
any stock or other securities received as a distribution with respect to such
participant’s restricted stock shall be subject to the same restrictions as then
in effect for the restricted stock.

     

    Except as
otherwise provided by the Committee, if a participant ceases to be a director,
officer or employee of, or to otherwise perform services for, the Company and
its Subsidiaries due to death, Disability or Retirement during any period of
restriction, all restrictions on Shares of restricted stock granted to such
participant shall lapse.  At such time as a participant ceases to be a
director, officer or employee of, or otherwise performing services for, the
Company or its Subsidiaries for any other reason, all Shares of restricted stock
granted to such participant on which the restrictions have not lapsed shall be
immediately forfeited to the Company.

     

    If there
is a Change in Control of the Company and a participant is terminated other than
for Cause from being a director, officer or employee of, or from performing
other services for, the Company or a subsidiary within one year after such
Change in Control, all restrictions on Shares of restricted stock granted to
such participant shall lapse.  In addition, the Committee shall have
the authority to grant shares of restricted stock with respect to which all
restrictions shall lapse automatically upon a Change in Control, whether or not
the grantee is subsequently terminated.

     

    9. Restricted Stock Units;
Deferred Stock Units.

     

    The
Committee may at any time and from time to time grant restricted stock units
under the Plan to such participants and in such amounts as it
determines.  Each grant of restricted stock units shall specify the
applicable restrictions on such units, the duration of such restrictions (which
shall be at least six months except as otherwise determined by the Committee or
provided in the third paragraph of this Section 9), and the time or times at
which such restrictions shall lapse with respect to all or a specified number of
units that are part of the grant.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    Each
restricted stock unit shall be equivalent in value to one share of Common Stock
and shall entitle the participant to receive from the Company at the end of the
vesting period (the “Vesting Period”) applicable to such unit one Share, unless
the participant elects in a timely fashion to defer the receipt of such Shares,
as provided below.  Restricted stock units may be granted without
payment of cash or consideration to the Company; provided that participants
shall be required to pay to the Company the aggregate par value of the Shares
received from the Company within ten days of the issuance of such Shares unless
such Shares are treasury shares.

     

    Except as
otherwise provided by the Committee, during the Vesting Period the participant
shall not have any rights as a shareholder of the Company; provided that the
participant shall have the right to receive accumulated dividends (so long as
such dividends are paid by March 15 of the year following the year in which the
participant’s right to receive the dividend vests) or distributions with respect
to the corresponding number of shares of Common Stock underlying each restricted
stock unit at the end of the Vesting Period, unless such restricted stock units
are converted into deferred stock units, in which case such accumulated
dividends or distributions shall be paid by the Company to the participant at
such time as the deferred stock units are converted into Shares.

     

    Except as
otherwise provided by the Committee, if a participant ceases to be a director,
officer or employee of, or to otherwise perform services for, the Company or any
Subsidiary due to death, Disability or Retirement during any Vesting Period, all
restrictions on restricted stock units granted to such participant shall lapse
and the participant shall then be entitled to receive payment in Shares with
respect to the applicable restricted stock units.  At such time as a
participant ceases to be a director, officer or employee of, or otherwise
performing services for, the Company or any Subsidiary for any other reason, all
restricted stock units granted to such participant on which the restrictions
have not lapsed shall be immediately forfeited to the Company.

     

    If there
is a Change in Control of the Company and a participant is terminated other than
for Cause from being a director, officer or employee of, or from performing
other services for, the Company or any Subsidiary within one year after such
Change in Control, all restrictions on restricted stock units granted to such
participant shall lapse.  In addition, the Committee shall have the
authority to grant restricted stock units with respect to which all restrictions
shall lapse automatically upon a Change in Control, whether or not the grantee
is subsequently terminated.

