Document:

Exhibit 10.27

 

SUPERIOR ESSEX INC.

 

SENIOR EXECUTIVE RETIREMENT PLAN

 

Introduction

 

The purpose of the Plan is to provide supplemental retirement benefits
to certain employees of the Company and its Affiliates, in addition to other
sources of retirement income.  It is
intended that the Plan will be a non-qualified, unfunded, deferred compensation
plan for a “select group of management or highly compensated employees” as that
term is used in ERISA.  The purpose of
the Plan is also to attract, retain and motivate key personnel for the progress
of the Company and its Affiliates.

 

Article I.

Definitions

 

The following words and phrases as used herein have the following
meaning unless a different meaning is plainly required by the context:

 

1.1.                              “Actuarial Equivalent” means an amount
equal in value on an actuarial basis, as determined by an actuary selected by
the Committee, based on the Actuarial Equivalent Factor.  The calculation by the actuary shall be final
and binding on all persons.

 

1.2.                              “Actuarial Equivalent Factor” means a
factor reflecting an assumption of interest at a rate of 7.0% and utilizing the
RP-2000 Mortality Tables.

 

1.3.                              “Affiliate” means each of the
following:  (a) any subsidiary
corporation of the Company within the meaning of Section 424(f) of the Code;
(b) any parent corporation of the Company within the meaning of Section 424(e)
of the Code; (c) any corporation, trade or business (including, without
limitation, a partnership or limited liability company) which is directly or
indirectly controlled 50% or more (whether by ownership of stock, assets or an
equivalent ownership interest or voting interest) by the Company or one of its
Affiliates; and (d) any other entity in which the Company or one of its
Affiliates has a material equity interest and which is designated as an “Affiliate”
by resolution of the Committee.

 

1.4.                              “Applicable Benefit Percentage” means one
of the following: (a) in the case of a Participant who is a Senior
Vice-President, 1.5%; (b) in the case of a Participant who is a Tier 1
Executive, 2.0%; (c) in the case of a Participant who is a Founding Tier 1
Executive, 2.0%; and (d) in the case of a Participant who is the Chief
Executive Officer, 2.5%.  The Committee
may, in its sole discretion, change the appropriate Applicable Benefit
Percentage for any Participant regardless of the title or classification of
such Participant, provided, however, that any downward adjustment to the
Applicable Benefit Percentage shall only be prospective.

 

1.5.                              “Beneficiary” means the individual designated
by the Participant to receive benefits payable under the Plan in the event of
the Participant’s death.  If no
Beneficiary is designated, the Participant’s Beneficiary shall be his or her
spouse, or if the Participant is not

 

 

married, the Participant’s estate.  A Participant’s designation of a Beneficiary
(or any election to revoke or change a prior Beneficiary designation) must be
made and filed with the Committee, in writing, on such form(s) and in such
manner prescribed by the Committee.  Upon
the acceptance by the Committee of a new Beneficiary designation, all
Beneficiary designations previously filed shall be canceled.  The Committee shall be entitled to rely on
the last Beneficiary designation filed by the Participant and accepted by the
Committee prior to his or her death.

 

1.6.                              “Board” means the board of directors of the
Company.

 

1.7.                              “Cause” means the following: (a) in the
case where there is no employment agreement or similar agreement in effect
between the Company or an Affiliate and the Participant (or where there is such
an agreement but it does not define “cause” (or words of like import)), (i) a
Participant’s continued willful failure to perform substantially the
Participant’s duties (other than as a result of total or partial incapacity due
to physical or mental illness) following written notice by the Company to the
Participant of such failure, (ii) dishonesty in the performance of the
Participant’s duties which is injurious (other than in some immaterial or de
minimis respect) to the financial condition or business reputation of the
Company or any of its Affiliates, (iii) a Participant’s conviction of, or plea
of guilty or nolo  contendere to, a crime constituting (y) a
felony under the laws of the United States or any state thereof or (z) a
misdemeanor involving misconduct by the Participant in his personal or
professional conduct punishable by imprisonment of more than three days or a
fine in excess of $5,000 (other than a traffic violation), which is reasonably
likely to damage the business, prospects or reputation of the Company or any of
its Affiliates in any respect, (iv) a Participant’s willful malfeasance or
willful misconduct in connection with the Participant’s duties or any act or
omission which is injurious (other than in some immaterial or de minimis
respect) to the financial condition or business reputation of the Company or
any of its Affiliates or (v) a Participant’s breach of the provisions of
Sections 9 or 10 of this Agreement (other than a breach which is insubstantial
and insignificant, taking into account all of the circumstances); provided,
however, that any event described in clauses (i), (ii) and (iv) of this
Section 1.7(a) shall constitute Cause only if a Participant fails to cure such
event, to the reasonable satisfaction of the Board, within 10 days after
receipt from the Company of written notice of the event which constitutes Cause
or (b) in the case where there is an employment agreement or similar
agreement in effect between the Company or an Affiliate and the Participant
that defines “cause” (or words of like import), as defined under such
agreement; provided, however, that with regard to any agreement under which the
definition of “cause” only applies on occurrence of a change in control, such
definition of “cause” shall not apply until a change in control actually takes
place and then only with regard to a termination thereafter, provided that
prior to a change in control “cause” shall be defined as provided in subsection
(a) above.

 

1.8.                              “Change in Control” means the following:
(a) in the case where there is no change in control agreement or similar
agreement in effect between the Company or an Affiliate and the Participant, a “change
in control” as defined in the Company’s 2003 Stock Incentive Plan, as amended
from time to time, or, if after the Effective Date, the Company adopts a new
equity-based incentive plan, a “change in control” as defined in such plan or
(b) in the case

 

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where there is a change in control agreement
or similar agreement in effect between the Company or an Affiliate and the
Participant that defines “change in control” (or words of like import), as
defined under such agreement without regard to whether a change in control has
taken place.

 

1.9.                              “Chief Executive Officer” means the chief
executive officer of the Company on the Effective Date.

 

1.10.                        “Code” means the Internal Revenue Code of
1986, as amended.  Any reference to any
section of the Code shall also be a reference to any successor provision and
any Treasury Regulation promulgated thereunder.

 

1.11.                        “Committee” means the Compensation
Committee of the Board or such other committee as may be appointed by the Board
from time to time to administer the Plan. 
The Committee may act under the Plan through any officers or employees
duly authorized by it.

 

1.12.                        “Company” means Superior Essex Inc. and any
successors to the Company or the business or all or substantially all of the
assets of Superior Essex Inc.

 

1.13.                        “Company
Client”  means an actual
client of the Company or any Affiliate as of the date of Participant’s
Termination of Employment and during the 12 months prior to that date as well
as any prospective client of the Company or any Affiliate that has been
actively solicited by the Company or any Affiliate during that same 12-month
period.

