Document:

exv10w16

Exhibit 10.16

PRIMO WATER CORPORATION

2010 OMNIBUS LONG-TERM INCENTIVE PLAN

     Primo Water Corporation, a Delaware corporation (the “Company”), sets forth herein the terms
of its Omnibus Long-Term Incentive Plan (the “Plan”), as follows:

1. PURPOSE

     The Plan is intended to enhance the Company’s and its Affiliates’ (as defined herein) ability
to attract and retain highly qualified officers, non-employee members of the Board, key employees,
consultants and advisors, and to motivate such officers, non-employee members of the Board, key
employees, consultants and advisors to serve the Company and its Affiliates and to expend maximum
effort to improve the business results and earnings of the Company, by providing to such persons an
opportunity to acquire or increase a direct proprietary interest in the operations and future
success of the Company. To this end, the Plan provides for the grant of stock options, stock
appreciation rights, restricted stock, restricted stock units, unrestricted stock, other
stock-based awards and cash awards. Any of these awards may, but need not, be made as performance
incentives to reward attainment of performance goals in accordance with the terms hereof. Stock
options granted under the Plan may be non-qualified stock options or incentive stock options, as
provided herein.

2. DEFINITIONS

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

     2.1. “Affiliate” means any company or other trade or business that “controls,” is
“controlled by” or is “under common control” with the Company within the meaning of Rule
405 of Regulation C under the Securities Act, including, without limitation, any
Subsidiary.

     2.2. “Award” means a grant of an Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit, other Stock-based Award or cash award under the Plan.

     2.3. “Award Agreement” means a written agreement between the Company and a Grantee,
or notice from the Company or an Affiliate to a Grantee that evidences and sets out the
terms and conditions of an Award.

     2.4. “Board” means the Board of Directors of the Company.

     2.5. “Cause” shall be defined as hat term is defined in a Grantee’s offer letter or
other applicable employment agreement; or, if there is no such definition “Cause” means,
as determined by the Company and unless otherwise provided in an applicable

 

Award Agreement with the Company or an Affiliate: (i) engaging in any act, or failing
to act, or misconduct that in any such case is injurious to the Company or its Affiliates;
(ii) gross negligence or willful misconduct in connection with the performance of duties;
(iii) conviction of (or entering a plea of guilty or nolo contendere to) a criminal
offense (other than a minor traffic offense); (iv) fraud, embezzlement or misappropriation
of funds or property of the Company or an Affiliate; (v) material breach of any term of
any employment, consulting or other services, confidentiality, intellectual property or
non-competition agreement, if any, between the Service Provider and the Company or an
Affiliate; (vi) the entry of an order duly issued by any regulatory agency (including
federal, state and local regulatory agencies and self-regulatory bodies) having
jurisdiction over the Company or an Affiliate requiring the removal from any office held
by the Service Provider with the Company or prohibiting or materially limiting a Service
Provider from participating in the business or affairs of the Company or any Affiliate; or
(vii) the revocation or threatened revocation of any of the Company’s or any Affiliate’s
government licenses, permits or approvals, which is primarily due to the Service
Provider’s action or inaction and such revocation or threatened revocation would be
alleviated or mitigated in any material respect by the termination of the Service
Provider’s Services.

     2.6. “Change in Control” shall have the meaning set forth in Section 15.2.

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

     2.8. “Committee” means the Compensation Committee of the Board, or such other
committee as determined by the Board. The Compensation Committee of the Board may, in its
discretion, designate a subcommittee of its members to serve as the Committee (to the
extent the Board has not designated another person, committee or entity as the Committee).
Following the Company’s initial public offering, (i) the Board will cause the Committee
to satisfy the applicable requirements of any stock exchange on which the Common Stock may
then be listed; (ii) for purposes of Awards to Covered Employees intended to constitute
Performance Awards, to the extent required by Code Section 162(m), Committee means all of
the members of the Compensation Committee who are “outside directors” within the meaning
of Section 162(m) of the Code; and (iii) for purposes of Awards to Grantees who are
subject to Section 16 of the Exchange Act, Committee means all of the members of the
Compensation Committee who are “non-employee directors” within the meaning of Rule 16b-3
adopted under the Exchange Act.

     2.9. “Company” means Primo Water Corporation, a Delaware corporation, or any
successor corporation.

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     2.10. “Common Stock” or “Stock” means a share of common stock of the Company, par
value $.001 per share.

     2.11. “Covered Employee” means a Grantee who is a “covered employee” within the
meaning of Section 162(m)(3) of the Code as qualified by Section 12.4 herein.

     2.12. “Disability” means as determined by the Company and unless otherwise provided
in an applicable Award Agreement with the Company or an Affiliate, the Grantee is unable
to perform each of the essential duties of such Grantee’s position by reason of a
medically determinable physical or mental impairment which is potentially permanent in
character or which can be expected to last for a continuous period of not less than 12
months; provided, however, that, with respect to rules regarding
expiration of an Incentive Stock Option following termination of the Grantee’s Service,
“Disability” means “permanent and total disability” as set forth in Section 22(e)(3) of
the Code.

     2.13.
“Effective Date” means April 22, 2010.

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

     2.15. “Fair Market Value” of a share of Common Stock as of a particular date shall
mean (1) if the Common Stock is listed on a national securities exchange, the closing or
last price of the Common Stock on the composite tape or other comparable reporting system
for the applicable date, or if the applicable date is not a trading day, the trading day
immediately preceding the applicable date, or (2) if the shares of Common Stock are not
then listed on a national securities exchange, or the value of such shares is not
otherwise determinable, such value as determined by the Board in good faith in its sole
discretion (but in any event not less than fair market value within the meaning of Section
409A); notwithstanding the foregoing, the Fair Market Value of a share of Common Stock for
purposes of determining Awards with a Grant Date as of the Company’s initial public
offering shall be the price per share of Common Stock set in the final prospectus for such
initial public offering.

     2.16. “Family Member” means a person who is a spouse, former spouse, child,
stepchild, grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother, sister, brother-in-law, or
sister-in-law, including adoptive relationships, of the applicable individual, any person
sharing the applicable individual’s household (other than a tenant or employee), a trust
in which any one or more of these persons have more than fifty percent of the beneficial
interest, a foundation in which any one or more of these persons (or the applicable
individual)

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control the management of assets, and any other entity in which one or more of these
persons (or the applicable individual) own more than fifty percent of the voting
interests.

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

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

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

     2.20. “Initial Public Offering” shall mean the initial public offering of shares of
Common Stock pursuant to a registration statement (other than a Form S-8 or successor
forms) filed with, and declared effective by, the Securities and Exchange Commission.

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

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

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

     2.24. “Outside Director” means a member of the Board who is not an officer or
employee of the Company or an Affiliate, determined in accordance with the requirements of
Section 162(m) of the Code.

     2.25. “Performance Award” means an Award made subject to the attainment of
performance goals (as described in Section 12) over a performance period of from one (1)
to five (5) years.

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     2.26. “Plan” means this Primo Water Corporation 2010 Omnibus Long-Term Incentive
Plan.

     2.27. “Purchase Price” means the purchase price for each share of Stock pursuant to a
grant of Restricted Stock.

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

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

     2.30. “Restricted Stock Unit” means a bookkeeping entry representing the equivalent
of shares of Stock, awarded to a Grantee pursuant to Section 10 hereof.

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

     2.32. “SEC” means the United States Securities and Exchange Commission.

     2.33. “Section 409A” shall mean Section 409A of the Code and all formal guidance and
regulations promulgated thereunder.

