Document:

Exhibit 4.01

 

CUSIP
NO. 52520W283

ISIN NO. US52520W2834

 

	
  REGISTERED

  	
   

  	
  PRINCIPAL
  AMOUNT: $8,083,300

  
	
  No. R-1

  	
   

  	
   

  

 

LEHMAN BROTHERS
HOLDINGS INC.

 

MEDIUM-TERM NOTE,
SERIES I

 

NOTES LINKED TO THE EURO/U.S. DOLLAR EXCHANGE RATE
 DUE JULY 29, 2011

 

THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF
THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY OR A NOMINEE OF THE DEPOSITORY. 
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE
COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.

 

UNLESS AND UNTIL IT IS EXCHANGED
IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM (A “CERTIFICATED
NOTE”), THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR
ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY.

 

 

LEHMAN BROTHERS HOLDINGS
INC., a corporation duly organized and existing under the laws of the State of
Delaware (herein called the “Company,” which term includes any successor
corporation under the Indenture referred to on the reverse hereof), for value
received, hereby promises to pay to CEDE & Co., or registered assigns,
on the Maturity Date, an amount equal to the Redemption Amount.

 

The
“Maturity Date” is July 29, 2011, or if such day is not a Business Day, on
the next following Business Day.

 

The “Valuation
Date” is July 26, 2011; provided that, upon the occurrence of a Disruption
Event with respect to a Reference Currency, the Valuation Date for the affected
Reference Currency may be postponed (as described in “Disruption Events”
below).

 

The “Redemption
Amount” is the amount equal to the sum of the principal amount of the Notes
plus the Additional Amount, if any.

 

The “Additional
Amount” is an amount per Note equal to $10.00 multiplied by the Absolute
Currency Return.

 

The “Currency Return” is
a quotient, the numerator of which is the difference of the Final Spot Rate
minus the Initial Spot Rate and the denominator of which is the Initial Spot
Rate.

 

The “Absolute Currency Return” is
a percentage equal to (a) the Currency Return, if the Currency Return is
positive or zero, or (b) -1 multiplied by the Currency Return, if the
Currency Return is negative.

 

The “Final
Spot Rate” is the Reference Exchange Rate on the Valuation Date, determined by
the Calculation Agent in accordance with the Spot Rate Source (subject to the
occurrence of a Disruption Event).

 

The “Initial
Spot Rate” is 1.5566, which is the Reference Exchange Rate determined by the
Calculation Agent on the Trade Date.

 

The “Reference
Exchange Rate” is the spot exchange rates for the euro quoted against the U.S.
dollar, expressed as the amount of U.S. dollars per one euro.

 

The “Issue Date”
is June 16, 2008.

 

The “Trade
Date” is June 11, 2008.

 

If a Disruption Event relating to
the euro is in effect on the scheduled Valuation Date, the Calculation Agent
will calculate the Absolute Currency Return using the Final Spot Rate on the
immediately succeeding scheduled Valuation Business Day on which no Disruption
Event occurs or is continuing; provided,
however that if a Disruption Event has occurred or is continuing on each of the
three scheduled Valuation Business Days following the scheduled Valuation Date,
then (a) such third scheduled Valuation Business Day shall be deemed the
Valuation Date; and (b) the Calculation Agent will determine the Final
Spot Rate on such day in accordance with Fallback Rate Observation Methodology.

 

2

 

A “Disruption Event” means any of
the following events with respect to the euro, as determined in good faith by
the Calculation Agent:

 

(A)                              the occurrence and/or existence of an event on any day that has the
effect of preventing or making impossible the conversion of the euro into U.S.
dollars through customary legal channels;

 

(B)                                the occurrence of any event causing the Reference Exchange Rate to be
split into dual or multiple currency exchange rates; or

 

(C)                                the Final Spot Rate being unavailable, or the occurrence of an event
that generally makes it impossible to obtain the Final Spot Rate, on the
Valuation Date.

 

For purposes of the above, “scheduled
Valuation Business Day” means a day that is or, in the judgment of the
Calculation Agent, should have been, a Valuation Business Day for the euro.

 

The “Spot Rate Source” for the euro is the USD/Euro
official fixing rate, expressed as the amount of U.S. dollars per one euro, for
settlement in two Business Days reported by the WM Company which appears on
Reuters page EURUSDFIXM=WM immediately under the caption “Bid/Ask” at
approximately 4:00 p.m., London time, on the relevant Valuation Date.

 

The screen or time of observation indicated in relation to
any Spot Rate Source above shall be deemed to refer to such screen or time of
observation as modified or amended from time to time, or to any substitute
screen thereto.

 

The “Fallback Rate Observation
Methodology” means that the Reference Exchange Rate, Settlement Rate or
other rate, as specified in the applicable pricing supplement, in respect of a
reference currency will equal the noon buying rate in New York for cable
transfers in foreign currencies as announced by the Federal Reserve Bank of New
York for customs purposes (the “Noon Buying Rate”) on the relevant Valuation
Date or such other date specified in the applicable pricing supplement. If the
Noon Buying Rate is not announced on that date, the Reference Exchange Rate,
Settlement Rate or other rate for such reference currency will be calculated on
the basis of the arithmetic mean of the applicable spot quotations received by
the Calculation Agent at approximately 10:00 a.m., New York City time, on
the Valuation Business Day next succeeding the Valuation Date or such other date
specified in the applicable pricing supplement, for the purchase or sale for
deposits in the reference currency by the New York offices of three leading
banks engaged in the interbank market (selected in the sole discretion of the
Calculation Agent) (the “Reference Banks”). If fewer than three Reference Banks
provide spot quotations, then the Reference Exchange Rate, Settlement Rate or
other rate, as applicable, will be calculated on the basis of the arithmetic
mean of the applicable spot quotations received by the Calculation Agent at
approximately 10:00 a.m., New York City time, on the relevant date from
two Reference Banks (selected in the sole discretion of the Calculation Agent),
for the purchase or sale for deposits in the reference currency. If these spot
quotations are available from only one Reference Bank, then the Calculation
Agent, in its sole discretion, will determine whether that quotation is
reasonable to be used. If no spot quotation is available, 

 

3

 

then
the Reference Exchange Rate, Settlement Rate or other rate, as applicable, for
such reference currency will be determined by the Calculation Agent in good
faith and in a commercially reasonable manner.