 

1.14.                        “Compensation” means a Participant’s annual
base salary and actual short term bonus earned as an employee from the Company
or an Affiliate, including, without limitation, (a) any amounts reduced
pursuant to the Participant’s salary reduction agreement under Section 125, 132
or 401(k) of the Code (if any), or (b) any amounts that the Participant elects
to defer under any nonqualified deferred compensation plan or arrangement
maintained by the Company or one of its Affiliates.  Compensation shall not include any other
compensation, including, without limitation, commissions, overtime pay,
severance pay, incentive compensation, benefits paid under any tax-qualified
plan, any group medical, dental or other welfare benefit plan, amounts realized
upon the exercise of a stock option or vesting of restricted stock, noncash
compensation, fringe benefits (cash and noncash), reimbursements or other
expense allowances, moving expenses, retention payments or any other additional
compensation.  Notwithstanding any other
provision of the Plan to the contrary, Compensation shall not include any
amounts received from the Company or one of its Affiliates (or any of their
respective predecessors) prior to November 10, 2003.

 

1.15.                        “Competitive Business” means an entity or
enterprise whose business, in whole or in part, involves the manufacture, sale
or distribution of telecommunication wire or cable products or magnet wire or
related products that directly compete with or are directly substitutable for
the products or services of the Company or its Affiliates.  Notwithstanding the foregoing, if a
Participant’s particular employment responsibilities for the Company or its
Affiliates are limited solely to the Company’s telecommunications wire or cable
products

 

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business or solely to the Company’s magnet
wire business, the definition of Competitive Business shall be deemed to apply only
to that portion of the business with which the Participant is affiliated.  It shall be presumed, however, that all Tier
1 Executives and “corporate office” Participants who are employed by the
Company rather than its Affiliates are involved in all aspects of the Company’s
and its Affiliates’ business, and thus the qualification in the preceding
sentence shall not apply to those Participants.

 

1.16.                        “Confidential Information” means any
non-public, proprietary or confidential information, including without
limitation trade secrets, know-how, research and development, software,
databases, inventions, processes, formulae, technology, designs and other
intellectual property, information concerning finances, investments, profits,
pricing, costs, products, services, vendors, customers, clients, partners,
investors, personnel, compensation, recruiting, training, advertising, sales,
marketing, promotions, government and regulatory activities and approvals
concerning the past, current or future business, activities and operations of
the Company or Affiliates and/or any third party that has disclosed or provided
any of same to the Company or its Affiliates on a confidential basis without
the prior written authorization of the Board. 
“Confidential Information” shall not include any information that is (a)
generally known to the industry or the public other than as a result of the
Participant’s breach of this covenant or any breach of other confidentiality
obligations by third parties; (b) made legitimately available to the
Participant by a third party without breach of any confidentiality obligation;
or (c) required by law to be disclosed; provided, however, that the Participant
shall give prompt written notice to the Company of such requirement, disclose
no more information than is so required, and cooperate (at the Company’s
expense) with any attempts by the Company to obtain a protective order or
similar treatment.

 

1.17.                        “Credited Service” means a Participant’s
period (or periods) of employment with the Company or one of its Affiliates
while designated as a Participant in the Plan. 
Credited Service shall not include (a) any periods of employment with
the Company or one of its Affiliates (or any of their respective predecessors)
prior to November 10, 2003, except that if a Participant was employed by the
Company or an Affiliate during the entire period beginning on November 10, 2003
and ending on November 30, 2003, such Participant shall receive one full month
of credited service for such period of service or (b) any periods of
Disability.  No more than 25 years of
Credited Service shall be taken into account for any purpose under the Plan for
any Participant who is a Senior Vice-President. 
The Committee may, in its sole discretion, determine an increased Credited
Service for the Participant and, in such case, the amount of the Retirement
Benefits payable under Article IV shall be calculated using the Participant’s
increased Credited Service as if it were his or her actual Credited
Service.  Any such increased Credited
Service for the Participant shall be set forth on Appendix A hereto, which
shall be updated as necessary from time to time by the Committee.  Credited Service shall be computed in years
and full months.  In the event a
Participant is rehired, the Committee shall determine, in its sole discretion,
the method of calculating Credited Service, taking into account any Retirement
Benefit previously paid to the Participant.

 

4

 

1.18.                        “Deferred Retirement Date” means the
Participant’s Termination of Employment after the Participant’s Normal
Retirement Date.  Notwithstanding any
other provision to the contrary, a Participant must have a vested interest
prior to receiving a Retirement Benefit.

 

1.19.                        “Disability” means any disability
determined under the Company’s or one of its Affiliate’s long term disability
policies, provided that the Participant is entitled to and receiving long term
disability benefits under such policies.

 

1.20.                        “Early Retirement Date” means one of the
following: (a) in the case of a Participant who is a Senior Vice-President, the
first day of the month coincident with or immediately following the Participant’s
attainment of age 55 and completion of 10 years of Credited Service; (b) in the
case of a Tier 1 Executive, the first day of the month coincident with or
immediately following the Participant’s attainment of age 55; and (c) in the
case of the Chief Executive Officer and the Founding Tier 1 Executives, the
first day of the month coincident with or immediately following the date a
Participant retires prior to his or her Normal Retirement Date pursuant to the
provisions of Section 3.3.  The Committee
may, in its sole discretion, determine an adjusted age for the Participant and,
in such case, the amount of Retirement Benefits payable under Article IV shall
be calculated using the Participant’s adjusted age as if it were his or her
actual age.  The Committee may also, in
its sole discretion, determine the appropriate Early Retirement Date for any
Participant whose title changes while a Participant in the Plan.  Notwithstanding any other provision to the
contrary, a Participant must have a vested interest prior to receiving a
Retirement Benefit.

 

1.21.                        “Early Retirement Reduction Factor” means
one of the following: (a) in the case of a Participant who is a Senior
Vice-President, 5% for each year (or portion of a year) by which a Participant’s
Early Retirement Date precedes his or her Normal Retirement Date; and (b) in
the case of any Participant who is not a Senior Vice-President, 3% for each
year (or portion of a year) by which a Participant’s Early Retirement Date
precedes his or her Normal Retirement Date. 
The Committee may, in its sole discretion, determine the appropriate
Early Retirement Reduction Factor for any Participant whose title changes while
a Participant in the Plan.

 

1.22.                        “Effective Date” means November 10, 2003.

 

1.23.                        “ERISA” means the Employee Retirement
Income Security Act of 1974, as amended. 
Any reference to any section of ERISA shall also be a reference to any
successor provision and any Department of Labor Regulation promulgated
thereunder.

 

1.24.                        “Final Average Compensation” means the
annual average of a Participant’s Compensation earned while designated as a
Participant in the Plan, for any three calendar years in the final five years
of employment with the Company or an Affiliate prior to the Participant’s
Termination of Employment which yields the highest average.  Average Compensation shall be obtained by
dividing the Participant’s Compensation earned during any three calendar years
by the number of years for which such Compensation is paid.  Notwithstanding any other provision of the
Plan to the contrary, Final Average Compensation shall not include any amounts
received

 

5

 

from the Company or one of its Affiliates (or
any of their respective predecessors) prior to November 10, 2003.

 

1.25.                        “Founding Tier 1 Executives” means each
person holding the title of Executive Vice President of the Company on the
Effective Date (other than the General Counsel of the Company).