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

     2.35. “Separation from Service” means a termination of Service by a Service Provider,
as determined by the Board, which determination shall be final, binding and conclusive;
provided if any Award governed by Section 409A is to be distributed on a Separation from
Service, then the definition of Separation from Service for such purposes shall comply
with the definition provided in Section 409A.

     2.36. “Service” means service as a Service Provider to the Company or an Affiliate.
Unless otherwise stated in the applicable Award Agreement, a Grantee’s change in position
or duties shall not result in interrupted or terminated Service, so long as such Grantee
continues to be a Service Provider to the Company or an Affiliate.

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     2.37. “Service Provider” means an employee, officer, non-employee member of the
Board, consultant or advisor of the Company or an Affiliate.

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

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

     2.40. “Substitute Award” means any Award granted in assumption of or in substitution
for an award of a company or business acquired by the Company or a Subsidiary or with
which the Company or an Affiliate combines, shares issued or issuable.

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

     2.42. “Termination Date” means the date that is ten (10) years after the Effective
Date, unless the Plan is earlier terminated by the Board under Section 5.2 hereof.

     2.43. “Transaction” shall have the meaning set forth in Section 15.2.

     2.44. “Transition Period” means the period beginning with the consummation of an
Initial Public Offering and ending as of the earlier of (i) the date of the first annual
meeting of shareholders of the Company at which directors are to be elected that occurs
after the close of the third calendar year following the calendar year in which the
Initial Public Offering occurs and (ii) the expiration of the “reliance period” under
Treasury Regulation Section 1.162-27(f)(2).

3. ADMINISTRATION OF THE PLAN

     3.1. General.

     The Board shall have such powers and authorities related to the administration of the Plan as
are consistent with the Company’s certificate of incorporation and bylaws and applicable law. The
Board shall have the power and authority to delegate its responsibilities hereunder to the
Committee, which shall have full authority to act in accordance with its charter, and with respect

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to the authority of the Board to act hereunder, all references to the Board shall be deemed to
include a reference to the Committee, to the extent such power or responsibilities have been
delegated. Except as specifically provided in Section 14 or as otherwise may be required by
applicable law, regulatory requirement or the certificate of incorporation or the bylaws of the
Company, the Board shall have full power and authority to take all actions and to make all
determinations required or provided for under the Plan, any Award or any Award Agreement, and shall
have full power and authority to take all such other actions and make all such other determinations
not inconsistent with the specific terms and provisions of the Plan that the Board deems to be
necessary or appropriate to the administration of the Plan. Following the Company’s initial public
offering, the Committee shall administer the Plan; provided that, the Board shall retain the right
to exercise the authority of the Committee to the extent consistent with applicable law and the
applicable requirements of any securities exchange on which the Common Stock may then be listed.
The interpretation and construction by the Board of any provision of the Plan, any Award or any
Award Agreement shall be final, binding and conclusive. Without limitation, the Board shall have
full and final authority, subject to the other terms and conditions of the Plan, to:

     (i) designate Grantees;

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

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

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

     (v) prescribe the form of each Award Agreement; and

     (vi) amend, modify, or supplement the terms of any outstanding Award including the authority,
in order to effectuate the purposes of the Plan, to modify Awards to foreign nationals or
individuals who are employed outside the United States to recognize differences in local law, tax
policy, or custom.

     To the extent permitted by applicable law, the Board may delegate its authority as identified
herein to any individual or committee of individuals (who need not be directors), including without
limitation the authority to make Awards to Grantees who are not subject to Section 16 of the
Exchange Act or who are not Covered Employees. To the extent that the Board delegates its
authority to make Awards as provided by this Section 3.1, all references in the Plan to the Board’s
authority to make Awards and determinations with respect thereto shall be deemed to include the
Board’s delegate. Any such delegate shall serve at the pleasure of, and may be removed at any time
by the Board.

     3.2. Restrictions; No Repricing.

          Notwithstanding the foregoing, no amendment or modification may be made to an outstanding
Option or SAR that causes the Option or SAR to become subject to Section 409A,

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without the Grantee’s written prior approval. Notwithstanding any provision herein to the
contrary, the repricing of Options or SARs is prohibited without prior approval of the Company’s
stockholders. For this purpose, a “repricing” means any of the following (or any other action that
has the same effect as any of the following): (A) changing the terms of an Option or SAR to lower
its Option Price or SAR Exercise Price; (B) any other action that is treated as a “repricing” under
generally accepted accounting principles; and (C) repurchasing for cash or canceling an Option or
SAR at a time when its Option Price or SAR Exercise Price is greater than the Fair Market Value of
the underlying shares in exchange for another Award, unless the cancellation and exchange occurs in
connection with a change in capitalization or similar change under Section 15. A cancellation and
exchange under clause (C) would be considered a “repricing” regardless of whether it is treated as
a “repricing” under generally accepted accounting principles and regardless of whether it is
voluntary on the part of the Grantee.

     3.3. Award Agreements.

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

          If any of the Company’s financial statements are required to be restated, the Company may
recover all or a portion of any Award made to any Grantee with respect to any fiscal year of the
Company the financial results of which are negatively affected by such restatement. The amount to
be recovered shall be the amount, as determined by the Committee, by which the affected Award
exceeds the amount that would have been payable had the financial statements been initially filed
as restated. In no event shall the amount to be recovered by the Company be less than the amount
required to be repaid or recovered as a matter of law.

     3.4. Deferral Arrangement.

     The Board may permit or require the deferral of any Award payment into a deferred compensation
arrangement, subject to such rules and procedures as it may establish and in accordance with
Section 409A, which may include provisions for the payment or crediting of interest or dividend
equivalents, including converting such credits into deferred Stock units.

     3.5. No Liability.

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

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     3.6. Book Entry.

     Notwithstanding any other provision of this Plan to the contrary, the Company may elect to
satisfy any requirement under this Plan for the delivery of stock certificates through the use of
book-entry.

4. STOCK SUBJECT TO THE PLAN

          Subject to adjustment as provided in Section 15 hereof, the maximum number of shares of Stock
available for issuance under the Plan shall be 7,500,000. In addition, there shall be added the
number of shares subject to stock options granted under the Company’s 2004 Stock Plan that are
canceled, expired, forfeited, settled in cash, settled by issuance of fewer shares than the number
of shares underlying stock option or otherwise terminated without delivery of shares to the
Grantees.

          7,500,000 of such shares of Stock available for issuance under the Plan shall be available for
issuance pursuant to Incentive Stock Options. Stock issued or to be issued under the Plan shall be
authorized but unissued shares; or, to the extent permitted by applicable law, issued shares that
have been reacquired by the Company. Following the end of the Transition Period and subject to
adjustments in accordance with Section 15, the maximum number of each type of Award (other than
cash-based Performance Awards) intended to constitute “performance-based compensation” under Code
Section 162(m) granted to any Grantee in any thirty-six (36) month period shall not exceed the
following: Options: 1,000,000; SARs: 1,000,000; Restricted Stock: 1,000,000; Restricted Stock
Units: 1,000,000; and other Stock-based Performance Awards :1,000,000.