 

A
“Business Day”, notwithstanding any provision in the Indenture, is any day that
is not is not a Saturday or Sunday and that is not a day on which banking
institutions in New York City generally are authorized or obligated by law or
executive order to be closed.

 

The
“Calculation Agent” means Lehman Brothers Inc.

 

Except
as provided below, the Redemption Amount may, at the option of the Company, be
made by check mailed to the person entitled thereto at such person’s address as
it appears on the registry books of the Company.

 

Payment
of the Redemption Amount will be made in immediately available funds in
accordance with the normal procedures of the Trustee (or any duly appointed
Paying Agent).

 

The
Company will pay any administrative costs imposed by banks in making payments in
immediately available funds, but any tax, assessment or governmental charge
imposed upon payments hereunder, including, without limitation, any withholding
tax, will be borne by the Holder hereof.

 

References herein to “U.S.
dollars” or “U.S.$” or “$” or “USD” are to the coin or currency of the United
States as at the time of payment is legal tender for the payment of public and
private debts.

 

REFERENCE IS HEREBY MADE
TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF.  SUCH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

 

This Note shall not be
valid or become obligatory for any purpose until the certificate of
authentication hereon shall have been signed by the Trustee under the
Indenture.

 

4

 

IN WITNESS WHEREOF,
Lehman Brothers Holdings Inc. has caused this instrument to be signed by its
Chairman of the Board, its President, its Vice Chairman, its Chief Financial
Officer, one of its Vice Presidents or its Treasurer, by manual or facsimile
signature under its corporate seal, attested by its Secretary or one of its
Assistant Secretaries by manual or facsimile signature.

 

Dated:  June 16, 2008

 

	
  [SEAL]

  	
   

  	
  LEHMAN BROTHERS
  HOLDINGS INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Andrew Yeung

  	 

	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  	 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Cindy Buckholz

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Assistant Secretary

  

 

 

TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

 

This is one of the
Securities of the series designated herein referred to in the within-mentioned
Indenture.

 

	
  CITIBANK, N.A.

  
	
    as
  Trustee

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Officer

  

 

5

 

[REVERSE
OF NOTE]

 

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTES,
SERIES I

NOTES LINKED TO THE EURO/U.S. DOLLAR EXCHANGE RATE
 DUE JULY 29, 2011

 

Section 1.  General.  This Note is one of a duly authorized series
of Notes of the Company designated as the Medium-Term Notes, Series I, Notes Linked To The Euro/U.S. Dollar Exchange
Rate (herein called the “Notes”).  The Notes are one of an indefinite
number of series of debt securities of the Company (collectively, the “Securities”)
issued or issuable under and pursuant to an indenture dated as of September 1,
1987, as amended and supplemented (the “Indenture”), duly executed and delivered
by the Company and Citibank, N.A., as Trustee (herein called the “Trustee”), to
which Indenture and all indentures supplemental thereto reference is hereby
made for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the holders of
the Securities.  The separate series of
Securities may be issued in various aggregate principal amounts, may mature at
different times, may bear interest (if any) at different rates, may be subject to
different redemption provisions or repurchase rights (if any), may be subject
to different sinking, purchase or analogous funds (if any), may be subject to
different covenants and Events of Default and may otherwise vary as in the
Indenture provided.

 

Section 2.  Principal Amount for Indenture Purposes.  For the purpose of determining whether
Holders of the requisite amount of Notes of this series outstanding under the
Indenture have made a demand, given a notice or waiver or taken any other
action, the principal amount of this Note will be deemed to be the principal
amount of this Note then outstanding.

 

Section 3.  Modification and Waivers.  The Indenture contains provisions permitting
the Company and the Trustee, with the consent of the Holders of not less than
66-2/3% in aggregate principal amount of each series of the Securities at the
time Outstanding to be affected, evidenced as in the Indenture provided, to
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Securities of all such series; provided, however, that no such supplemental
indenture shall, among other things, (i) change the fixed maturity of any
Security, or reduce the Additional Amount or the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon or reduce any
premium or other amount payable on redemption, or make the Additional Amount or
the principal amount thereof, premium or other amount payable, if any, or
interest thereon payable in any coin or currency other than that herein above
provided, without the consent of the Holder of each Security so affected, or (ii) change
the place of payment on any Security, or impair the right to institute suit for
payment on any Security, or reduce the aforesaid percentage of Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Security so affected.  It is also provided in the Indenture that,
prior to any declaration accelerating the maturity of any series of Securities,
the holders of a majority in aggregate principal amount of the Securities of
such series 

 

 

Outstanding may on behalf
of the holders of all the Securities of such series waive any past default or
Event of Default under the Indenture with respect to such series and its
consequences, except a default in the payment of interest, if any, on the
Additional Amount or the principal amount, or premium, if any, on any of the
Securities of such series, or in the payment of any sinking fund installment or
analogous obligation with respect to Securities of such series.  Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
holders and owners of this Note and any Notes of this series which may be
issued in exchange or substitution herefor, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes of this series.

 

Section 4.  Obligations Unconditional.  No reference herein to the Indenture and no
provisions of this Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
Additional Amount or the principal amount on this Note at the place, at the
respective times, at the rate, and in the coin or currency herein prescribed.

 

Section 5.  Defeasance.  The Indenture contains provisions for the
discharge of the Indenture and defeasance at any time of the indebtedness on
this Note upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Note.