     

    A
participant may elect by written notice to the Company, which notice must be
made before the later of (i) the close of the tax year preceding the year in
which the restricted stock units are granted or (ii) 30 days of first becoming
eligible to participate in the Plan (or, if earlier, the last day of the tax
year in which the participant first becomes eligible to participate in the plan)
and on or prior to the date the restricted stock units are granted, to defer the
receipt of all or a portion of the Shares due with respect to the vesting of
such restricted stock units; provided that the Committee may impose such
additional restrictions with respect to the time at which a participant may
elect to defer receipt of Shares subject to the deferral election, and any other
terms with respect to a grant of restricted stock units to the extent the
Committee deems necessary to enable the participant to defer recognition of
income with respect to such units until the Shares underlying such units are
issued or distributed to the participant.  Upon such deferral, the
restricted stock units so deferred shall be converted into deferred stock
units.  Except as provided below, delivery of Shares with respect to
deferred stock units shall be made at the end of the deferral period set forth
in the participant’s deferral election notice (the “Deferral
Period”).  Deferral Periods shall be no less than one year after the
vesting date of the applicable restricted stock units.

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    Except as
otherwise provided by the Committee, during such Deferral Period the participant
shall not have any rights as a shareholder of the Company; provided that, the
participant shall have the right to receive accumulated dividends or
distributions with respect to the corresponding number of shares of Common Stock
underlying each deferred stock unit at the end of the Deferral Period when such
deferred stock units are converted into Shares.

     

    Except as
otherwise provided by the Committee, if a participant ceases to be a director,
officer or employee of, or to otherwise perform services for, the Company or any
Subsidiary upon his or her death prior to the end of the Deferral Period, the
participant shall receive payment in Shares in respect of such participant’s
deferred stock units which would have matured or been earned at the end of such
Deferral Period as if the applicable Deferral Period had ended as of the date of
such participant’s death.

     

    Except as
otherwise provided by the Committee, if a participant ceases to be a director,
officer or employee of, or to otherwise perform services for, the Company or any
Subsidiary upon becoming disabled (as defined under Section 409A(a)(2)(C) of the
Code) or Retirement or for any other reason except termination for Cause prior
to the end of the Deferral Period, the participant shall receive payment in
Shares in respect of such participant’s deferred stock units at the end of the
applicable Deferral Period or on such accelerated basis as the Committee may
determine, to the extent permitted by regulations issued under Section
409A(a)(3) of the Code.

     

    Except as
otherwise provided by the Committee, if a participant ceases to be a director,
officer or employee of, or to otherwise perform services for, the Company or any
Subsidiary due to termination for Cause such participant shall immediately
forfeit any deferred stock units which would have matured or been earned at the
end of the applicable Deferral Period.

     

    Except as
otherwise provided by the Committee, in the event of a Change in Control that
also constitutes a “change in the ownership or effective control of” the
Company, or a change in the ownership of a substantial portion of the Company’s
assets (in each case as determined under regulations issued pursuant to Section
409A(a)(2)(A)(v) of the Code), a participant shall receive payment in Shares in
respect of such participant’s deferred stock units which would have matured or
been earned at the end of the applicable Deferral Period as if such Deferral
Period had ended immediately prior to the Change in Control; provided, however,
that if an event that constitutes a Change in Control hereunder does not
constitute a “change in control” under Section 409A of the Code (or the
regulations promulgated thereunder), no payments with respect to the deferred
stock units shall be made under this paragraph to the extent such payments would
constitute an impermissible acceleration under Section 409A of the
Code.

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

     

    10. Performance
Awards.

     

    Performance
awards may be granted to participants at any time and from time to time as
determined by the Committee.  The Committee shall have complete
discretion in determining the size and composition of performance awards granted
to a participant.  The period over which performance is to be measured
(a “performance cycle”) shall commence on the date specified by the Committee
and shall end on the last day of a fiscal year specified by the
Committee.  Each performance award shall be paid no later than the
15th day of the third month immediately following the end of the first calendar
year in which all of the conditions necessary to entitle the applicable
participant to payment of such performance award have been satisfied, provided that, if paying a performance
award within such time frame would (i) be administratively impracticable due to
events not foreseeable at the time the performance award was granted, or (ii)
jeopardize the Company's ability to continue as a going concern, then the
Company may delay payment of such performance award until the earliest time that
payment would (i) not be administratively impracticable, or (ii) jeopardize the
Company's ability to continue as a going concern.  Such
payment terms are intended to cause performance awards to satisfy the
requirements for “short-term deferrals” set forth in Section 1.409A-1(b)(4) of
the United States Treasury Regulations, and shall be interpreted and applied in
a manner consistent with such intention.  Performance awards may
include (i) specific dollar-value target awards, (ii) performance units, the
value of each such unit being determined by the Committee at the time of
issuance, and/or (iii) performance Shares, the value of each such Share being
equal to the Fair Market Value of a share of Common Stock.