     The Board may adopt reasonable counting procedures to ensure appropriate counting, avoid
double counting (as, for example, in the case of tandem or Substitute Awards) and make adjustments
in accordance with Section 15. If the Option Price of any Option granted under the Plan, or if
pursuant to Section 17.3 the withholding obligation of any Grantee with respect to an Option or
other Award, is satisfied by tendering shares of Stock to the Company (by either actual delivery or
by attestation) or by withholding shares of Stock, the number of shares of Stock issued net of the
shares of Stock tendered or withheld shall be deemed delivered for purposes of determining the
maximum number of shares of Stock available for delivery under the Plan. To the extent that an
Award under the Plan or a stock option granted under the Company’s 2004 Stock Plan is canceled,
expired, forfeited, settled in cash, settled by issuance of fewer shares than the number underlying
the Award or stock option, or otherwise terminated without delivery of shares to the Grantee, the
shares retained by or returned to the Company will be available under the Plan; and shares that are
withheld from such an Award or stock option granted under the Company’s 2004 Stock Plan, or
separately surrendered by the Grantee in payment of any exercise price or taxes relating to such an
Award or stock option shall be deemed to constitute shares not delivered to the Grantee and will be
available under the Plan. In addition, in the case of any Substitute Award, such Substitute Award
shall not be counted against the number of shares reserved under the Plan.

     5. EFFECTIVE DATE, DURATION AND AMENDMENTS

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     5.1. Term.

     The Plan shall be effective as of the Effective Date and shall terminate automatically as of
the first meeting of stockholders at which directors are to be elected that occurs after the close
of the third calendar year following the calendar year in which the initial public offering occurs
unless the Plan is approved by the stockholders of the Company prior to such meeting but subsequent
to the Effective Date. The Plan shall terminate automatically on the ten (10) year anniversary of
the Effective Date and may be terminated on any earlier date as provided in Section 5.2.

     5.2. Amendment and Termination of the Plan.

     The Board may, at any time and from time to time, amend, suspend, or terminate the Plan as to
any Awards which have not been made. An amendment shall be contingent on approval of the Company’s
stockholders to the extent stated by the Board, required by applicable law or required by
applicable stock exchange listing requirements. Notwithstanding the foregoing, any amendment to
Section 3.2 shall be contingent upon the approval of the Company’s stockholders. No Awards shall
be made after the Termination Date. The applicable terms of the Plan, and any terms and conditions
applicable to Awards granted prior to the Termination Date shall survive the termination of the
Plan and continue to apply to such Awards. No amendment, suspension, or termination of the Plan
shall, without the consent of the Grantee, materially impair rights or obligations under any Award
theretofore awarded.

6. AWARD ELIGIBILITY AND LIMITATIONS

     6.1. Service Providers.

     Subject to this Section 6, Awards may be made to any Service Provider, including any Service
Provider who is an officer, Non-employee member of the Board, consultant or advisor of the Company
or of any Affiliate, as the Board shall determine and designate from time to time in its
discretion.

     6.2. Successive Awards.

     An eligible person may receive more than one Award, subject to such restrictions as are
provided herein.

     6.3. Stand-Alone, Additional, Tandem, and Substitute Awards.

     Awards may, in the discretion of the Board, be granted either alone or in addition to, in
tandem with, or in substitution or exchange for, any other Award or any award granted under another
plan of the Company, any Affiliate, or any business entity to be acquired by the Company or an
Affiliate, or any other right of a Grantee to receive payment from the Company or any Affiliate.
Such additional, tandem, and substitute or exchange Awards may be granted at any time. If an Award
is granted in substitution or exchange for another Award, the Board shall

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have the right to require the surrender of such other Award in consideration for the grant of
the new Award. The Board shall have the right, in its discretion, to make Awards in substitution or
exchange for any other award under another plan of the Company, any Affiliate, or any business
entity to be acquired by the Company or an Affiliate. In addition, Awards may be granted in lieu of
cash compensation, including in lieu of cash amounts payable under other plans of the Company or
any Affiliate, in which the value of Stock subject to the Award is equivalent in value to the cash
compensation (for example, Restricted Stock Units or Restricted Stock).

7. AWARD AGREEMENT

     Each Award shall be evidenced by an Award Agreement, in such form or forms as the Board shall
from time to time determine. Without limiting the foregoing, an Award Agreement may be provided in
the form of a notice which provides that acceptance of the Award constitutes acceptance of all
terms of the Plan and the notice. Award Agreements granted from time to time or at the same time
need not contain similar provisions but shall be consistent with the terms of the Plan. Each Award
Agreement evidencing an Award of Options shall specify whether such Options are intended to be
Non-qualified Stock Options or Incentive Stock Options, and in the absence of such specification
such options shall be deemed Non-qualified Stock Options.

8. TERMS AND CONDITIONS OF OPTIONS

     8.1. Option Price.

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

     8.2. Vesting.

          Subject to Section 8.3 hereof, each Option shall become exercisable at such times and under
such conditions (including, without limitation, performance requirements) as shall be determined by
the Board and stated in the Award Agreement.

     8.3. Term.

     Each Option shall terminate, and all rights to purchase shares of Stock thereunder shall
cease, upon the expiration of ten (10) years from the Grant Date, or under such circumstances and
on such date prior thereto as is set forth in the Plan or as may be fixed by the Board and stated
in the related Award Agreement; provided, however, that in the event that the
Grantee is a Ten Percent Stockholder, an Option granted to such Grantee that is intended to be an
Incentive

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Stock Option at the Grant Date shall not be exercisable after the expiration of five (5) years
from its Grant Date.

     8.4. Limitations on Exercise of Option.

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

     8.5. Method of Exercise.

     An Option that is exercisable may be exercised by the Grantee’s delivery of a notice of
exercise to the Company, setting forth the number of shares of Stock with respect to which the
Option is to be exercised, accompanied by full payment for the shares. To be effective, notice of
exercise must be made in accordance with procedures established by the Company from time to
time.

     8.6. Rights of Holders of Options.

     Unless otherwise stated in the related Award Agreement, an individual holding or exercising an
Option shall have none of the rights of a stockholder (for example, the right to receive cash or
dividend payments or distributions attributable to the subject shares of Stock or to direct the
voting of the subject shares of Stock ) until the shares of Stock covered thereby are fully paid
and issued to him. Except as provided in Section 15 hereof or the related Award Agreement, no
adjustment shall be made for dividends, distributions or other rights for which the record date is
prior to the date of such issuance.

     8.7. Delivery of Stock Certificates.

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

     8.8. Limitations on Incentive Stock Options.

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

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9. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

     9.1. Right to Payment.

     A SAR shall confer on the Grantee a right to receive, upon exercise thereof, the excess of (i)
the Fair Market Value of one share of Stock on the date of exercise over (ii) the SAR Exercise
Price, as determined by the Board. The Award Agreement for an SAR shall specify the SAR Exercise
Price, which shall be fixed at the Fair Market Value of a share of Stock on the Grant Date. SARs
may be granted alone or in conjunction with all or part of an Option or at any subsequent time
during the term of such Option or in conjunction with all or part of any other Award. A SAR granted
in tandem with an outstanding Option following the Grant Date of such Option shall have a grant
price that is equal to the Option Price; provided, however, that the SAR’s grant
price may not be less than the Fair Market Value of a share of Stock on the Grant Date of the SAR.

     9.2. Other Terms.

          The Board shall determine at the Grant Date or thereafter, the time or times at which and the
circumstances under which an SAR may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements), the time or times at which
SARs shall cease to be or become exercisable following Separation from Service or upon other
conditions, the method of exercise, whether or not a SAR shall be in tandem or in combination with
any other Award, and any other terms and conditions of any SAR.

     9.3. Term of SARs.

          The term of a SAR granted under the Plan shall be determined by the Board, in its sole
discretion; provided, however, that such term shall not exceed ten (10) years.

     9.4. Payment of SAR Amount.

          Upon exercise of a SAR, a Grantee shall be entitled to receive payment from the Company (in
cash or Stock, as determined by the Board) in an amount determined by multiplying:

     (i) the difference between the Fair Market Value of a share of Stock on the date of
exercise over the SAR Exercise Price; by

     (ii) the number of shares of Stock with respect to which the SAR is exercised.