 

Section 6.  Authorized Form and Denominations.  The Notes of this series are issuable in
registered form, without coupons.  Each
Note will be issued initially as either a Global Security or a Certificated
Note, at the option of the Company, in denominations of $10 or whole multiples
of $10, either at the office or agency to be designated and maintained by the
Company for such purpose in the Borough of Manhattan, New York City, pursuant
to the provisions of the Indenture or at any of such other offices or agencies
as may be designated and maintained by the Company for such purpose pursuant to
the provisions of the Indenture, and in the manner and subject to the
limitations provided in the Indenture, but without the payment of any service
charge, except for any tax or other governmental charges imposed in connection
therewith.  Notes of this series are
exchangeable for a like aggregate principal amount of Notes of this series of a
different authorized denomination, except that Global Securities will not be
exchangeable for Certificated Notes of this series.

 

Section 7.  Registration of Transfer.  As provided in the Indenture and subject to
certain limitations as therein set forth, the transfer of this Note is
registrable in the Security Register, upon surrender of this Note for
registration of transfer, at the Corporate Trust Office or agency in a Place of
Payment for this Note, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar
requiring such written instrument of transfer duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more
new Notes of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

 

If at any time the
Depository notifies the Company that it is unwilling or unable to continue as
Depository or if at any time the Depository shall no longer be eligible under
the Indenture, the Company shall appoint a successor Depository.  If a successor Depository for the Notes of
this series is not appointed by the Company within 90 days after the Company
receives 

 

 

such notice or becomes
aware of such ineligibility, the Company will issue, and the Trustee will
authenticate and deliver, Notes of this series in definitive form in an
aggregate principal amount equal to the principal amount of this Note.

 

No service charge shall
be made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.

 

Prior to due presentment
of this Note for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the person in whose name this Note
is registered as the owner hereof for all purposes, and neither the Company nor
the Trustee nor any agent of the Company or of the Trustee shall be affected by
any notice to the contrary.

 

Section 8.  Events of Default.  If an Event of Default with respect to Notes
of this series shall occur and be continuing, the amount that may be declared
due and payable upon any acceleration of the notes will be determined by the
Calculation Agent for the period from and including the Issue Date to but
excluding the date of early repayment and will equal, for each note, the
Redemption Amount, calculated as the date of early repayment were the Maturity
Date. If a bankruptcy proceeding is commenced in respect of Lehman Brothers
Holdings, the claim of the beneficial owner of a note for the period from and
including the Issue Date to but excluding the date of early repayment will be
capped at the Redemption Amount, calculated as though the date of the
commencement of the proceeding were the Maturity Date.

 

Section 9.  No Recourse Against Certain Persons.  No recourse for the payment of the Additional
Amount or for any claim based hereon or otherwise in respect hereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
the Indenture or any Indenture supplemental thereto or in any Note, or because
of the creation of any indebtedness represented thereby, shall be had against
any incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.

 

Section 10.  Defined
Terms.  All terms used but not
defined in this Note are used herein as defined in the Indenture.

 

Section 11.  GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.EXHIBIT 10.1

 

APPENDIX A

 

OLD
SECOND BANCORP, INC.

 

2008
EQUITY INCENTIVE PLAN

 

Article 1

GENERAL

 

Section 1.1                                   Purpose, Effective Date and Term.  The purpose of this OLD SECOND BANCORP, INC. 2008 EQUITY INCENTIVE PLAN (the
“Plan”) is to promote the long-term
financial success of OLD SECOND BANCORP, INC.,
a Delaware corporation (the “Company”),
and any Subsidiary by providing a means to attract, retain and reward
individuals who can and do contribute to such success and to further align
their interests with those of the Company’s shareholders.  The “Effective
Date” of the Plan is January 15, 2008,
subject to approval of the Plan by the Company’s shareholders.  The Plan shall remain in effect as long as
any awards under it are outstanding; provided, however,
that no awards may be granted under the Plan after the ten-year anniversary of
the Effective Date.

 

Section 1.2                                   Administration.  The
authority to control and manage the operation of the Plan shall be vested in a
committee of the Company’s Board of Directors (the “Committee”), in accordance with Section 5.1.

 

Section 1.3                                   Participation.  Each
employee or Director of, or service provider to, the Company or any Subsidiary
of the Company who is granted an award in accordance with the terms of the Plan
shall be a “Participant” in the
Plan.  Awards under the Plan shall be
limited to employees and Directors of, and service providers to, the Company or
any Subsidiary; provided, however, that an award
(other than an award of an ISO) may be granted to an individual prior to the
date on which he or she first performs services as an employee or a Director,
provided that such award does not become vested prior to the date such
individual commences such services.

 

Section 1.4                                   Definitions.  Capitalized terms in
the Plan shall be defined as set forth in the Plan (including the definition
provisions of Article 8).

 

Article 2

AWARDS

 

Section 2.1                                   General.  Any award under the
Plan may be granted singularly, in combination with another award (or awards),
or in tandem whereby the exercise or vesting of one award held by a Participant
cancels another award held by the Participant. 
Each award under the Plan shall be subject to the terms and conditions
of the Plan and such additional terms, conditions, limitations and restrictions
as the Committee shall provide with respect to such award and as evidenced in
the Award Agreement.  Subject to the
provisions of Section 2.6, an award may be
granted as an alternative to or replacement of an existing award under (i) the
Plan; (ii) any other plan of the Company or any Subsidiary; (iii) any
Prior Plan; or (iv) as the form of payment for grants or rights earned or
due under any other compensation plan or arrangement of the Company or any
Subsidiary, including without limitation the plan of any entity acquired by 

 

 

the Company or any
Subsidiary.  The types of awards that may
be granted under the Plan include:

 

(a)                                  Stock Options.  A stock option represents the right to
purchase shares of Stock at an Exercise Price established by the
Committee.  Any option may be either an incentive stock option (an “ISO”) that is intended to satisfy the
requirements applicable to an “incentive stock option” described in Code Section 422(b) or
a non-qualified option that is not intended to be an ISO, provided,
however, that no ISOs may be: 
(i) granted after the ten-year anniversary of the earlier of the
Effective Date or shareholder approval of the Plan; or (ii) granted to a
non-employee.  Unless otherwise specifically provided by its terms, any
option granted under the Plan shall be a non-qualified option.  Any ISO granted under this Plan that does not
qualify as an ISO for any reason shall be deemed to be a non-qualified
option.  In addition, any ISO granted
under this Plan may be unilaterally modified by the Committee to disqualify
such option from ISO treatment such that it shall become a non-qualified
option.