     

    The value
of each performance award may be fixed or it may be permitted to fluctuate based
on a performance factor (e.g., return on equity) selected by the
Committee.

     

    The
Committee shall establish performance goals and objectives for each performance
cycle on the basis of such criteria and objectives as the Committee may select
from time to time, including, without limitation, the performance of the
participant, the Company, one or more of its Subsidiaries or divisions or any
combination of the foregoing.  During any performance cycle, the
Committee shall have the authority to adjust the performance goals and
objectives for such cycle for such reasons as it deems equitable.

     

    The
Committee shall determine the portion of each performance award that is earned
by a participant on the basis of the Company’s performance over the performance
cycle in relation to the performance goals for such cycle. The earned portion of
a performance award may be paid out in Shares, cash, Other Company Securities,
or any combination thereof, as the Committee may determine.

     

    Except as otherwise determined by the Committee with
respect to cash awards, a participant must be a
director, officer or employee of, or otherwise perform services for, the Company
or its Subsidiaries at the end of the performance cycle in order to be entitled
to payment of a performance award issued in respect of such cycle; provided,
however, that except as otherwise determined by the Committee, if a participant
ceases to be a director, officer or employee of, or to otherwise perform
services for, the Company and its Subsidiaries upon his or her death,
Retirement, or Disability prior to the end of the performance cycle, the
participant shall earn a proportionate portion of the performance award based
upon the elapsed portion of the performance cycle and the Company’s performance
over that portion of such cycle.

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

     

    In the
event of a Change in Control, a participant shall earn no less than the portion
of the performance award that the participant would have earned if the
applicable performance cycle(s) had terminated as of the date of the Change in
Control.

     

    11. Withholding
Taxes.

     

    (a) Participant Election. 
Unless
otherwise determined by the Committee, a participant may elect to deliver shares
of Common Stock (or have the Company withhold shares acquired upon exercise of
an option or SAR or deliverable upon grant or vesting of restricted stock, as
the case may be) to satisfy, in whole or in part, the amount the Company is
required to withhold for taxes in connection with the exercise of an option or
SAR or the delivery of restricted stock upon grant or vesting, as the case may
be.  Such election must be made on or before the date the amount of
tax to be withheld is determined.  Once made, the election shall be
irrevocable.  The fair market value of the shares to be withheld or
delivered will be the Fair Market Value as of the date the amount of tax to be
withheld is determined. In the event a participant elects to deliver or have the
Company withhold shares of Common Stock pursuant to this Section 11(a), such
delivery or withholding must be made subject to the conditions and pursuant to
the procedures set forth in Section 6(b) with respect to the delivery or
withholding of Common Stock in payment of the exercise price of
options.

     

    (b) Company Requirement. 
The
Company may require, as a condition to any grant or exercise under the Plan or
to the delivery of certificates for Shares issued hereunder, that the grantee
make provision for the payment to the Company, either pursuant to Section 11(a)
or this Section 11(b), of federal, state or local taxes of any kind required by
law to be withheld with respect to any grant or delivery of
Shares.  The Company, to the extent permitted or required by law,
shall have the right to deduct from any payment of any kind (including salary or
bonus) otherwise due to a grantee, an amount equal to any federal, state or
local taxes of any kind required by law to be withheld with respect to any grant
or delivery of Shares under the Plan.

     

    12. Written Agreement;
Vesting.

     

    Unless
the Committee determines otherwise, each participant to whom a grant is made
under the Plan shall enter into a written agreement with the Company that shall
contain such provisions, including without limitation vesting requirements,
consistent with the provisions of the Plan, as may be approved by the
Committee.  Unless the Committee determines otherwise and except as
otherwise provided in Sections 6, 7, 8, 9 and 10 in connection with a Change in
Control or certain occurrences of termination, no grant under this Plan may be
exercised, and no restrictions relating thereto may lapse, within six months of
the date such grant is made.