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10. TERMS AND CONDITIONS OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS

     10.1. Restrictions.

     At the time of grant, the Board may, in its sole discretion, establish a period of time (a
“restricted period”) and any additional restrictions including the satisfaction of corporate or
individual performance objectives applicable to an Award of Restricted Stock or Restricted Stock
Units in accordance with Section 12.1 and 12.2. Each Award of Restricted Stock or Restricted Stock
Units may be subject to a different restricted period and additional restrictions. Neither
Restricted Stock nor Restricted Stock Units may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of during the restricted period or prior to the satisfaction of
any other applicable restrictions.

     10.2. Restricted Stock Certificates.

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

     10.3. Rights of Holders of Restricted Stock.

     Unless the Board otherwise provides in an Award Agreement, holders of Restricted Stock shall
have rights as stockholders of the Company, including voting and dividend rights.

     10.4. Rights of Holders of Restricted Stock Units.

     10.4.1. Settlement of Restricted Stock Units.

          Restricted Stock Units may be settled in cash or Stock, as determined by the Board and set
forth in the Award Agreement. The Award Agreement shall also set forth whether the Restricted Stock
Units shall be settled (i) within the time period specified in Section 17.9.1 for short term
deferrals or (ii) otherwise within the requirements of Section 409A, in which case the Award
Agreement shall specify upon which events such Restricted Stock Units shall be settled.

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     10.4.2. Voting and Dividend Rights.

     Unless otherwise stated in the applicable Award Agreement, holders of Restricted Stock Units
shall not have rights as stockholders of the Company, including no voting or dividend or dividend
equivalents rights.

     10.4.3. Creditor’s Rights.

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

     10.5. Purchase of Restricted Stock.

     The Grantee shall be required, to the extent required by applicable law, to purchase the
Restricted Stock from the Company at a Purchase Price equal to the greater of (i) the aggregate par
value of the shares of Stock represented by such Restricted Stock or (ii) the Purchase Price, if
any, specified in the related Award Agreement. If specified in the Award Agreement, the Purchase
Price may be deemed paid by Services already rendered. The Purchase Price shall be payable in a
form described in Section 11 or, in the discretion of the Board, in consideration for past Services
rendered.

     10.6. Delivery of Stock.

     Upon the expiration or termination of any restricted period and the satisfaction of any other
conditions prescribed by the Board, the restrictions applicable to shares of Restricted Stock or
Restricted Stock Units settled in Stock shall lapse, and, unless otherwise provided in the Award
Agreement, a stock certificate for such shares shall be delivered, free of all such restrictions,
to the Grantee or the Grantee’s beneficiary or estate, as the case may be.

11. FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK

     11.1. General Rule.

     Payment of the Option Price for the shares purchased pursuant to the exercise of an Option or
the Purchase Price for Restricted Stock shall be made in cash or in cash equivalents acceptable to
the Company, except as provided in this Section 11.

     11.2. Surrender of Stock.

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

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make payment in the form of already owned shares of Stock may be authorized only at the time
of grant.

     11.3. Cashless Exercise.

     With respect to an Option only (and not with respect to Restricted Stock), to the extent
permitted by law and to the extent the Award Agreement so provides, payment of the Option Price may
be made all or in part by delivery (on a form acceptable to the Board) of an irrevocable direction
to a licensed securities broker acceptable to the Company to sell shares of Stock and to deliver
all or part of the sales proceeds to the Company in payment of the Option Price and any withholding
taxes described in Section 17.3.

     11.4. Other Forms of Payment.

          To the extent the Award Agreement so provides, payment of the Option Price or the Purchase
Price for Restricted Stock may be made in any other form that is consistent with applicable laws,
regulations and rules, including, but not limited to, the Company’s withholding of shares of Stock
otherwise due to the exercising Grantee.

12. TERMS AND CONDITIONS OF PERFORMANCE AWARDS

     12.1. Performance Conditions.

          The right of a Grantee to exercise or receive a grant or settlement of any Award, and the
timing thereof, may be subject to such performance conditions as may be specified by the Committee.
The Committee may use such business criteria and other measures of performance as it may deem
appropriate in establishing any performance conditions, and may exercise its discretion to reduce
the amounts payable under any Award subject to performance conditions, except as limited under
Sections 12.2 hereof in the case of a Performance Award intended to qualify under Code Section
162(m).

     12.2. Performance Awards Granted to Designated Covered Employees.

          If and to the extent that the Committee determines that a Performance Award to be granted to a
Grantee who is designated by the Committee as likely to be a Covered Employee should qualify as
“performance-based compensation” for purposes of Code Section 162(m), the grant, exercise and/or
settlement of such Performance Award shall be contingent upon achievement of pre-established
performance goals and other terms set forth in this Section 12.2.

     12.2.1. Performance Goals Generally.

     The performance goals for such Performance Awards shall consist of one or more business
criteria and a targeted level or levels of performance with respect to each of such criteria, as
specified by the Committee consistent with this Section 12.2. Following the end of the Transition
Period, performance goals shall be objective and shall otherwise meet the requirements of Code
Section 162(m) and regulations thereunder including the requirement that

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the level or levels of performance targeted by the Committee result in the achievement of
performance goals being “substantially uncertain.” The Committee may determine that such
Performance Awards shall be granted, exercised and/or settled upon achievement of any one
performance goal or that two or more of the performance goals must be achieved as a condition to
grant, exercise and/or settlement of such Performance Awards. Performance goals may, in the
discretion of the Committee, be established on a Company-wide basis, or with respect to one or more
business units, divisions, subsidiaries or business segments, as applicable. Performance goals may
be absolute or relative (to the performance of one or more comparable companies or indices).
Measurement of performance goals may exclude (in the discretion of the Committee) the impact of
charges for restructuring, discontinued operations, extraordinary items, and other unusual
non-recurring items, and the cumulative effects of tax or accounting changes (each as defined by
generally accepted accounting principles and as identified in the Company’s financial statements or
other SEC filings). Performance goals may differ for Performance Awards granted to any one Grantee
or to different Grantees.

     12.2.2. Business Criteria.

     One or more of the following business criteria for the Company, on a consolidated basis,
and/or specified subsidiaries or business units of the Company (except with respect to the total
stockholder return and earnings per share criteria), shall be used exclusively by the Committee in
establishing performance goals for such Performance Awards: net sales; revenue; revenue growth or
product revenue growth; operating income (before or after taxes); pre-or after-tax income (before
or after allocation of corporate overhead and bonuses; net earnings; earnings per share; net income
(before or after taxes); return on equity; total shareholder return; return on assets or net
assets; appreciation in and/or maintenance of, share price; market share; gross profits; earnings
(including earnings before taxes, earnings before interest and taxes or earnings before interest,
taxes depreciation and amortization); economic value-added models or equivalent metrics;
comparisons with various stock market indices; reduction in costs; cash flow or cash flow per share
(before or after dividends); return on capital (including return on total capital or return on
invested capital; cash flow return on investment; improvement in or attainment of expense levels or
working capital levels; operating margins; gross margins or cash margin; year-end cash; debt
reductions; shareholder equity; regulatory performance; implementation, completion or attainment of
measurable objectives with respect to research, development, products or projects and recruiting
and maintaining personnel and, prior to the end of the Transition Period, any other business
criteria established by the Committee.