 

(b)                                  Stock Appreciation Rights.  A stock
appreciation right (an “SAR”) is a
right to receive, in cash, Stock or a combination of both (as shall be
reflected in the Award Agreement), an amount equal to or based upon the excess
of: (i) the Fair Market Value of a share of Stock at the time of exercise;
over (ii) an Exercise Price established by the Committee.

 

(c)                                  Stock Awards.  A stock award is a
grant of shares of Stock or a right to receive shares of Stock (or their cash
equivalent or a combination of both) in the future.  Such awards may
include, but shall not be limited to, bonus shares, stock units, performance
shares, performance units, restricted stock or restricted stock units or any
other equity-based award as determined by the Committee.

 

(d)                                  Cash Incentive Awards.  A cash
incentive award is the grant of a right to receive a payment of cash,
determined on an individual basis or as an allocation of an incentive pool (or
Stock having a value equivalent to the cash otherwise payable) that is
contingent on the achievement of performance objectives established by the
Committee.

 

Section 2.2                                   Exercise of Options and SARs.  An option or SAR shall be
exercisable in accordance with such terms and conditions and during such
periods as may be established by the Committee.  In no event, however,
shall an option or SAR expire later than ten (10) years after the date of
its grant (five (5) years in the case of a 10% Shareholder with respect to
an ISO).  The “Exercise Price”
of each option and SAR shall not be less than 100% of the Fair Market Value of
a share of Stock on the date of grant (or, if greater, the par value of a share
of Stock); provided, however, that
the Exercise Price of an ISO shall not be less than 110% of Fair Market Value
of a share of Stock on the date of grant in the case of a 10% Shareholder; further, provided, that, to the extent permitted under Code Section 409A,
the Exercise Price may be higher or lower in the case of options or SARs
granted in replacement of existing awards held by an employee, Director or
service provider granted under a Prior Plan or by an acquired entity.  The
payment of the Exercise Price of an option shall be by cash or, subject to
limitations imposed by applicable law, by such other means as the Committee may
from time to time permit, including:  (a) by
tendering, either actually or by attestation, shares of Stock acceptable to the
Committee, and valued at Fair Market Value as of the day of exercise; (b) by
irrevocably authorizing a third party, acceptable to the Committee, to sell
shares of Stock (or a sufficient 

 

A-2

 

portion of the
shares) acquired upon exercise of the option and to remit to the Company a
sufficient portion of the sale proceeds to pay the entire Exercise Price and
any tax withholding resulting from such exercise; (c) by personal,
certified or cashiers’ check; (d) by other property deemed acceptable by
the Committee; or (e) by any combination thereof.

 

Section 2.3                                   Performance-Based Compensation. Any award under the Plan which
is intended to be “performance-based compensation” within the meaning of Code Section 162(m) shall
be conditioned on the achievement of one or more objective performance
measures, to the extent required by Code Section 162(m), as may be
determined by the Committee.  The grant
of any award and the establishment of performance measures that are intended to
be performance-based compensation shall be made during the period required
under Code Section 162(m).

 

(a)                                  Performance Measures.  Such
performance measures may be based on any one or more of the following: earnings
(e.g., earnings before interest
and taxes, earnings before interest, taxes, depreciation and amortization; or
earnings per share); financial return ratios (e.g.,
return on investment, return on invested capital, return on equity
or return on assets); increase in revenue, operating or net cash flows; cash
flow return on investment; total shareholder return; market share; net
operating income, operating income or net income; debt load reduction; expense
management; economic value added; stock price; assets, achievement of balance
sheet or income statement objectives and strategic business objectives,
consisting of one or more objectives based on meeting specific cost targets,
business expansion goals and goals relating to acquisitions or
divestitures.  Performance measures may be based on the performance of the
Company as a whole or of any one or more Subsidiaries or business units of the
Company or a Subsidiary and may be measured relative to a peer group, an index
or a business plan.

 

(b)                                  Partial Achievement.  The terms of
any award may provide that partial achievement of the performance measures may
result in a payment or vesting based upon the degree of achievement.  In addition, partial achievement of
performance measures shall apply toward a Participant’s individual limitations
as set forth in Section 3.3.

 

(c)                                  Extraordinary Items.  In establishing
any performance measures, the Committee may provide for the exclusion of the
effects of the following items, to the extent identified in the audited
financial statements of the Company, including footnotes, or in the Management’s
Discussion and Analysis section of the Company’s annual report:  (i) extraordinary, unusual, and/or
nonrecurring items of gain or loss; (ii) gains or losses on the
disposition of a business; (iii) changes in tax or accounting principles,
regulations or laws; or (iv) mergers or acquisitions.  To the extent
not specifically excluded, such effects shall be included in any applicable
performance measure.