     

    13. Transferability.

     

    Unless
the Committee determines otherwise, no award granted under the Plan shall be
transferable by a participant other than by will or the laws of descent and
distribution or to a participant’s Family Member by gift or a qualified domestic
relations order as defined by the Code.  Unless the Committee
determines otherwise, an option or SAR may be exercised only by the optionee or
grantee thereof; by his or her Family Member if such person has acquired the
option or SAR by gift or qualified domestic relations order; by the executor or
administrator of the estate of any of the foregoing or any person to whom the
option or SAR is transferred by will or the laws of descent and distribution; or
by the guardian or legal representative of any of the foregoing; provided that
Incentive Stock Options may be exercised by any Family Member, guardian or legal
representative only if permitted by the Code and any regulations
thereunder.  All provisions of this Plan shall in any event continue
to apply to any award granted under the Plan and transferred as permitted by
this Section 13, and any transferee of any such award shall be bound by all
provisions of this Plan as and to the same extent as the applicable original
grantee.

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

     

    14. Listing, Registration and
Qualification.

     

    If the
Committee determines that the listing, registration or qualification upon any
securities exchange or under any law of Shares subject to any option, SAR,
performance award, restricted stock unit, deferred stock unit or restricted
stock grant is necessary or desirable as a condition of, or in connection with,
the granting of same or the issue or purchase of Shares thereunder, no such
option or SAR may be exercised in whole or in part, no such performance award
may be paid out, and no Shares may be issued, unless such listing, registration
or qualification is effected free of any conditions not acceptable to the
Committee.

     

    15. Transfer of
Employee.

     

    The
transfer of an employee from the Company to a Subsidiary, from a Subsidiary to
the Company, or from one Subsidiary to another shall not be considered a
termination of employment; nor shall it be considered a termination of
employment if an employee is placed on military or sick leave or such other
leave of absence which is considered by the Committee as continuing intact the
employment relationship.

     

    16. Adjustments.

     

    In the
event of a reorganization, recapitalization, stock split, stock dividend,
combination of Shares, merger, consolidation, distribution of assets, or any
other change in the corporate structure or shares of the Company, the Committee
shall make such adjustment as it deems appropriate in the number and kind of
Shares or other property available for issuance under the Plan (including,
without limitation, the total number of Shares available for issuance under the
Plan pursuant to Section 4), in the number and kind of options, SARs, Shares,
restricted stock units, deferred stock units or other property covered by grants
previously made under the Plan, and in the exercise price of outstanding options
or SARS; provided, however, that the Committee shall not be required to make any
adjustment that would (i) require the inclusion of any compensation deferred
pursuant to provisions of the Plan (or an award thereunder) in a participant's
gross income pursuant to Section 409A of the Code and the regulations issued
thereunder from time to time and/or (ii) cause any award made pursuant to the
Plan to be treated as providing for the deferral of compensation pursuant to
such Code section and regulations.  Any such adjustment shall be
final, conclusive and binding for all purposes of the Plan.  In the
event of any merger, consolidation or other reorganization in which the Company
is not the surviving or continuing corporation or in which a Change in Control
is to occur, all of the Company’s obligations regarding awards that were granted
hereunder and that are outstanding on the date of such event shall, on such
terms as may be approved by the Committee prior to such event, be (a) canceled
in exchange for cash or other property (but, with respect to vested deferred
stock units, only if such merger, consolidation, other reorganization, or Change
in Control constitutes a “change in ownership or control” of the Company or a
“change in the ownership of a substantial portion” of the Company’s assets, as
determined pursuant to regulations issued under Section 409A(a)(2)(A)(v) of the
Code) or (b) assumed by the surviving or continuing
corporation.