     12.2.3. Timing for Establishing Performance Goals.

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

     12.2.4. Settlement of Performance Awards; Other Terms.

     Settlement of Performance Awards shall be in cash, Stock, other Awards or other property, in
the discretion of the Committee. The Committee may, in its discretion, reduce the amount of a

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settlement otherwise to be made in connection with such Performance Awards. Following the end
of the Transition Period, the maximum amount of each cash-based Performance Award intended to
constitute “performance-based compensation” under Code Section 162(m) granted to any Grantee in any
twelve (12) month period shall not exceed $2,000,000.

     12.3. Written Determinations.

          All determinations by the Committee as to the establishment of performance goals, the amount
of any Performance Award pool or potential individual Performance Awards and as to the achievement
of performance goals relating to Performance Awards, shall be made in writing in the case of any
Award intended to qualify under Code Section 162(m) to the extent required by Code Section 162(m).
To the extent permitted by Code Section 162(m), the Committee may delegate any responsibility
relating to such Performance Awards.

     12.4. Status of Section 12.2 Awards under Code Section 162(m).

          It is the intent of the Company that Performance Awards under Section 12.2 hereof granted to
persons who are designated by the Committee as likely to be Covered Employees within the meaning of
Code Section 162(m) and regulations thereunder shall, if so designated by the Committee, constitute
“qualified performance-based compensation” within the meaning of Code Section 162(m) and
regulations thereunder. Accordingly, the terms of Section 12.2, including the definitions of
Covered Employee and other terms used therein, shall be interpreted in a manner consistent with
Code Section 162(m) and regulations thereunder. The foregoing notwithstanding, because the
Committee cannot determine with certainty whether a given Grantee will be a Covered Employee with
respect to a fiscal year that has not yet been completed, the term Covered Employee as used herein
shall mean only a person designated by the Committee, at the time of grant of Performance Awards,
as likely to be a Covered Employee with respect to that fiscal year. If any provision of the Plan
or any agreement relating to such Performance Awards does not comply or is inconsistent with the
requirements of Code Section 162(m) or regulations thereunder, such provision shall be construed or
deemed amended to the extent necessary to conform to such requirements.

	13.	 	OTHER STOCK-BASED AWARDS

     13.1. Grant of Other Stock-based Awards.

          Other Stock-based Awards, consisting of Stock units, or other Awards, valued in whole or in
part by reference to, or otherwise based on, Common Stock, may be granted either alone or in
addition to or in conjunction with other Awards under the Plan. Other Stock-based Awards may be
granted in lieu of other cash or other compensation to which a; Service Provider is entitled from
the Company or may be used in the settlement of amounts payable in shares of Common Stock under any
other compensation plan or arrangement of the Company, including without limitation, the Company’s
Incentive Compensation Plan. Subject to the provisions of the Plan, the Committee shall have the
sole and complete authority to determine the persons to whom and the time or times at which such
Awards shall be made, the number of shares of Common Stock to be granted pursuant to such Awards,
and all other conditions of such Awards.

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Unless the Committee determines otherwise, any such Award shall be confirmed by an Award Agreement,
which shall contain such provisions as the Committee determines to be necessary or appropriate to
carry out the intent of this Plan with respect to such Award.

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     13.2. Terms of Other Stock-based Awards.

          Any Common Stock subject to Awards made under this Section 13 may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date on which the shares are issued, or,
if later, the date on which any applicable restriction, performance or deferral period lapses.

14. REQUIREMENTS OF LAW

     14.1. General.

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

     14.2. Rule 16b-3.

     During any time when the Company has a class of equity security registered under Section 12 of
the Exchange Act, it is the intent of the Company that Awards and the exercise of Options granted
to officers and directors hereunder will qualify for the exemption provided by

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Rule 16b-3 under the Exchange Act. To the extent that any provision of the Plan or action by the Board
or Committee does not comply with the requirements of Rule 16b-3, it shall be deemed inoperative to
the extent permitted by law and deemed advisable by the Board, and shall not affect the validity of
the Plan. In the event that Rule 16b-3 is revised or replaced, the Board may exercise its
discretion to modify this Plan in any respect necessary to satisfy the requirements of, or to take
advantage of any features of, the revised exemption or its replacement.

15. EFFECT OF CHANGES IN CAPITALIZATION

     15.1.1. Changes in Stock.

     If (i) the number of outstanding shares of Stock is increased or decreased or the shares of
Stock are changed into or exchanged for a different number or kind of shares or other securities of
the Company on account of any recapitalization, reclassification, stock split, reverse split,
combination of shares, exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease in such shares effected without receipt of consideration by
the Company occurring after the Effective Date or (ii) there occurs any spin-off, split-up,
extraordinary cash dividend or other distribution of assets by the Company, the number and kinds of
shares for which grants of Options and other Stock-based Awards may be made under the Plan
(including the per-Grantee maximums set forth in Section 4) shall be equitably adjusted by the
Company; provided that any such adjustment shall comply with Section 409A. In addition, in the
event of any such increase or decease in the number of outstanding shares or other transaction
described in clause (ii) above, the number and kind of shares for which Awards are outstanding and
the Option Price per share of outstanding options and SAR Exercise Price per share of outstanding
SARs shall be equitably adjusted; provided that any such adjustment shall comply with Section 409A.

     15.1.2. Effect of Certain Transactions.

          Except as otherwise provided in an Award Agreement, in the event of (a) the liquidation or
dissolution of the Company or (b) a reorganization, merger, exchange or consolidation of the
Company or involving the shares of Common Stock (a “Transaction”), the Plan and the Awards issued
hereunder shall continue in effect in accordance with their respective terms, except that following
a Transaction either (i) each outstanding Award shall be treated as provided for in the agreement
entered into in connection with the Transaction or (ii) if not so provided in such agreement, each
Grantee shall be entitled to receive in respect of each share of Common Stock subject to any
outstanding Awards, upon exercise or payment or transfer in respect of any Award, the same number
and kind of stock, securities, cash, property or other consideration that each holder of a share of
Common Stock was entitled to receive in the Transaction in respect of a share of Common stock;
provided, however, that, unless otherwise determined by the Committee, such stock, securities,
cash, property or other consideration shall remain subject to all of the conditions, restrictions
and performance criteria which were applicable to the Awards prior to such Transaction. Without
limiting the generality of the foregoing, the treatment of outstanding Options and Stock
Appreciation Rights pursuant to this Section 15.1.2 in connection with a Transaction in which the
consideration paid or distributed to the Company’s stockholders is not entirely shares of common
stock of the acquiring or resulting corporation may include the

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cancellation of outstanding Options and Stock Appreciation Rights upon consummation of the
Transaction as long as, at the election of the Committee, (x) the holders of affected Options and
SARs have been given a period of at least fifteen days prior to the date of the consummation of the
Transaction to exercise the Options or SARs (whether or not they were otherwise exercisable) or (y)
the holders of the affected Options and SARs are paid (in cash or cash equivalents) in respect of
each Share covered by the Option or SAR being canceled an amount equal to the excess, if any, of
the per share price paid or distributed to stockholders in the transaction (the value of any
non-cash consideration to be determined by the Committee in its sole discretion) over the Price
Option or SAR Exercise Price, as applicable. For avoidance of doubt, (1) the cancellation of
Options and SARs pursuant to clause (y) of the preceding sentence may be effected notwithstanding
anything to the contrary contained in this Plan or any Award Agreement and (2) if the amount
determined pursuant to clause (y) of the preceding sentence is zero or less, the affected Option or
SAR may be cancelled without any payment therefore. The treatment of any Award as provided in this
Section 15.1.2 shall be conclusively presumed to be appropriate for purposes of Section 15.1.1.