 

1.26.                        “Normal Retirement Date” means one of the
following: (a) in the case of a Participant who is a Senior Vice-President, the
first day of the month coincident with or next following the date on which a
Participant attains his or her sixty-fifth (65th) birthday; and (b) in the case
of any Participant that is not a Senior Vice-President, the first day of the
month coincident with or next following the date on which a Participant attains
his or her sixty-second (62nd) birthday. 
Notwithstanding any other provision to the contrary, a Participant must
have a vested interest prior to receiving a Retirement Benefit.

 

1.27.                        “Participant” means one of the
following:  (a) the Chief Executive
Officer; (b) the Founding Tier 1 Executives; (c) each Tier 1 Executive and
Senior Vice-President of the Company or one of its Affiliates selected by the
Committee in its sole discretion and designated in writing as a Participant;
and (d) any former employees of the Company or one of its Affiliates that is
entitled to a Retirement Benefit under the Plan.

 

1.28.                        “Plan” means the Superior Essex Inc. Senior
Executive Retirement Plan, as set forth herein and as amended from time to
time.

 

1.29.                        “Restricted Territory” means, with respect
to any Participant, all geographical areas within a 100 mile radius of each
facility from which or with respect to which, as of the date the Participant
becomes a Participant in the Plan: (a) the Company or its Affiliates
manufacture or distribute wire and cable products; and (b) the Participant has
responsibility for representing the Company or its Affiliates.  The Parties acknowledge and agree that
certain senior executive officers of the Company, including, without
limitation, the Tier 1 Executives and “corporate” Participants who are employed
by the Company rather than its Affiliates, can reasonably be assumed to be “representing”
the Company or its Affiliates anywhere the Company or the Affiliates are doing
business.  Thus, the foregoing restricted
territory is intended to reflect an attempt by the Company to choose a
relatively narrow territory that provides the Company with some protection from
competition from its former key executives and yet does not unreasonably
restrain the former employee from engaging in a competing business.

 

1.30.                        “Retirement Benefit” means any benefit
payable under the Plan.  A Participant’s
Retirement Benefit under the Plan shall be calculated as a single life annuity
commencing at the Participant’s Normal Retirement Age and then converted into
the form for payment elected by the Participant, which shall have the same
Actuarial Equivalent value based on the Actuarial Equivalent Factors.  Notwithstanding any other provision to the
contrary, a Participant must have a vested interest prior to receiving a
Retirement Benefit.

 

6

 

1.31.                        “Senior Vice-President” means each person
holding the title of Senior Vice-President of the Company or one of its
Affiliates.

 

1.32.                        “Termination of Employment” means: (a) a
termination of employment (for reasons other than a military or personal leave
of absence granted by the Company or one of its Affiliates) of a Participant
from the Company and its Affiliates; or (b) when an entity which is employing a
Participant ceases to be an Affiliate, unless the Participant otherwise is, or
thereupon becomes, employed by the Company or another Affiliate at the time the
entity ceases to be an Affiliate.

 

1.33.                        “Tier 1 Executive” means each person who becomes
the chief executive officer of the Company or an Executive Vice President of
the Company on or after the Effective Date.

 

Article II.

Participation

 

2.1.                              Participation.  Participants will be limited to the Chief
Executive Officer, the Founding Tier 1 Executives, the Tier 1 Executives and
the Senior Vice-Presidents designated by the Committee in writing to
participate in the Plan.

 

2.2.                              Continuation of Participation.

 

(a)                                  Subject
to the provisions of Article XII, a person who has become a Participant in
accordance with Section 2.1 shall, except as provided in (b) below, continue as
a Participant as long as he or she continues in the employment of the Company
or one of its Affiliates and thereafter as long as he is entitled to benefits
under the Plan.

 

(b)                                 If
an employee no longer meets the requirements of Section 2.1, he or she shall no
longer be eligible to participate in the Plan but shall continue to be a
Participant until his or her Retirement Benefits (if any) have been fully paid;
provided that: (a) the individual shall not accrue additional Retirement
Benefits under the Plan and (b) for purposes of calculating a Participant’s
Retirement Benefit, the Participant’s Credited Service and Final Average
Compensation shall be determined as if the date that the employee no longer met
the requirements of Section 2.1 was the date of his or her Termination of
Employment.  Notwithstanding the
foregoing, an Employee who no longer meets the requirements of Section 2.1 shall
continue to be credited with service for purposes of Article V.

 

(c)                                  After
a Participant commences to receive Retirement Benefits in accordance with
Article IV, the Committee, in its sole reasonable discretion, may cease payment
of benefits under the Plan if the Committee determines that the Participant is
in violation of the restrictions set forth in Section 2.3.

 

7

 

2.3.                              Restrictive Covenants.  In consideration of and as a condition of the
receipt of any Retirement Benefits by any Participant, the Participant agrees
to the following provisions:

 

(a)                                  So
long as a Participant is employed by the Company or any of its Affiliates and
for a period of 18 months following the Participant’s Termination of Employment
for any reason (the “Restricted Period”), the Participant will not, whether on
the Participant’s own behalf or on behalf of or in conjunction with any person,
firm, partnership, joint venture, association, corporation or other business
organization, entity or enterprise whatsoever (“Person”), including, without
limitation a Competitive Business, directly or indirectly solicit or assist in
soliciting a Company Client for the purpose of providing or having that Company
Client provided with products or services directly competitive with or directly
substitutable for products or services of the Company or any Affiliate;
provided that after the effective date of Participant’s Termination of
Employment the foregoing covenant shall be limited to Company Clients:

 

(i)                                     with
whom the Participant had personal contact or dealings on behalf of the Company
or any of its Affiliates during the one year period preceding the Participant’s
Termination of Employment;

 

(ii)                                  with
whom employees reporting to the Participant have had personal contact or
dealings on behalf of the Company or its Affiliates during the one year period
immediately preceding the Participant’s Termination of Employment; or

 

(iii)                               for
whom the Participant had direct responsibility or direct access to and
knowledge of sensitive client information during the one-year period
immediately preceding the Participant’s Termination of Employment.

 

(b)                                 During
the Restricted Period, the Participant will not own an equity interest in or
provide services or funding to or affiliate with any Competitive Business
within the Restricted Territory; provided, however, that during the 18 months
following the Participant’s Termination of Employment for any reason, this
restriction shall apply only where Participant’s services for or affiliation
with the competing entity are substantially similar to the services that
Participant provided to the Company or its Affiliates or the capacity in which
Participant served with the Company or its Affiliates as of the date the
Participant became a Participant in the Plan.

 

Notwithstanding the foregoing, nothing herein
shall prevent the Participant from owning up to but not more than a 2% interest
in the shares or other equity interest of any Competitive Business in the
United States whose shares are publicly traded or listed on a national
exchange.

 

(c)                                  During
the Restricted Period, the Participant will not, whether on the Participant’s
own behalf or on behalf of or in conjunction with any Person, directly or
indirectly solicit or encourage any employee, consultant or other personnel or
contractor of the Company or any of its Affiliates with whom the Participant
had material contact

 

8

 

during the 18 month period immediately prior to the Participant’s
Termination of Employment to terminate or sever that party’s relationship or
affiliation with the Company or any of its Affiliates.