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

     

    Without
limitation of the foregoing, in connection with any transaction of the type
specified by clause (iii) of the definition of a Change in Control in Section
2(c) that also constitutes a “change in ownership or control” of the Company or
a “change in the ownership of a substantial portion” of the Company’s assets, as
determined pursuant to regulations issued under Section 409A(a)(2)(A)(v) of the
Code, the Committee may, in its discretion, (i) cancel any or all outstanding
options under the Plan in consideration for payment to the holders thereof of an
amount equal to the portion of the consideration that would have  been
payable to such holders pursuant to such transaction if their options had been
fully exercised immediately prior to such transaction, less the aggregate
exercise price that would have been payable therefor, or (ii) if the amount that
would have been payable to the option holders pursuant to such transaction if
their options had been fully exercised immediately prior thereto would be equal
to or less than the aggregate exercise price that would have been payable
therefor, cancel any or all such options for no consideration or payment of any
kind.  Payment of any amount payable pursuant to the preceding
sentence may be made in cash or, in the event that the consideration to be
received in such transaction includes securities or other property, in cash
and/or securities or other property in the Committee’s discretion.

     

    17. Amendment and Termination of
the Plan.

     

    The Board
of Directors or the Committee, without approval of the stockholders, may amend
or terminate the Plan, except that no amendment shall become effective without
prior approval of the stockholders of the Company if stockholder approval would
be required by applicable law or regulations or by any listing requirement of
the principal stock exchange on which the Common Stock is then
listed.

     

    Notwithstanding
any other provisions of the Plan, and in addition to the powers of amendment set
forth in this Section 17 and Section 18 hereof or otherwise, the provisions
hereof and the provisions of any award made hereunder may be amended
unilaterally by the Committee from time to time to the extent necessary (and
only to the extent necessary) to prevent the implementation, application or
existence (as the case may be) of any such provision from (i) requiring the
inclusion of any compensation deferred pursuant to the provisions of the Plan
(or an award thereunder) in a participant's gross income pursuant to Section
409A of the Code, and the regulations issued thereunder from time to time and/or
(ii) inadvertently causing any award hereunder to be treated as providing for
the deferral of compensation pursuant to such Code section and
regulations.

    
      
        
           

        

        
          -16-

          
            

          

        

        
           

        

      

    

    
18. Amendment or Substitution of Awards under the
Plan.

     

    The terms
of any outstanding award under the Plan may be amended from time to time by the
Committee in its discretion in any manner that it deems appropriate, including,
but not limited to, acceleration of the date of exercise of any award and/or
payments thereunder or of the date of lapse of restrictions on Shares (but only
to the extent permitted by regulations issued under Section 409A(a)(3) of the
Code); provided that, except as otherwise provided in Section 16, no such
amendment shall adversely affect in a material manner any right of a participant
under the award without his or her written consent, and provided further that
the Committee shall not reduce the exercise price of any options or SARs awarded
under the Plan without approval of the stockholders of the
Company.  The Committee may, in its discretion, permit holders of
awards under the Plan to surrender outstanding awards in order to exercise or
realize rights under other awards, or in exchange for the grant of new awards,
or require holders of awards to surrender outstanding awards as a condition
precedent to the grant of new awards under the Plan, but only if such surrender,
exercise, realization, exchange, or grant (a) would not constitute a
distribution of deferred compensation for purposes of Section 409A(a)(3) of the
Code or (b) constitutes a distribution of deferred compensation that is
permitted under regulations issued pursuant to Section 409A(a)(3) of the
Code.

     

    19. Commencement Date;
Termination Date.

     

    The date
of commencement of the Plan shall be the date on which the Company’s
Registration Statement on Form S-1 (File No. 333-136913) is declared effective
by the Securities and Exchange Commission.  If required by the Code,
the Plan will also be subject to reapproval by the shareholders of the Company
prior to the time required under the Code.

     

    Unless
previously terminated upon the adoption of a resolution of the Board terminating
the Plan, the Plan shall terminate at the close of business on the ten year
anniversary of the date on which the Company’s Registration Statement on Form
S-1 (File No. 333-136913) is declared effective by the Securities and Exchange
Commission.  No termination of the Plan shall materially and adversely
affect any of the rights or obligations of any person, without his or her
written consent, under any grant of options or other incentives theretofore
granted under the Plan.

     

    20. Severability.

     

            Whenever
possible, each provision of the Plan shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of the Plan is
held to be prohibited by or invalid under applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of the Plan.

     

    21. Governing
Law.

     

            The
Plan shall be governed by the corporate laws of the State of Delaware, without
giving effect to any choice of law provisions that might otherwise refer
construction or interpretation of the Plan to the substantive law of another
jurisdiction.

     

     

     -17-

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