 

(d)                                  Adjustments.  Pursuant to this Section 2.3,
in certain circumstances the Committee may adjust performance measures; provided, however, no adjustment may be
made with respect to an award that is intended to be performance-based
compensation, except to the extent the Committee exercises such negative
discretion as is permitted under applicable law for purposes of an exception
under Code Section 162(m).  If the
Committee determines that a change in the business, operations, corporate
structure or capital structure of the Company or the manner in which the
Company or any Subsidiary conducts its business or other events or
circumstances render current performance measures to be unsuitable, the
Committee may modify 

 

A-3

 

such performance
measures, in whole or in part, as the Committee deems appropriate.  If a Participant is promoted, demoted or
transferred to a different business unit during a performance period, the
Committee may determine that the selected performance measures or applicable
performance period are no longer appropriate, in which case, the Committee, in
its sole discretion, may: (i) adjust, change or eliminate the performance
measures or change the applicable performance period; or (ii) cause to be
made a cash payment to the Participant in an amount determined by the
Committee.

 

Section 2.4                                   Dividends
and Dividend Equivalents.  Any
award under the Plan (other than an option or an SAR) may provide the
Participant with the right to receive dividend payments or dividend equivalent
payments with respect to shares of Stock subject to the award, which payments
may be either made currently or credited to an account for the Participant, may
be settled in cash or Stock and may be subject to restrictions similar to the
underlying award.

 

Section 2.5                                   Deferred Compensation.  If any award would be considered “deferred
compensation” as defined under Code Section 409A (“Deferred
Compensation”), the Committee reserves the absolute right (including
the right to delegate such right) to unilaterally amend the Plan or the Award
Agreement, without the consent of the Participant, to avoid the application of,
or to maintain compliance with, Code Section 409A.  Any amendment by the Committee to the Plan or
an Award Agreement pursuant to this Section 2.5
shall maintain, to the extent practicable, the original intent of the
applicable provision without violating Code Section 409A.  A Participant’s acceptance of any award under
the Plan constitutes acknowledgement and consent to such rights of the
Committee, without further consideration or action.  Any discretionary authority retained by the
Committee pursuant to the terms of this Plan or pursuant to an Award Agreement
shall not be applicable to an award which is determined to constitute Deferred
Compensation, if such discretionary authority would contravene Code Section 409A.

 

Section 2.6                                   Repricing of Awards.  Except for adjustments
pursuant to Section 3.4
(relating to the adjustment of shares), and reductions of the Exercise Price
approved by the Company Shareholders, the Exercise Price for any outstanding
option may not be decreased after the date of grant nor may an outstanding
option granted under the Plan be surrendered to the Company as consideration
for the grant of a replacement option with a lower exercise price.

 

Section 2.7                                   Forfeiture of Awards.  Unless specifically provided to the contrary
in an Award Agreement, upon notification of Termination of Service for Cause,
any outstanding award, whether vested or unvested, held by a Participant shall
terminate immediately, the award shall be forfeited and the Participant shall
have no further rights thereunder.

 

Article 3

SHARES SUBJECT TO PLAN

 

Section 3.1                                   Available Shares.  The shares of Stock with
respect to which awards may be made under the Plan shall be shares currently
authorized but unissued, currently held or, to the extent permitted by
applicable law, subsequently acquired by the Company, including shares
purchased in the open market or in private transactions.

 

A-4

 

Section 3.2                                   Share Limitations.

 

(a)                                  Share Reserve.  Subject to the following provisions of this Section 3.2, the maximum number of
shares of Stock that may be delivered to Participants and their beneficiaries
in the aggregate under the Plan shall be 575,000 shares of Stock (all of which
may be granted as ISOs to the extent that such shares are granted under the
Plan).  The maximum number of shares of
Stock that may be issued in conjunction with awards other than options and SARs
shall be 287,500.  As of the date of
shareholder approval, no further awards shall be granted pursuant to the Prior
Plans.  The aggregate number of shares
available for grant under this Plan (including the number that may be granted
as ISOs and as awards other than options and SARs) and the number of shares of
Stock subject to outstanding awards shall be subject to adjustment as provided
in Section 3.4.

 

(b)                                  Reuse of Shares.  To the extent any
shares of Stock covered by an award (including stock awards), under the Plan
are forfeited or are not delivered to a Participant or beneficiary for any
reason, including because the award is forfeited, canceled or settled in cash,
such shares shall not be deemed to have been delivered for purposes of
determining the maximum number of shares of Stock available for delivery under
the Plan and shall again become eligible for issuance under the Plan.  SARs which are settled in Stock shall be
counted in full against the number of shares available for award under the
Plan, regardless of the number of net shares issued upon settlement of the SAR.

 

Section 3.3                                   Limitations
on Grants to Individuals.  With respect to awards, the following
limitations shall be applicable:

 

(a)                                  Options and SARs.  The maximum number
of shares of Stock that may be subject to options or SARs granted to any one
Participant during any calendar year and are intended to be “performance-based
compensation” (as that term is used for purposes of Code Section 162(m))
and then only to the extent that such limitation is required by Code Section 162(m),
shall be 100,000.  For purposes of this Section 3.3(a), if an option is in tandem with an SAR,
such that the exercise of the option or SAR with respect to a share of Stock
cancels the tandem SAR or option right, respectively, with respect to such
share, the tandem option and SAR rights with respect to each share of Stock
shall be counted as covering but one share of Stock for purposes of applying
the limitations of this Section 3.3(a).

 

(b)                                  Stock Awards.  The maximum number of
shares of Stock that may be subject to stock awards described under Section 2.1(c) which are granted
to any one Participant during any calendar year and are intended to be “performance-based
compensation” (as that term is used for purposes of Code Section 162(m))
and then only to the extent that such limitation is required by Code Section 162(m),
shall be 50,000.

 

(c)                                  Cash Incentive Awards and Stock Awards Settled in
Cash.  The maximum dollar amount that may be payable to a
Participant pursuant to cash incentive awards described under Section 2.1(d) or cash-settled
stock awards under Section 2.1(c) which
are granted to any one Participant during any calendar year and are intended to
be performance-based compensation (as that term is used for purposes of Code Section 162(m))
and then only to the extent that such limitation is required by Code Section 162(m),
shall be $1,000,000.