 

(d)                                 The
Participant will not at any time (whether during or after the Participant’s
employment with the Company or any of its Affiliates) (i) retain or use for the
benefit, purposes or account of the Participant or any other Person, or (ii)
disclose, divulge, reveal, communicate, share, transfer or provide access to
any Person outside the Company or its Affiliates (other than its professional
advisers who are bound by confidentiality obligations), any Confidential
Information.  Upon termination of the
Participant’s employment with the Company for any reason, the Participant
shall: (x) cease and not thereafter commence use of any Confidential
Information or intellectual property (including without limitation, any patent,
invention, copyright, trade secret, trademark, trade name, logo, domain name or
other source indicator) owned or used by the Company or its Affiliates; (y)
immediately destroy, delete, or return to the Company, at the Company’s option,
all originals and copies in any form or medium (including memoranda, books,
papers, plans, computer files, letters and other data) in the Participant’s
possession or control (including any of the foregoing stored or located in the
Participant’s office, home, laptop or other computer, whether or not Company
property) that contain Confidential Information or otherwise relate to the
business of the Company, its Affiliates, except that the Participant may retain
only those portions of any personal notes, notebooks and diaries that do not
contain any Confidential Information; and (z) notify and fully cooperate with
the Company (at the Company’s expense) regarding the delivery or destruction of
any other Confidential Information of which the Participant is or becomes
aware.  Notwithstanding the foregoing,
the non-disclosure and non-use covenants in this paragraph shall cease to apply
three years after the Participant’s Termination of Employment with respect to
any Confidential Information that does not meet the definition of “trade secret”
under Georgia law.

 

(e)                                  Although
the Participant and the Company consider the restrictions contained in this
Section 2.3 to be reasonable, if a final judicial determination is made by a
court of competent jurisdiction that the time or territory or any other
restriction contained in this Section 2.3 is an unenforceable restriction
against the Participant, the provisions of this Section 2.3 shall not be
rendered void but shall be deemed amended to apply as to such maximum time and
territory and to such maximum extent as such court may judicially determine or
indicate to be enforceable, and the parties authorize any court reaching a
determination that the covenants are unenforceable to partially enforce or “blue
pencil” those covenants so that they are enforced to an extent that complies
with applicable law.  Alternatively, if
any court of competent jurisdiction finds that any restriction contained in
this Section 2.3 is unenforceable, and such restriction cannot be amended so as
to make it enforceable, such finding shall not affect the enforceability of any
of the other restrictions contained herein. 
If a material change in the nature of the Participant’s employment
responsibilities or the Company’s business renders any parameter of the
non-competition or non-solicitation covenants unreasonable or inexact,

 

9

 

then the parties agree to amend the covenants to make them conform to
the changed nature of the employment duties or the Company’s business.

 

(f)                                    Since
the Company’s remedies at law for a breach or threatened breach of any of the
provisions of Section 2.3 would be inadequate and the Company would suffer
irreparable damages as a result of such breach or threatened breach, in the
event of such a breach or threatened breach, in addition to any remedies at
law, the Company, without posting any bond, shall be entitled to cease making
any payments or providing any benefit otherwise required by the Plan and obtain
equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction or any other equitable remedy which
may then be available.

 

(g)                                 The
obligations contained in this Section 2.3 will survive the Participant’s
Termination of Employment and will be fully enforceable thereafter.

 

Article III.

Retirement Date

 

Subject to the provisions of Articles V and X and the Company’s right
to terminate benefits or to forfeit benefits in accordance with the provisions
of Section 2.2(c) or 5.2:

 

3.1.                              Normal Retirement Date.  A Participant who retires on his or her
Normal Retirement Date shall be entitled to a Retirement Benefit as determined
in accordance with Section 4.1.

 

3.2.                              Deferred Retirement Date.  A Participant whose employment with the
Company or one of its Affiliates continues beyond his or her Normal Retirement
Date shall retire on a Deferred Retirement Date and shall be entitled to a
Retirement Benefit in accordance with Section 4.2.

 

3.3.                              Early Retirement Date.  A Participant who retires on his or her Early
Retirement Date shall be entitled to a Retirement Benefit as determined under
Section 4.3.  In addition, if (a) a
Participant who is a Tier 1 Executive or (b) a Participant who is a Senior
Vice-President who has completed 10 years of Credited Service experiences a
Termination of Employment prior to his or her Early Retirement Date, subject to
the provisions of Article V, such Participant shall be entitled to a Retirement
Benefit as determined under Section 4.3 once the Participant attains age 55.

 

Article IV.

Retirement Benefits

 

4.1.                              Normal Retirement Benefit.  The annual amount of the Retirement Benefit
for a Participant retiring on his or her Normal Retirement Date shall be equal
to the Applicable Benefit Percentage multiplied by the Participant’s Final
Average Compensation multiplied by the Participant’s years of Credited Service.

 

10

 

4.2.                              Deferred Retirement Benefit.  If a Participant remains in employment after
his or her Normal Retirement Date and is entitled to a Retirement Benefit in
accordance with Section 3.2, benefit payments shall be postponed until the
Participant’s actual retirement on the Deferred Retirement Date.  At such Deferred Retirement Date, the
Participant shall be entitled to the benefit computed under Section 4.1 based
on Credited Service to the Deferred Retirement Date with no actuarial
adjustment for such deferred payment.

 

4.3.                              Early Retirement Benefit.  A Participant retiring prior to his or her
Normal Retirement Date, as provided in Section 3.3, shall be entitled to
receive a Retirement Benefit, commencing on such Normal Retirement Date, equal
to the amount computed under Section 4.1 based on his or her Final Average
Compensation and Credited Service, each determined on the date of the
Participant’s Termination of Employment. 
Notwithstanding the foregoing, a Participant may elect to have payment
of his or her Retirement Benefit under the Plan commence on or after the date
of the Participant’s Early Retirement Date. 
In such case, the Participant’s benefit under the Plan shall be reduced
by the Early Retirement Reduction Factor for each year (or portion of a year)
by which such Early Retirement Date precedes his or her Normal Retirement Date.

 

4.4.                              Death. 
Subject to the provisions of Article V, upon a Participant’s death prior
to the commencement of Retirement Benefits, whether or not then employed by the
Company and its Affiliates, the Participant’s Beneficiary shall be entitled to
receive, as soon as administratively practicable following the Participant’s
death, a single lump sum that is equal to the amount computed under Section 4.1
based on his or her Final Average Compensation and Credited Service, each
determined on the date of death; provided, however, that for purposes of
calculating the Retirement Benefit under this Section 4.4, the amount payable
pursuant to this Section 4.4 to a Beneficiary shall be (a) reduced by the Early
Retirement Reduction Factor for each year (or portion of a year) between the
Participant’s Early Retirement Date and the Participant’s Normal Retirement
Date by which such payment precedes the Participant’s Normal Retirement Date
and (b) actuarially reduced using the Actuarial Equivalent Factors for each
year (or portion of a year) by which such payment precedes the Participant’s
Early Retirement Age.