     15.2. Definition of Change in Control.

     “Change in Control” means:

	 	(1)	 	Any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) (a “Person”) becomes the beneficial
owner (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 50% or more of either (A) the then-outstanding shares of
common stock of the Company (the “Outstanding Company Common Stock”)
or (B) the combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the election
of directors (the “Outstanding Company Voting Securities”); provided,
however, that, for purposes of this Section 15.2, the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
Affiliated Company, or (iv) any acquisition pursuant to a transaction
that complies with Sections 1(d)(3)(A), 1(d)(3)(B) and 1(d)(3)(C).
	 
	 	(2)	 	Individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the Company’s stockholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual was a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;

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	 	(3)	 	Consummation of a reorganization, merger, statutory share exchange or
consolidation or similar transaction involving the Company or any of
its subsidiaries, a sale or other disposition of all or substantially
all of the assets of the Company, or the acquisition of assets or
stock of another entity by the Company or any of its subsidiaries
(each, a “Business Combination”), in each case unless, following such
Business Combination, (A) all or substantially all of the individuals
and entities that were the beneficial owners of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then-outstanding shares
of common stock (or, for a non-corporate entity, equivalent
securities) and the combined voting power of the then-outstanding
voting securities entitled to vote generally in the election of
directors (or, for a non-corporate entity, equivalent governing body),
as the case may be, of the entity resulting from such Business
Combination (including, without limitation, an entity that, as a
result of such transaction, owns the Company or all or substantially
all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities, as
the case may be, (B) no Person (excluding any corporation resulting
from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20%
or more of, respectively, the then-outstanding shares of common stock
of the corporation resulting from such Business Combination or the
combined voting power of the then-outstanding voting securities of
such corporation, except to the extent that such ownership existed
prior to the Business Combination, and (C) at least a majority of the
members of the board of directors (or, for a non-corporate entity,
equivalent governing body) 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; or
	 
	 	(4)	 	Approval by the stockholders of the Company of a complete liquidation
or dissolution of the Company.

     Notwithstanding the foregoing, if it is determined that an Award hereunder is subject to the
requirements of Section 409A, the Company will not be deemed to have undergone a Change in Control
unless the Company is deemed to have undergone a “change in control event” pursuant to the
definition of such term in Section 409A.

     15.3. Effect of Change in Control

     The Board shall determine the effect of a Change in Control upon Awards, and such effect may
be set forth in the appropriate Award Agreement. Without limiting the foregoing, the Board may
provide in the Award Agreements at the time of grant, or any time thereafter with the consent of
the Grantee, the actions that will be taken upon the occurrence of a Change in Control, including,
but not limited to, accelerated vesting, termination or assumption. The Board

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may also provide in the Award Agreements at the time of grant, or any time thereafter with the
consent of the Grantee, for different provisions to apply to an Award in place of those described
in Sections 15.1 and 15.2.

     15.4. Reorganization Which Does Not Constitute a Change in Control.

     If the Company undergoes any reorganization, merger, or consolidation of the Company with one
or more other entities which does not constitute a Change in Control, any Option or SAR theretofore
granted pursuant to the Plan shall pertain to and apply to the securities to which a holder of the
number of shares of Stock subject to such Option or SAR would have been entitled immediately
following such reorganization, merger, or consolidation, with a corresponding proportionate
adjustment of the Option Price or SAR Exercise Price per share so that the aggregate Option Price
or SAR Exercise Price thereafter shall be the same as the aggregate Option Price or SAR Exercise
Price of the shares remaining subject to the Option or SAR immediately prior to such
reorganization, merger, or consolidation. Subject to any contrary language in an Award Agreement,
any restrictions applicable to such Award shall apply as well to any replacement shares received by
the Grantee as a result of the reorganization, merger or consolidation.

     15.5. Adjustments.

     Adjustments under this Section 15 related to shares of Stock or securities of the Company
shall be made by the Board, whose determination in that respect shall be final, binding and
conclusive. No fractional shares or other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case
by rounding downward to the nearest whole share.

16. NO LIMITATIONS ON COMPANY

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

17. TERMS APPLICABLE GENERALLY TO AWARDS GRANTED UNDER THE PLAN

     17.1. Disclaimer of Rights.

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

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addition, notwithstanding anything contained in the Plan to the contrary, unless otherwise
stated in the applicable Award Agreement, no Award granted under the Plan shall be affected by any
change of duties or position of the Grantee, so long as such Grantee continues to be a Service
Provider. The obligation of the Company to pay any benefits pursuant to this Plan shall be
interpreted as a contractual obligation to pay only those amounts described herein, in the manner
and under the conditions prescribed herein. The Plan shall in no way be interpreted to require the
Company to transfer any amounts to a third party trustee or otherwise hold any amounts in trust or
escrow for payment to any Grantee or beneficiary under the terms of the Plan.

     17.2. Nonexclusivity of the Plan.

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

     17.3. Withholding Taxes.

     The Company or an Affiliate, as the case may be, shall have the right to deduct from payments
of any kind otherwise due to a Grantee any federal, state, or local taxes of any kind required by
law to be withheld (i) with respect to the vesting of or other lapse of restrictions applicable to
an Award, (ii) upon the issuance of any shares of Stock upon the exercise of an Option or SAR, or
(iii) otherwise due in connection with an Award. At the time of such vesting, lapse, or exercise,
the Grantee shall pay to the Company or the Affiliate, as the case may be, any amount that the
Company or the Affiliate may reasonably determine to be necessary to satisfy such withholding
obligation. Subject to the prior approval of the Company or the Affiliate, which may be withheld by
the Company or the Affiliate, as the case may be, in its sole discretion, the Grantee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company or the Affiliate to
withhold the minimum required number of shares of Stock otherwise issuable to the Grantee as may be
necessary to satisfy such withholding obligation or (ii) by delivering to the Company or the
Affiliate shares of Stock already owned by the Grantee. The shares of Stock so delivered or
withheld shall have an aggregate Fair Market Value equal to such withholding obligations. The Fair
Market Value of the shares of Stock used to satisfy such withholding obligation shall be determined
by the Company or the Affiliate as of the date that the amount of tax to be withheld is to be
determined. A Grantee who has made an election pursuant to this Section 17.3 may satisfy his or her
withholding obligation only with shares of Stock that are not subject to any repurchase,
forfeiture, unfulfilled vesting, or other similar requirements.

     17.4. Captions.

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

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     17.5. Other Provisions.

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

     17.6. Number and Gender.

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

     17.7. Severability.

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

     17.8. Governing Law.

     The Plan shall be governed by and construed in accordance with the laws of the Sate of North
Carolina without giving effect to the principles of conflicts of law, provided that the provisions
set forth herein that are required to be governed by the Delaware General Corporation Law shall be
governed by such law.

     17.9. Section 409A.

     17.9.1. Short-Term Deferrals.

     For each Award intended to comply with the short-term deferral exception provided for under
Section 409A, the related Award Agreement shall provide that such Award shall be paid out by the
later of (i) the 15th day of the third month following the Grantee’s first taxable year
in which the Award is no longer subject to a substantial risk of forfeiture or (ii) the
15th day of the third month following the end of the Company’s first taxable year in
which the Award is no longer subject to a substantial risk of forfeiture.

     17.9.2. Adjustments.

     To the extent that the Board determines that a Grantee would be subject to the additional 20%
tax imposed on certain deferred compensation arrangements pursuant to Section 409A as a result of
any provision of any Award, to the extent permitted by Section 409A, such provision shall be deemed
amended to the minimum extent necessary to avoid application of such additional tax. The Board
shall determine the nature and scope of such amendment.