 

A-5

 

(d)                                  Dividend, Dividend Equivalents and Earnings.  For
purposes of determining whether an award is intended to be qualified as
performance-based compensation under the foregoing limitations of this Section 3.3, (i) the right to
receive dividends and dividend equivalents with respect to any award which is
not yet vested shall be treated as a separate award; and (ii) if the
delivery of any shares or cash under an award is deferred, any earnings,
including dividends and dividend equivalents, shall be disregarded.

 

(e)                                  Partial Performance.  Notwithstanding the
preceding provisions of this Section 3.3,
if in respect of any performance period or restriction period, the Committee
grants to a Participant awards having an aggregate dollar value and/or number
of shares less than the maximum dollar value and/or number of shares that could
be paid or awarded to such Participant based on the degree to which the
relevant performance measures were attained, the excess of such maximum dollar
value and/or number of shares over the aggregate dollar value and/or number of
shares actually subject to awards granted to such Participant shall be carried
forward and shall increase the maximum dollar value and/or the number of shares
that may be awarded to such Participant in respect of the next performance
period in respect of which the Committee grants to such Participant an award
intended to qualify as “performance-based compensation” (as that term is used
for purposes of Code Section 162(m)), subject to adjustment pursuant to Section 3.4 hereof.

 

Section 3.4                                   Corporate Transactions.  In the event of a
corporate transaction involving the Company or the shares of Stock of the
Company (including any stock dividend, stock split, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination or exchange of shares), all outstanding awards under the
Plan and the Prior Plans, the number of shares reserved for issuance under the
Plan and the Prior Plans under Section 3.2
and each of the specified limitations set forth in Section 3.3 shall automatically be adjusted to
proportionately and uniformly reflect such transaction (but only to the extent
that such adjustment will not affect the status of an award intended to qualify
as “performance-based compensation” under Code Section 162(m), if
applicable); provided, however,
that the Committee may otherwise adjust awards (or prevent such automatic
adjustment) as it deems necessary, in its sole discretion, to preserve the
benefits or potential benefits of the awards and the Plan.  Action by the
Committee may include: (i) adjustment of the number and kind of shares
which may be delivered under the Plan; (ii) adjustment of the number and
kind of shares subject to outstanding awards; (iii) adjustment of the
Exercise Price of outstanding options and SARs; and (iv) any other
adjustments that the Committee determines to be equitable (which may include, (A) replacement
of awards with other awards which the Committee determines have comparable
value and which are based on stock of a company resulting from the transaction,
and (B) cancellation of the award in return for cash payment of the
current value of the award, determined as though the award were fully vested at
the time of payment, provided that in the case of an option or SAR, the amount
of such payment shall be no less than the excess of the value of the Stock
subject to the option or SAR at the time of the transaction over the Exercise
Price).

 

Section 3.5                                   Delivery of Shares.  Delivery of shares of
Stock or other amounts under the Plan shall be subject to the following:

 

A-6

 

(a)                                  Compliance with Applicable Laws.  Notwithstanding
any other provision of the Plan, the Company shall have no obligation to
deliver any shares of Stock or make any other distribution of benefits under
the Plan unless such delivery or distribution complies with all applicable laws
(including, the requirements of the Securities Act), and the applicable
requirements of any securities exchange or similar entity.

 

(b)                                  Certificates.  To the extent that the
Plan provides for the issuance of shares of Stock, the issuance may be affected
on a non-certificated basis, to the extent not prohibited by applicable law or
the applicable rules of any stock exchange.

 

Article 4

CHANGE IN CONTROL

 

Section 4.1                                   Consequence
of a Change in Control.  Subject
to the provisions of Section 3.4
(relating to the adjustment of shares), and except as otherwise provided in the
Plan or in the terms of any Award Agreement:

 

(a)                                  At
the time of a Change in Control, all options and SARs then held by the
Participant shall become fully exercisable immediately upon the Change in Control
(subject to the expiration provisions otherwise applicable to the option or
SAR).

 

(b)                                  At
the time of a Change in Control, all stock awards described in Section 2.1(c) or cash incentive
awards described in Section 2.1(d) shall
be fully earned and vested immediately upon the Change in Control.

 

Section 4.2                                   Definition of Change in Control.  For purposes of the Plan, “Change in Control” shall mean in the case
of a Participant with a then-current written Change in Control Agreement, the
definition of Change in Control set forth in the Change in Control
Agreement.  For all other Participants, a
Change in Control shall be deemed to have occurred if:

 

(a)                                  Any
person other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a corporation owned directly or
indirectly by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company, is or becomes the
beneficial owner (within the meaning of Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of the Company representing thirty-three
percent (33%) or more of the total voting power represented by the Company’s
then outstanding Voting Securities; or

 

(b)                                  During
any period of two (2) consecutive years, individuals who at the beginning
of such period constitute the Board and any new Director whose election by the
Board or nomination for election by the Company’s shareholders was approved by
a vote of at least two-thirds (2/3) of the Directors then still in office who
either were Directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof; or

 

(c)                                  Consummation
of:  (i) a merger or consolidation
to which the Company is a party if the shareholders before such merger or
consolidation do not, as a result of such merger 

 

A-7

 

or consolidation, own, directly or indirectly, more
than sixty-seven percent (67%) of the combined voting power of the then
outstanding voting securities of the entity resulting from such merger or
consolidation in substantially the same proportion as their ownership of the
combined voting power of the Company’s Voting Securities outstanding
immediately before such merger or consolidation; or (ii) a complete
liquidation or dissolution or an agreement for the sale or other disposition of
all or substantially all of the Company’s assets.