 

4.5.                              Disability.  Subject to the provisions of Article V, in
the event of a Participant’s Termination of Employment on account of the
Participant’s Disability, the Participant shall be entitled to receive a
Retirement Benefit, commencing as soon as administratively practicable
following the Participant’s Termination of Employment, equal to the amount
computed under Section 4.1 based on his or her Final Average Compensation and
Credited Service, each determined on the date of the Participant’s Termination
of Employment.  Payments pursuant to this
Section 4.5 shall cease upon the Participant ceasing to have a Disability.  The amount of the Retirement Benefit determined
under this Section 4.5 shall not be reduced by the Early Retirement Reduction
Factors or on an Actuarially Equivalent basis.

 

11

 

Article V.

Vesting

 

5.1.                              Vesting of Interest of Participant in Trust Fund.  A
Participant’s rights under the Plan to any Retirement Benefit shall be fully
vested and nonforfeitable, except as provided in Section 5.2, solely upon the
earliest of the following to occur:

 

(a)                                  completion
of four full and consecutive years of Credited Service;

 

(b)                                 the
occurrence of a Change in Control;

 

(c)                                  the
termination of the Plan as provided in Article X; and

 

(d)                                 if
the Participant is the Chief Executive Officer or a Founding Tier 1 Executive,
the Participant’s death or Disability while an employee of the Company or one
of its Affiliates.

 

5.2.                              Forfeiture.  If a Termination of Employment occurs with
respect to a Participant prior to becoming vested in the Retirement Benefit,
the Participant’s right under the Plan to a Retirement Benefit is terminated.  Notwithstanding the provisions of Section
5.1, a Participant shall not have any right to a Retirement Benefit in the
event the Participant’s Termination of Employment is for Cause or if the
Executive violates the provisions of Section 2.3.

 

Article VI.

Termination of Employment

 

6.1.                              Termination Prior to Vesting.  If a Participant’s Termination of Employment
occurs for any reason before the Participant has a vested interest in a
Retirement Benefit, no Retirement Benefit shall become payable to such
Participant under the Plan.

 

6.2.                              Termination Prior to Early Retirement Eligibility.  If a Participant’s Termination of Employment
occurs for any reason after vesting but before the Participant is eligible for
a Retirement Benefit pursuant to the provisions of Section 4.3, no Retirement
Benefit shall commence prior to Normal Retirement Age, subject to any possible
termination or forfeiture of benefits pursuant to Section 2.2(c) or 5.2.

 

6.3.                              Termination After Eligibility for Retirement.  A Participant whose Termination of Employment
occurs for any reason and the Participant is eligible to retire under the
provisions of Article IV, shall be deemed to have retired or to have been
retired by the Company and its Affiliates and shall be entitled to the appropriate
Retirement Benefits, subject to any possible termination or forfeiture of
benefits pursuant to Section 2.2(c) or 5.2.

 

12

 

Article VII.

Time and Form of Benefit Payment

 

7.1.                              Forms of Benefit.  A Participant may elect, in accordance with
the provisions of Section 7.3, to receive the Retirement Benefit in one of the
following forms of payment (each of which shall have the same Actuarial
Equivalent value based on the Actuarial Equivalent Factors):

 

(a)                                  a
joint and 50% survivor annuity (equal monthly payments for the Participant’s
lifetime and, in the event of the Participant’s death, 50% of the amount
payable to the Participant will be payable to the Participant’s Beneficiary for
his or her lifetime if the Participant’s Beneficiary survives the Participant);

 

(b)                                 a
single life annuity (equal monthly payments for the Participant’s lifetime);

 

(c)                                  a
life annuity with a 10-year period certain (equal monthly payments for the
Participant’s lifetime with payments to the Participant’s beneficiary for the
remainder of the 10-year period certain in the event of the Participant’s death
prior to the end of the period certain);

 

(d)                                 a
lump sum payment equal to up to 50% of the Retirement Benefit reduced by the
Early Retirement Reduction Factor for each year (or portion of a year) by which
such payment date precedes the Participant’s Normal Retirement Date and payable
as soon as soon as administratively practicable following the Participant’s
Termination of Employment with the balance payable in the form of a joint and
50% survivor annuity, a single life annuity or a life annuity with a 10-year
period certain commencing upon the later of the Participant’s Termination of
Employment or attainment of Early Retirement Date; or

 

(e)                                  on
or after a Change in Control, a lump sum payment equal to 100% of the
Retirement Benefit reduced by the Early Retirement Reduction Factor for each
year (or portion of a year) by which such payment date precedes the Participant’s
Normal Retirement Date and payable as soon as soon as administratively
practicable following the Participant’s Termination of Employment.

 

7.2.                              Time of Distribution.  Unless a Participant elects to receive his or
her benefits in the distribution forms described in Section 7.1(d) and (e), a
Participant may elect, in accordance with the provisions of Section 7.3, to
commence receiving Retirement Benefits at one of the following times:

 

(a)                                  As
soon as administratively practicable following the later of the Participant’s
Termination of Employment or Normal Retirement Date;

 

13

 

(b)                                 As
soon as administratively practicable following the later of the Participant’s
Termination of Employment or the Participant’s Early Retirement Date; or

 

(c)                                  As
soon as administratively practicable following the Participant’s Termination of
Employment on or after a Change in Control.

 

7.3.                              Timing of Elections to Change Form and Time of
Distribution. 
Participants shall have the right to elect, on a form prescribed by the
Committee, the form of payment that his or her Retirement Benefit will be paid
(or, in the event of the Participant’s death, to his or her Beneficiary) and
the time payment of Retirement Benefits will commence provided that such
election must be made and filed with the Committee at least one year prior to
the Participant’s Termination of Employment or, in the event of a Termination
of Employment following a Change in Control, such election must be made and
filed with the Committee prior to the execution of a definitive agreement
providing for a Change in Control if the date of such execution is within one
year prior to the Participant’s Termination of Employment.  The Participant may revoke such an election
at any time or from time to time by written notice filed with the Committee at
least one year prior to the Participant’s Termination of Employment; provided
that if it is later determined that such revocation occurred within such one
year period, then such revocation shall not be effective and the Participant’s
prior election shall govern.  A
Participant who does not make an election, or whose election is not effective,
shall receive his or her benefits in the distribution form described in Section
7.1(a), if the Participant is married, or Section 7.1(b), if the Participant is
not married, and at the time described in Section 7.2(a).

 

Article VIII.

Funding

 

The Plan shall be funded out of the general assets of the Company as
and when benefits are payable under the Plan. 
All Participants shall be solely unsecured creditors of the Company and,
if a bankruptcy proceeding of the Company is pending, the Participants shall be
solely unsecured creditors of the Company with administrative priority.  If the Company decides in its sole discretion
to establish any advance accrued reserve on its books against the future
expense of benefits payable hereunder, or if the Company decides in its sole
discretion to fund a trust under the Plan, such reserve or trust shall not
under any circumstances be deemed to be an asset of the Plan.