-26-

 

     17.10. Stockholder Approval; Effective Date of Plan.

     The Plan shall be effective as of the Effective Date. Any Option that is designated as an
Incentive Stock Option shall be a Nonqualified Stock Option if the Plan is not approved by the
shareholders of the Company within twelve (12) months after the Effective Date of the Plan.
Following the end of the Transition Period, no award that is intended to qualify as
performance-based compensation within the meaning of Section 162(m) of the Code shall be effective
unless and until the Plan is approved by the stockholders of the Company.

     17.11. Separation from Service.

          The Board shall determine the effect of a Separation from Service upon Awards, and such effect
shall be set forth in the appropriate Award Agreement. Without limiting the foregoing, the Board
may provide in the Award Agreements at the time of grant, or any time thereafter with the consent
of the Grantee, the actions that will be taken upon the occurrence of a Separation from Service,
including, but not limited to, accelerated vesting or termination, depending upon the circumstances
surrounding the Separation from Service.

     17.12. Transferability of Awards.

     17.12.1. Transfers in General.

     Except as provided in Section 17.12.2, no Award shall be assignable or transferable by the
Grantee to whom it is granted, other than by will or the laws of descent and distribution, and,
during the lifetime of the Grantee, only the Grantee personally (or the Grantee’s personal
representative) may exercise rights under the Plan.

     17.12.2. Family Transfers.

     If authorized in the applicable Award Agreement, a Grantee may transfer, not for value, all or
part of an Award (other than Incentive Stock Options) to any Family Member. For the purpose of this
Section 17.12.2, a “not for value” transfer is a transfer which is (i) a gift, (ii) a transfer
under a domestic relations order in settlement of marital property rights; or (iii) a transfer to
an entity in which more than fifty percent of the voting interests are owned by Family Members (or
the Grantee) in exchange for an interest in that entity. Following a transfer under this Section
17.12.2, any such Award shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer. Subsequent transfers of transferred Awards are prohibited
except to Family Members of the original Grantee in accordance with this Section 17.12.2 or by will
or the laws of descent and distribution.

     17.13. Dividends and Dividend Equivalent Rights.

          If specified in the Award Agreement, the recipient of an Award under this Plan may be entitled
to receive, currently or on a deferred basis, dividends or dividend equivalents with respect to the
Common Stock or other securities covered by an Award. The terms and conditions

-27-

 

of a dividend equivalent right may be set forth in the Award Agreement. Dividend equivalents
credited to a Grantee may be paid currently or may be deemed to be reinvested in additional shares
of Stock or other securities of the Company at a price per unit equal to the Fair Market Value of a
share of Stock on the date that such dividend was paid to shareholders, as determined in the sole
discretion of the Committee.

	 	 	 	 	 
	 	PRIMO WATER CORPORATION

 	 
	 	By:  	/s/
Billy D. Prim 	 
	 	Title: 	CEO 	 
	 	 	 	 
	 

-28-exv10w17

Exhibit 10.17

NOTICE OF GRANT OF [INCENTIVE/NON-QUALIFIED] STOCK OPTION AWARD

PRIMO WATER CORPORATION

2010 OMNIBUS LONG-TERM INCENTIVE PLAN

     FOR GOOD AND VALUABLE CONSIDERATION, Primo Water Corporation (the “Company”) hereby
grants, pursuant to the provisions of the Company’s 2010 Omnibus Long-Term Incentive Plan (the
“Plan”), to the Optionee designated in this Notice of Grant of [Incentive/Non-Qualified] Stock
Option Award (the “Notice”) an option to purchase the number of shares of the Common Stock of the
Company set forth in the Notice (the “Shares”), subject to certain restrictions as outlined below
in this Notice and the additional provisions set forth in the attached Terms and Conditions of
Stock Option Award (collectively, the “Agreement”).

	 	 	 

	Optionee: [                    ]

	 	Type of Option:
[Incentive/Non-Qualified] Stock Option
	 
	 	 
	Exercise Price per Share: $                    

	 	Date of Grant:                     
	 
	 	 
	Total Number of
Shares Granted:                     

	 	Expiration Date:                     

Vesting Schedule: Subject to the Terms and Conditions and the provisions of the Plan,
this Option shall vest and become exercisable, in accordance with the following schedule, in
the event the Optionee does not have a Separation from Service prior to the applicable
vesting date:

	 	 	 

	Date
of Vesting

	 	Cumulative Amount Vested
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

Acceleration of Vesting: Notwithstanding the foregoing Vesting Schedule, the Option shall be
deemed fully vested and exercisable in the event of the Optionee’s death or Disability.
Further, vesting of the Option shall be accelerated in accordance with the terms of any
applicable employment, change in control or similar agreement between the Optionee and the
Company or an Affiliate which is in effect during the Term (the “Employment Agreement”).

Exercise After Separation from Service:

Separation from Service for any reason other than death, Disability or for Cause: any
non-vested portion of the Option expires immediately and any vested portion of the Option
remains exercisable for [thirty (30) days] following the Separation from Service;

Separation from Service due to death or Disability: the entire Option, including any
non-vested portion for which vesting is accelerated above, is exercisable by the Optionee
(or the Optionee’s beneficiary in the event of the Optionee’s death) for [twelve (12)
months] following the Optionee’s Separation from Service;

Separation from Service for Cause: the entire Option, including any vested and non-vested
portion, expires immediately upon Separation from Service.

IN NO EVENT MAY THIS OPTION BE EXERCISED AFTER THE EXPIRATION DATE AS PROVIDED ABOVE.

By signing below, the Optionee agrees that this [Incentive/Non-Qualified] Stock Option Award is
granted under and governed by the terms and conditions of the Company’s 2010 Omnibus Long-Term
Incentive Plan and the attached Terms and Conditions.

	 	 	 	 	 	 	 
	Optionee 	 	
Primo Water Corporation
 	 

	 
	 	 	By:  	 	 
	 	 	 	 	Title:  	 	 
	Date: 	 	 	 	                             Date: 	 	 

 

 

	 	 	 	 	 

TERMS AND CONDITIONS OF STOCK OPTION AWARD

     1. Grant of Option. The Option granted to the Optionee and described in the Notice of
Grant is subject to the terms and conditions of the Plan, which is incorporated by reference in its
entirety into these Terms and Conditions of Stock Option Award.

          The Board of Directors of the Company has authorized and approved the 2010 Omnibus Long-Term
Incentive Plan (the “Plan”), which has been approved by the stockholders of the Company. The
[Board/Committee] has approved an award to the Optionee of a number of shares of the Company’s
Common Stock, conditioned upon the Optionee’s acceptance of the provisions set forth in the Notice
and these Terms and Conditions within 60 days after the Notice and these Terms and Conditions are
presented to the Optionee for review. For purposes of the Notice and these Terms and Conditions,
any reference to the Company shall include a reference to any Affiliate.

          If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code.
Nevertheless, to the extent that the Option fails to meet the requirements of an ISO under Section
422 of the Code, this Option shall be treated as a Non-qualified Stock Option (“NSO”).

          The Company intends that this Option not be considered to provide for the deferral of
compensation under Section 409A of the Code and that this Agreement shall be so administered and
construed. Further, the Company may modify the Plan and this Award to the extent necessary to
fulfill this intent.

     2. Exercise of Option.

          (a) Right to Exercise. This Option shall be exercisable, in whole or in part, during
its term in accordance with the Vesting Schedule set out in the Notice of Grant and with the
applicable provisions of the Plan and this Agreement. No Shares shall be issued pursuant to the
exercise of an Option unless the issuance and exercise comply with applicable laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on
the date on which the Option is exercised with respect to such Shares. The [Board/Committee] may,
in its discretion and pursuant to its administrative authority under Section 3.1 of the Plan, (i)
accelerate vesting of the Option, or (ii) extend the applicable exercise period of the Option.