 

However,  in  no  event  shall  a  Change  in  Control  be  deemed  to  have  occurred,  with  respect  to  a  Participant  if  the  Participant  is  part  of  a  purchasing  group  which  consummates  the  Change-in-Control  transaction.  A  Participant  shall  be  deemed  “part  of  a  purchasing  group”  for  purposes  of  the  preceding  sentence  if  the  Participant  is  an  equity  participant  in  the  purchase  company  or  group  (except  for  (i)  passive  ownership  of  less  than  two  percent  (2%)  of  the  stock  of  the  purchasing  company;  or  (ii)  ownership  of  equity  participation  in  the  purchasing  company  or  group  which  is  otherwise  not  significant,  as  determined  prior  to  the  Change  in  Control  by  a  majority  of  the  non-employee  continuing  Directors).

 

In the event that any
award under the Plan constitutes Deferred Compensation, and the settlement of,
or distribution of benefits under such award is to be triggered by a Change in
Control, then such settlement or distribution shall be subject to the event
constituting the Change in Control also constituting a “change in control event”
permitted under Code Section 409A.

 

Article 5

COMMITTEE

 

Section 5.1                                   Administration.  The  authority  to  control  and  manage  the  operation  and  administration  of  the  Plan  shall  be  vested  in  the  Committee  in  accordance  with  this
Article 5.   The  Committee  shall  be  selected  by  the  Board,  provided  that  the  Committee  shall  consist  of  two  (2) or  more  members  of  the  Board,  each  of  whom  are  both  a  “non-employee  director”  (within  the  meaning  of  Rule  16b-3  promulgated  under  the  Exchange  Act)  and  an  “outside  director”  (within  the  meaning  of  Code  Section  162(m)).  Subject  to  applicable  stock  exchange  rules,  if  the  Committee  does  not  exist,  or  for  any  other  reason  determined  by  the  Board,  the  Board  may  take  any  action  under  the  Plan  that  would  otherwise  be  the  responsibility  of  the  Committee.

 

Section 5.2                                   Powers of Committee.  The Committee’s
administration of the Plan shall be subject to the following:

 

(a)                                  Subject
to the provisions of the Plan, the Committee will have the authority and
discretion to select from among the Company’s and any Subsidiary’s employees,
Directors and service providers those persons who shall receive awards, to
determine the time or times of receipt, to determine the types of awards and
the number of shares covered by the awards, to establish the terms, conditions,
performance criteria, restrictions, and other provisions of such awards,
(subject to the restrictions imposed by Article 6)
to cancel or suspend awards and to reduce or eliminate any restrictions or
vesting requirements applicable to an award at any time after the grant of the award.

 

(b)                                  Notwithstanding
anything in the Plan to the contrary, in the event that the Committee
determines that it is advisable to grant awards which shall not qualify for the

 

A-8

 

exception for performance-based
compensation from the tax deductibility limitations of Section 162(m) of
the Code, the Committee may make such grants or awards, or may amend the Plan
to provide for such grants or awards, without satisfying the requirements of Section 162(m) of
the Code.

 

(c)                                  The
Committee will have the authority and discretion to interpret the Plan, to
establish, amend and rescind any rules and regulations relating to the
Plan, and to make all other determinations that may be necessary or advisable
for the administration of the Plan.

 

(d)                                  The
Committee will have the authority to define terms not otherwise defined herein.

 

(e)                                  Any
interpretation of the Plan by the Committee and any decision made by it under
the Plan is final and binding on all persons.

 

(f)                                    In
controlling and managing the operation and administration of the Plan, the
Committee shall take action in a manner that conforms to the articles and
bylaws of the Company and applicable state corporate law.

 

Section 5.3                                   Delegation by Committee.  Except to the extent
prohibited by applicable law, the applicable rules of a stock exchange or
the Plan, or as necessary to comply with the exemptive provisions of Rule 16b-3
promulgated under the Exchange Act, the Committee may allocate all or any
portion of its responsibilities and powers to any one or more of its members
and may delegate all or any part of its responsibilities and powers to any
person or persons selected by it, including: 
(a) delegating to a committee of one or more members of the Board
who are not “outside directors”
within the meaning of Code Section 162(m), the authority to grant awards
under the Plan to eligible persons who are either:  (i) not then “covered employees,” within the meaning of Code Section 162(m) and
are not expected to be “covered employees” at the time of recognition of income
resulting from such award; or (ii) not persons with respect to whom the
Company wishes to comply with Code Section 162(m); and/or (b) delegating
to a committee of one or more members of the Board who are not “non-employee
directors,” within the meaning of Rule 16b-3, the authority to grant
awards under the Plan to eligible persons who are not then subject to Section 16
of the Exchange Act.  The acts of such delegates shall be treated
hereunder as acts of the Committee and such delegates shall report regularly to
the Committee regarding the delegated duties and responsibilities and any
awards so granted.  Any such allocation
or delegation may be revoked by the Committee at any time.

 

Section 5.4                                   Information to be Furnished to Committee.  As may be permitted by
applicable law, the Company and any Subsidiary shall furnish the Committee with
such data and information as it determines may be required for it to discharge
its duties.  The records of the Company and any Subsidiary as to an
employee’s or Participant’s employment, termination of employment, leave of
absence, reemployment and compensation shall be conclusive on all persons
unless determined by the Committee to be manifestly incorrect.  Subject to
applicable law, Participants and other persons entitled to benefits under the
Plan must furnish the Committee such evidence, data or information as the
Committee considers desirable to carry out the terms of the Plan.

 

A-9

 

Section 5.5                                   Expenses and Liabilities.  All expenses and liabilities
incurred by the Committee in the administration and interpretation of the Plan
or any Award Agreement shall be borne by the Company.  The Committee may employ attorneys,
consultants, accountants or other persons in connection with the administration
and interpretation of the Plan.  The
Company, and its officers and Directors, shall be entitled to rely upon the
advice, opinions or valuations of any such persons.