 

Article IX.

Administration of the Plan

 

9.1.                              Plan Administrator.  The general administration of the Plan on
behalf of the Company (as plan administrator under Section 3(16)(A) of ERISA)
shall be placed with the Committee.

 

9.2.                              Reimbursement of Expenses of Plan Committee.  The Company shall pay or reimburse the
members of the Committee for all reasonable expenses incurred in connection
with their duties hereunder.

 

14

 

9.3.                              Action by the Plan Committee.  Subject to the terms of the Plan and provided
that the Committee acts in good faith, the Committee shall have the authority
to determine a Participant’s participation and benefits under the Plan and to
interpret and construe the provisions of the Plan.

 

9.4.                              Retention of Professional Assistance.  The Committee may employ such legal counsel,
accountants and other persons as may be required in carrying out its work in
connection with the Plan.

 

9.5.                              Accounts and Records.  The Committee shall maintain such accounts
and records regarding the fiscal and other transactions of the Plan and such
other data as may be required to carry out its functions under the Plan and to
comply with all applicable laws.

 

9.6.                              Claims/Disputes Procedure.

 

(a)                                  Any
claim by a Participant or beneficiary (“Claimant”) with respect to eligibility,
participation, contributions, benefits or other aspects of the operation of the
Plan shall be made in writing to the Committee. The Committee shall provide the
Claimant with the necessary forms and make all determinations as to the right
of any person to a disputed benefit.  If
a Claimant is denied benefits under the Plan, the Committee or its designee
shall notify the Claimant in writing of the denial of the claim within 90 days
(such period may be extended to 180 days) after the Plan receives the claim,
provided that in the event of special circumstances such period may be
extended.

 

(b)                                 If
the initial 90 day period is extended, the Committee or its designee shall,
within 90 days of receipt of the claim, notify the Claimant in writing of such
extension.  The written notice of
extension will indicate the special circumstances requiring the extension of
time and provide the date by which the Committee expects to make a determination
with respect to the claim.  If the
extension is required due to the Claimant’s failure to submit information
necessary to decide the claim, the period for making the determination will be
tolled from the date on which the extension notice is sent to the Claimant
until the earlier of (i) the date on which the Claimant responds to the Plan’s
request for information or (ii) expiration of the 45 day period commencing on
the date that the Claimant is notified that the requested additional
information must be provided.  If notice
of the denial of a claim is not furnished within the required time period
described herein, the claim shall be deemed denied as of the last day of such
period.

 

(c)                                  If
the claim is wholly or partially denied, the notice to the Claimant shall set
forth:

 

(i)                                     the
specific reason or reasons for the denial;

 

(ii)                                  specific
reference to pertinent Plan provisions upon which the denial is based;

 

15

 

(iii)                               a
description of any additional material or information necessary for the
Claimant to perfect the claim and an explanation of why such material or
information is necessary;

 

(iv)                              appropriate
information as to the steps to be taken and the applicable time limits if the
Claimant wishes to submit the adverse determination for review; and

 

(v)                                 a
statement of the Claimant’s right to bring a civil action under Section 502(a)
of ERISA following an adverse determination on review (collectively, the “Notice
Requirements”).

 

(d)                                 If
the claim has been denied, the Claimant may submit the claim for review.  Any request for review of a claim must be
made in writing to the Committee no later than 60 days after the Claimant
receives notification of denial or, if no notification was provided, the date
the claim is deemed denied.  The claim
will then be reviewed by the Committee. 
The Claimant or his duly authorized representative may:

 

(i)                                     upon
request and free of charge, be provided with access to, and copies of, relevant
documents, records, and other information relevant to the Claimant’s claim; and

 

(ii)                                  submit
written comments, documents, records, and other information relating to the
claim.  The review of the claim
determination shall take into account all comments, documents, records, and
other information submitted by the Claimant relating to the claim, without
regard to whether such information was submitted or considered in the initial
claim determination.

 

(e)                                  The
decision of the Committee shall be made within 60 days (such period may be
extended to 120 days)  after receipt of
the Claimant’s request for review, unless special circumstances require an
extension.

 

(f)                                    If
the initial 60 day period is extended, the Committee or its designee shall,
within 60 days of receipt of the claim, notify the Claimant in writing of such
extension.  The written notice of
extension will indicate the special circumstances requiring the extension of
time and provide the date by which the Committee expects to make a
determination with respect to the claim. 
If the extension is required due to the Claimant’s failure to submit
information necessary to decide the claim, the period for making the
determination will be tolled from the date on which the extension notice is
sent to the Claimant until the earlier of (i) the date on which the Claimant
responds to the Plan’s request for information or (ii) expiration of the 45 day
period commencing on the date that the Claimant is notified that the requested
additional information must be provided. If notice of the denial of a claim is
not furnished within the required time period described herein, the claim shall
be deemed denied as of the last day of such period.

 

16

 

(g)                                 If
an extension of time is required, the Claimant shall be notified in writing of
such extension.  The written notice of
extension will indicate the special circumstances requiring the extension of
time and the date by which the Committee expects to make a determination with
respect to the claim.  If the extension
is required due to the Claimant’s failure to submit information necessary to
decide the claim on review, the period for making the determination will be
tolled from the date on which the extension notice is sent to the Claimant
until the earlier of (i) the date on which the Claimant responds to the Plan’s
request for information or (ii) expiration of the 45-day period commencing on
the date that the Claimant is notified that the requested additional
information must be provided.  In any
event, a decision shall be rendered not later than 120 days after receipt of
the request for review.  If notice of the
decision upon review is not furnished within the required time period described
herein, the claim on review shall be deemed denied as of the last day of such
period.

 

(h)                                 The
Committee’s decision on the Claimant’s claim for review will be communicated to
the Claimant in writing.  If the claim on
review is denied, the notice to the Claimant shall provide a statement that the
Claimant is entitled to receive, upon request and free of charge, reasonable
access to, and copies of, all documents, records and other information relevant
to the claim, and also set forth the Notice Requirements (other than subsection
(c)(iv)).

 

(i)                                     The
claims procedures set forth in this section are intended to comply with U.S.
Department of Labor Regulation § 2560.503-1 and should be construed in
accordance with such regulation.  In no
event shall it be interpreted as expanding the rights of Claimants beyond what
is required by U.S. Dept. of Labor § 2560.503-1.

 

(j)                                     A
Claimant shall not be required to exhaust all administrative remedies under
this Section 9.6 prior to commencing any action in Federal court.

 

9.7.                              Indemnification.  The Committee and its members shall not be
liable for any action or determination made in good faith with respect to the
Plan.  The Company shall, to the extent
permitted by law, by the purchase of insurance or otherwise, indemnify and hold
harmless each member of the Committee and each director, officer and employee
of the Company for liabilities or expenses they and each of them incur in
carrying out their respective duties under the Plan, other than for any
liabilities or expenses arising out of such individual’s willful misconduct or
fraud.

 

Article X.