          (b) Method of Exercise. The Optionee may exercise the Option by delivering an
exercise notice in a form approved by the Company (the “Exercise Notice”) which shall state the
election to exercise the Option, the number of Shares with respect to which the Option is being
exercised, and such other representations and agreements as may be required by the Company. The
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Shares
exercised. This Option shall be deemed to be exercised upon receipt by the Company of such fully
executed Exercise Notice accompanied by the aggregate Exercise Price.

     3. Method of Payment. If the Optionee elects to exercise the Option by submitting an
Exercise Notice under Section 2(b) of this Agreement, the aggregate Exercise Price (as well as any
applicable withholding or other taxes) shall be paid by cash or check; provided, however, that the
[Board/Committee] may accept, in its discretion, payment in any of the following forms, or a
combination of them:

          (a) cash or check;

          (b) a “net exercise” under which the Company reduces the number of shares of Common Stock
issued upon exercise by the largest whole number of shares with a Fair Market Value that

- 1 -

 

does not exceed the aggregate Exercise Price and any applicable withholding, or such other
consideration received by the Company under a cashless exercise program approved by the Company in
connection with the Plan;

          (c) surrender of other shares of Common Stock owned by the Optionee which have a Fair Market
Value on the date of surrender equal to the aggregate Exercise Price of the exercised Shares and
any applicable withholding; or

          (d) any other consideration that the [Board/Committee] deems appropriate and in compliance
with applicable law.

     4. Restrictions on Exercise. This Option may not be exercised if the issuance of the
Shares upon exercise or the method of payment of consideration for those shares would constitute a
violation of any applicable law, regulation or Company policy.

     5. Non-Transferability of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be exercised during the
lifetime of the Optionee only by the Optionee [IF THE OPTION IS A NSO, THE FOLLOWING LANGUAGE MAY
BE INCLUDED PERMITTING LIMITED TRANSFER OF THE OPTION] [; provided, however, that the Optionee may
transfer the Option (i) pursuant to a qualified domestic relations order (as defined by the Code or
the rules thereunder) or (ii) to any Family Member of the Optionee in accordance with Section
17.12.2 of the Plan by delivering to the Company a Notice of Assignment in a form acceptable to the
Company. No transfer or assignment of the Option to or on behalf of a Family Member under this
Section 5 shall be effective until the Company has acknowledged such transfer or assignment in
writing]. The terms of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

     6. Term of Option. This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with the Plan and the
terms of this Agreement.

     7. Withholding.

          (a) The [Board/Committee] shall determine the amount of any withholding or other tax required
by law to be withheld or paid by the Company with respect to any income recognized by the Optionee
with respect to the Option Award.

          (b) The Optionee shall be required to meet any applicable tax withholding obligation in
accordance with the provisions of Section 17.3 of the Plan.

          (c) Subject to any rules prescribed by the [Board/Committee], the Optionee shall have the
right to elect to meet any withholding requirement (i) by having withheld from this Award at the
appropriate time that number of whole shares of common stock whose Fair Market Value is equal to
the amount of any taxes required to be withheld with respect to such Award, (ii) by direct payment
to the Company in cash of the amount of any taxes required to be withheld with respect to such
Award or (iii) by a combination of shares and cash.

     8. Defined Terms. Capitalized terms used but not defined in the Notice and these
Terms and Conditions shall have the meanings set forth in the Plan, unless such term is defined in
any employment or similar agreement between the Optionee and the Company or an Affiliate. Any
terms used in the Notice and these Terms and Conditions, but defined in an employment or similar
agreement with the Optionee are incorporated herein by reference and shall be effective for
purposes of the Notice

2

 

and these Terms and Conditions without regard to the continued effectiveness of such
employment or similar agreement.

     9. Optionee Representations. The Optionee hereby represents to the Company that the
Optionee has read and fully understands the provisions of the Notice, these Terms and Conditions
and the Plan and the Optionee’s decision to participate in the Plan is completely voluntary.
Further, the Optionee acknowledges that the Optionee is relying solely on his or her own advisors
with respect to the tax consequences of this stock option award.

     10. Regulatory Limitations on Exercises. Notwithstanding the other provisions of this
Agreement, the [Board/Committee] shall have the sole discretion to impose such conditions,
restrictions and limitations (including suspending the exercise of the Option and the tolling of
any applicable exercise period during such suspension) on the issuance of Common Stock with respect
to this Option unless and until the [Board/Committee] determines that such issuance complies with
(i) any applicable registration requirements under the Securities Act or the [Board/Committee] has
determined that an exemption therefrom is available, (ii) any applicable listing requirement of any
stock exchange on which the Common Stock is listed, (iii) any applicable Company policy or
administrative rules, and (iv) any other applicable provision of state, federal or foreign law,
including foreign securities laws where applicable.

     11. Miscellaneous.

(a) Notices. All notices, requests, deliveries, payments, demands and other
communications which are required or permitted to be given under these Terms and Conditions
shall be in writing and shall be either delivered personally or sent by registered or
certified mail, or by private courier, return receipt requested, postage prepaid to the
parties at their respective addresses set forth herein, or to such other address as either
shall have specified by notice in writing to the other. Notice shall be deemed duly given
hereunder when delivered or mailed as provided herein.

(b) Waiver. The waiver by any party hereto of a breach of any provision of the
Notice or these Terms and Conditions shall not operate or be construed as a waiver of any
other or subsequent breach.

(c) Entire Agreement. These Terms and Conditions, the Notice, the Plan and any
applicable Employment Agreement constitute the entire agreement between the parties with
respect to the subject matter hereof.

(d) Binding Effect; Successors. These Terms and Conditions shall inure to the
benefit of and be binding upon the parties hereto and to the extent not prohibited herein,
their respective heirs, successors, assigns and representatives. Nothing in these Terms and
Conditions, express or implied, is intended to confer on any person other than the parties
hereto and as provided above, their respective heirs, successors, assigns and
representatives any rights, remedies, obligations or liabilities.

(e) Governing Law. The Notice and these Terms and Conditions shall be governed by
and construed in accordance with the laws of the State of North Carolina without giving
effect to the principles of conflicts of law, provided that the provisions set forth herein
that are required to be governed by the Delaware General Corporation Law shall be governed
by such law.

(f) Headings. The headings contained herein are for the sole purpose of convenience
of reference, and shall not in any way limit or affect the meaning or interpretation of any
of the terms or provisions of these Terms and Conditions.

3

 

(g) Conflicts; Amendment. The provisions of the Plan are incorporated in these
Terms and Conditions in their entirety. In the event of any conflict between the provisions
of this Agreement and the Plan, the provisions of the Plan shall control. Further, in the
event of any conflict between the provisions of this Agreement and any Employment Agreement,
the provisions of such Employment Agreement shall control. The Agreement may be amended at
any time by the [Board/Committee], provided that no amendment may, without the consent of
the Optionee, materially impair the Optionee’s rights with respect to the Option.

(h) No Right to Continued Employment. Nothing in the Notice or these Terms and
Conditions shall confer upon the Optionee any right to continue in the employ or service of
the Company or affect the right of the Company to terminate the Optionee’s employment or
service at any time.

(i) Further Assurances. The Optionee agrees, upon demand of the Company or the
[Board/Committee], to do all acts and execute, deliver and perform all additional documents,
instruments and agreements which may be reasonably required by the Company or the
[Board/Committee], as the case may be, to implement the provisions and purposes of the
Notice and these Terms and Conditions and the Plan.

4

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