Amendment and Termination

 

The Company reserves the right to amend, freeze or terminate, in whole
or in part, any or all of the provisions of the Plan at any time, retroactively
or otherwise; provided, however, that no amendment or termination shall reduce
the amount of the Retirement Benefit being paid to any Participant or
Beneficiary as of the date of amendment or termination or, for any active
Participant with a vested interest on such date, the amount of the Retirement
Benefit otherwise

 

17

 

payable based on the
Participant’s Credited Service and compensation to the date of the amendment,
freezing or termination, unless such Participant consents to such amendment or
termination.  Without limiting the
generality of the foregoing, the Company may amend the Plan at any time,
retroactively or otherwise, without the Participant’s consent to such
amendments, as may be necessary to preserve the intended tax-deferred
characteristics of the Plan.  The Company’s
right to amend or terminate the Plan pursuant to this Article X shall not
affect any Participant’s right to a supplemental retirement benefit under any
employment or similar agreement between the Company and a Participant or to
enforce such Participant’s rights under such employment or similar agreement.

 

In the event of a termination of the Plan, (i) a Participant’s rights
under the Plan to any Retirement Benefit shall be fully vested and
nonforfeitable and (ii) a lump sum payment equal to 100% of the Retirement
Benefit calculated as if the Participant had a Termination of Employment as of
the date of termination (a) reduced by the Early Retirement Reduction Factor
for each year (or portion of a year) between the Participant’s Early Retirement
Date and the Participant’s Normal Retirement Date by which such payment
precedes the Participant’s Normal Retirement Date and (b) actuarially reduced
using the Actuarial Equivalent Factors for each year (or portion of a year) by
which such payment precedes the Participant’s Early Retirement Age shall be
distributed as soon as administratively practicable following such termination
or in accordance with the Participant’s elections pursuant to Section 7.1 and
7.2, as determined by the Committee, in its sole discretion.

 

Article XI.

Successors

 

For purposes of the Plan, the Company shall include any and all
successors and assignees, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all the business or assets
of the Company and such successors and assignees shall perform the Company’s
obligations under the Plan, in the same manner and to the same extent that the
Company would be required to perform if no such succession or assignment had
taken place.  In such event, the term “Company”,
as used in the Plan, shall mean the Company, as hereinbefore defined and any
successor or assignee to the business or assets which by reason hereof becomes
bound by the terms and provisions of the Plan.

 

Article XII.

Miscellaneous

 

12.1.                        Rights of Participants.  Nothing herein contained shall be held or
construed to create any liability or obligation upon the Company or any of its
Affiliates to retain any Participant in its service.  All Participants shall remain subject to discharge
or discipline to the same extent as if the Plan had not been put into effect.

 

12.2.                        Governing Law.  The Plan is intended to be a “top hat”
pension benefit plan within the meaning of U.S. Department of Labor Regulation
Section 2520.104-24.  To the extent
legally required, the Code and ERISA shall govern the Plan and, if any
provision hereof is in

 

18

 

violation of any applicable requirement
thereof, the Company reserves the right to retroactively amend the Plan to
comply therewith.  To the extent not
governed by the Code and ERISA, the Plan shall be governed by the laws of the
State of Georgia (without reference to rules relating to conflicts of law).

 

12.3.                        Withholding.  The Company and its Affiliates shall have the
right to make such provisions as it deems necessary or appropriate to satisfy
any obligations it may have to withhold federal, state or local income or other
taxes incurred by reason of payments pursuant to the Plan.

 

12.4.                        Severability.  In case any provision of the Plan be deemed
or held to be unlawful or invalid for any reason, such fact shall not adversely
affect the other provisions of the Plan unless such determination shall render
impossible or impracticable the functioning of the Plan, and in such case, an
appropriate provision or provisions shall be adopted so that the Plan may
continue to function properly.

 

12.5.                        Assignment and Alienation.  The benefits payable to the Participant under
the Plan shall not be subject to alienation, transfer, assignment, garnishment,
execution or levy of any kind and any attempt to cause any benefits to be so
subjected shall not be recognized.

 

12.6.                        Communications.  All announcements, notices and other
communications regarding the Plan will be made by the Company in writing.

 

19

 

Appendix A

 

Increased Credited Service

 

For purposes of calculating the Retirement Benefit for the CEO and the
Founding Tier 1 Executives under Section 4.1 of the Plan, the CEO and the
Founding Tier 1 Executives shall be treated as having accrued an additional
five years of Credited Service after completing five years of continuous
service with the Company and its Affiliates beginning on November 10, 2003 (i.e.,
a 10% accrual for year five in addition to the 2% per year accrual).Exhibit 10.1

 

INCENTIVE STOCK OPTION AGREEMENT

 

UNDER THE NEUROMETRIX, INC.

2004 STOCK OPTION AND INCENTIVE PLAN

 

Name of Optionee:

No. of Option Shares:

Option Exercise Price per
Share:

Grant Date:

Expiration Date:

 

Pursuant to the
NeuroMetrix, Inc. 2004 Stock Option Incentive Plan (the “Plan”) as amended
through the date hereof, NeuroMetrix, Inc. (the “Company”) hereby grants to the
Optionee named above an option (the “Stock Option”) to purchase on or prior to
the Expiration Date specified above all or part of the number of shares of
Common Stock, par value $0.0001 per share (the “Stock”) of the Company
specified above at the Option Exercise Price per Share specified above subject
to the terms and conditions set forth herein and in the Plan.

 

1      Exercisability
Schedule.  No portion of this Stock
Option may be exercised until such portion shall have become exercisable.  Except as otherwise set forth below, and
subject to the discretion of the Administrator (as defined in Section 2 of
the Plan) to accelerate the exercisability schedule hereunder, this Stock
Option shall be exercisable with respect to                 
Option Shares (        % of the total
Option Shares) on                   additional            
of the total  Option Shares on each                ,              
,               ,
and                      ,
thereafter until the Stock Option has become exercisable with respect to all of
the Option Shares; provided that the total number of Option Shares for which
this Stock Option is exercisable will be rounded down to the nearest whole
Option Share.

 

Once exercisable, this Stock Option shall continue to be exercisable at
any time or times prior to the close of business on the Expiration Date,
subject to the provisions hereof and of the Plan.

 

Once exercisable, this
Stock Option shall continue to be exercisable at any time or times prior to the
close of business on the Expiration Date, subject to the provisions hereof and
of the Plan.

 

1.             Manner
of Exercise.

 

(a)           The
Optionee may exercise this Stock Option only in the following manner:  from time to time on or prior to the
Expiration Date of this Stock Option, the Optionee may give written notice to
the Administrator of his or her election to purchase some or all of the

 

 

Option Shares purchasable
at the time of such notice.  This notice
shall specify the number of Option Shares to be purchased.

 

Payment of the purchase
price for the Option Shares may be made by one or more of the following
methods:  (i) in cash, by certified
or bank check or other instrument acceptable to the Administrator;
(ii) through the delivery (or attestation to the ownership) of shares of
Stock that have been purchased by the Optionee on the open market or that have
been beneficially owned by the Optionee for at least six months and are not
then subject to any restrictions under any Company plan; (iii) by the
Optionee delivering to the Company a properly executed exercise notice together
with irrevocable instructions to a broker to promptly deliver to the Company
cash or a check payable and acceptable to the Company to pay the option
purchase price, provided that in the event the Optionee chooses to pay the
option purchase price as so provided, the Optionee and the broker shall comply
with such procedures and enter into such agreements of indemnity and other
agreements as the Administrator shall prescribe as a condition of such payment
procedure; or (iv) a combination of (i), (ii) and (iii) above.  Payment instruments will be received subject
to collection.

 

The delivery of certificates
representing the Option Shares will be contingent upon the Company’s receipt
from the Optionee of full payment for the Option Shares, as set forth above and
any agreement, statement or other evidence that the Company may require to
satisfy itself that the issuance of Stock to be purchased pursuant to the
exercise of Stock Options under the Plan and any subsequent resale of the
shares of Stock will be in compliance with applicable laws and
regulations.  In the event the Optionee
chooses to pay the purchase price by previously-owned shares of Stock through
the attestation method, the number of shares of Stock transferred to the
Optionee upon the exercise of the Stock Option shall be net of the shares
attested to.

 

(b)           Certificates
for the shares of Stock purchased upon exercise of this Stock Option shall be
issued and delivered to the Optionee upon compliance to the satisfaction of the
Administrator with all requirements under applicable laws or regulations in
connection with such issuance and with the requirements hereof and of the
Plan.  The determination of the
Administrator as to such compliance shall be final and binding on the
Optionee.  The Optionee shall not be
deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Stock subject to this Stock Option unless and until
this Stock Option shall have been exercised pursuant to the terms hereof, the
Company shall have issued and delivered the shares to the Optionee, and the
Optionee’s name shall have been entered as the stockholder of record on the
books of the Company.  Thereupon, the
Optionee shall have full voting, dividend and other ownership rights with
respect to such shares of Stock.

 

(c)           The
minimum number of shares with respect to which this Stock Option may be
exercised at any one time shall be 100 shares, unless the number of shares with
respect to which this Stock Option is being exercised is the total number of
shares subject to exercise under this Stock Option at the time.

 

(d)           Notwithstanding
any other provision hereof or of the Plan, no portion of this Stock Option
shall be exercisable after the Expiration Date hereof.

 

2

 

2.             Termination
of Employment.  If the Optionee’s
employment by the Company or a Subsidiary (as defined in the Plan) is
terminated, the period within which to exercise the Stock Option may be subject
to earlier termination as set forth below.

 

(a)           Termination
Due to Death.  If the Optionee’s
employment terminates by reason of death, any Stock Option held by the Optionee
shall become fully exercisable and may thereafter be exercised by the Optionee’s
legal representative or legatee for a period of 12 months from the date of
death or until the Expiration Date, if earlier.

 

(b)           Termination
Due to Disability.  If the Optionee’s
employment terminates by reason of disability (as determined by the
Administrator), any Stock Option held by the Optionee shall become fully
exercisable and may thereafter be exercised by the Optionee for a period of 12
months from the date of termination or until the Expiration Date, if
earlier.  The death of the Optionee
during the 12-month period provided in this Section 3(b) shall extend such
period for another 12 months from the date of death or until the Expiration
Date, if earlier.

 

(c)           Termination
for Cause.  If the Optionee’s
employment terminates for Cause, any Stock Option held by the Optionee shall
terminate immediately and be of no further force and effect.  For purposes hereof, “Cause” shall mean a
vote by the Board resolving that the Optionee shall be dismissed as a result of
(i) any material breach by the Optionee of any agreement between the Optionee
and the Company; (ii) the conviction of or plea of nolo contendere by the
Optionee to a felony or a crime involving moral turpitude; or (iii) any
material misconduct or willful and deliberate non-performance (other than by
reason of disability) by the Optionee of the Optionee’s duties to the Company.

 

(d)           Other
Termination.  If the Optionee’s
employment terminates for any reason other than death, disability, or Cause,
and unless otherwise determined by the Administrator, any Stock Option held by
the Optionee may be exercised, to the extent exercisable on the date of
termination, for a period of three months from the date of termination or until
the Expiration Date, if earlier.  Any
Stock Option that is not exercisable at such time shall terminate immediately
and be of no further force or effect.

 

The Administrator’s
determination of the reason for termination of the Optionee’s employment shall
be conclusive and binding on the Optionee and his or her representatives or
legatees.

 

3.             Incorporation
of Plan.  Notwithstanding anything
herein to the contrary, this Stock Option shall be subject to and governed by
all the terms and conditions of the Plan, including the powers of the
Administrator set forth in Section 2(b) of the Plan.  Capitalized terms in this Agreement shall
have the meaning specified in the Plan, unless a different meaning is specified
herein.

 

4.             Transferability.  This Agreement is personal to the Optionee,
is non-assignable and is not transferable in any manner, by operation of law or
otherwise, other than by will or the laws of descent and distribution.  This Stock Option is exercisable, during the
Optionee’s lifetime, only by the Optionee, and thereafter, only by the Optionee’s
legal representative or legatee.

 

3

 

5.             Status
of the Stock Option.  This Stock
Option is intended to qualify as an “incentive stock option” under Section 422
of the Internal Revenue Code of 1986, as amended (the “Code”), but the Company
does not represent or warrant that this Stock Option qualifies as such.  The Optionee should consult with his or her
own tax advisors regarding the tax effects of this Stock Option and the
requirements necessary to obtain favorable income tax treatment under Section 422
of the Code, including, but not limited to, holding period requirements.  If the Optionee intends to dispose or does
dispose (whether by sale, gift, transfer or otherwise) of any Option Shares
within the one-year period beginning on the date after the transfer of such
shares to him or her, or within the two-year period beginning on the day after
the grant of this Stock Option, he or she will notify the Company within 30
days after such disposition.

 

6.             Tax
Withholding.  The Optionee shall, not
later than the date as of which the exercise of this Stock Option becomes a
taxable event for Federal income tax purposes, pay to the Company or make
arrangements satisfactory to the Administrator for payment of any Federal,
state, and local taxes required by law to be withheld on account of such
taxable event.  The Optionee may elect to
have the minimum required tax withholding obligation satisfied, in whole or in
part, by (i) authorizing the Company to withhold from shares of Stock to be
issued, or (ii) transferring to the Company, a number of shares of Stock with
an aggregate Fair Market Value that would satisfy the withholding amount due.

 

7.             Miscellaneous.

 

(a)           Notice
hereunder shall be given to the Company at its principal place of business, and
shall be given to the Optionee at the address set forth below, or in either
case at such other address as one party may subsequently furnish to the other
party in writing.

 

4

 

(b)           This
Stock Option does not confer upon the Optionee any rights with respect to
continuance of employment by the Company or any Subsidiary.

 

 

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  

 

 

The foregoing Agreement
is hereby accepted and the terms and conditions thereof hereby agreed to by the
undersigned.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  Optionee’s
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Optionee’s
  name and address:

  

 

 

 

5

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