 

Article 6

AMENDMENT AND TERMINATION

 

Section 6.1                                   General.  The Board may,
as permitted by law, at any time, amend or terminate the Plan, and may amend
any Award Agreement, provided that no amendment or termination (except as
provided in Section 2.5, Section 3.4 and Section 6.2)
may, in the absence of written consent to the change by the affected
Participant (or, if the Participant is not then living, the affected
beneficiary), impair the rights of any Participant or beneficiary under any
award granted which was granted under the Plan prior to the date such amendment
is adopted by the Board; provided, however,
that, no amendment may (a) materially increase the benefits accruing to
Participants under the Plan; (b) materially increase the aggregate number
of securities which may be issued under the Plan, other than pursuant to Section 3.4, or (c) materially
modify the requirements for participation in the Plan, unless the amendment
under (a), (b) or (c) above is approved by the Company’s
shareholders.

 

Section 6.2                                   Amendment to Conform to Law. 
Notwithstanding any provision in this Plan or any Award Agreement to the
contrary, the Committee may amend the Plan or an Award Agreement, to take
effect retroactively or otherwise, as deemed necessary or advisable for the
purpose of conforming the Plan or the Award Agreement to any present or future
law relating to plans of this or similar nature (including, but not limited to,
Code Section 409A).  By accepting an
award under this Plan, each Participant agrees and consents to any amendment
made pursuant to this Section 6.2 or Section 2.5 to any award granted under this Plan without further consideration or
action.

 

Article 7

GENERAL TERMS

 

Section 7.1                                   No
Implied Rights.

 

(a)                                  No Rights to Specific Assets.  Neither
a Participant nor any other person shall by reason of participation in the Plan
acquire any right in or title to any assets, funds or property of the Company
or any Subsidiary whatsoever, including any specific funds, assets, or other
property which the Company or any Subsidiary, in its sole discretion, may set
aside in anticipation of a liability under the Plan.  A Participant shall
have only a contractual right to the Stock or amounts, if any, payable or
distributable under the Plan, unsecured by any assets of the Company or any Subsidiary,
and nothing contained in the Plan shall constitute a guarantee that the assets
of the Company or any Subsidiary shall be sufficient to pay any benefits to any
person.

 

A-10

 

(b)                                  No Contractual Right to Employment or Future
Awards.  The Plan does not constitute a contract of employment,
and selection as a Participant will not give any participating employee the
right to be retained in the employ of the Company or any Subsidiary or any
right or claim to any benefit under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan.  No individual shall
have the right to be selected to receive an award under this Plan, or, having
been so selected, to receive a future award under this Plan.

 

(c)                                  No Rights as a Shareholder.  Except as otherwise provided in the Plan, no
award under the Plan shall confer upon the holder thereof any rights as a
shareholder of the Company prior to the date on which the individual fulfills
all conditions for receipt of such rights.

 

Section 7.2                                   Transferability.  Except as otherwise so
provided by the Committee, awards under the Plan are not transferable except as
designated by the Participant by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order, as defined in
the Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended.  The Committee shall have the
discretion to permit the transfer of awards under the plan; provided, however, that such transfers shall be limited to
immediate family members of participants, trusts and partnerships established
for the primary benefit of such family members or to charitable organizations,
and; provided, further, that such transfers
are not made for consideration to the Participant.

 

Section 7.3                                   Designation
of Beneficiaries.  A Participant hereunder may file with the
Company a written designation of a beneficiary or beneficiaries under this Plan
and may from time to time revoke or amend any such designation (“Beneficiary Designation”). 
Any designation of beneficiary under this Plan shall be controlling over
any other disposition, testamentary or otherwise; provided,
however, that if the Committee is in doubt as to the entitlement of
any such beneficiary to any award, the Committee may determine to recognize
only the legal representative of the Participant in which case the Company, the
Committee and the members thereof shall not be under any further liability to
anyone.

 

Section 7.4                                   Non-Exclusivity.  Neither
the adoption of this Plan by the Board nor the submission of the Plan to the
shareholders of the Company for approval shall be construed as creating any
limitations on the power of the Board or the Committee to adopt such other
incentive arrangements as either may deem desirable, including, without
limitation, the granting of restricted stock, stock options or other equity
awards otherwise than under the Plan or an arrangement that is or is not
intended to qualify under Code Section 162(m), and such arrangements may
be either generally applicable or applicable only in specific cases.

 

Section 7.5                                   Award
Agreement.  Each award granted under the Plan shall be evidenced
by an Award Agreement.  A copy of the
Award Agreement, in any medium chosen by the Committee, shall be provided (or
made available electronically) to the Participant, and the Committee may but
need not require that the Participant sign a copy of the Award Agreement.

 

Section 7.6                                   Form and Time of Elections.  Unless otherwise specified
herein, each election required or permitted to be made by any Participant or
other person entitled to benefits under the Plan, and any permitted
modification, or revocation thereof, shall be filed with the 

 

A-11

 

Company at such
times, in such form, and subject to such restrictions and limitations, not
inconsistent with the terms of the Plan, as the Committee shall require.

 

Section 7.7                                   Evidence.  Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting
on it considers pertinent and reliable, and signed, made or presented by the
proper party or parties.

 

Section 7.8                                   Tax Withholding.  All distributions under
the Plan are subject to withholding of all applicable taxes and the Committee
may condition the delivery of any shares or other benefits under the Plan on
satisfaction of the applicable withholding obligations.  Except as
otherwise provided by the Committee, such withholding obligations may be satisfied:  (a) through cash payment by the
Participant; (b) through the surrender of shares of Stock which the
Participant already owns; or (c) through the surrender of shares of Stock
to which the Participant is otherwise entitled under the Plan; provided, however, that except as otherwise specifically
provided by the Committee, such shares under clause (c) may not be used to
satisfy more than the Company’s minimum statutory withholding obligation.

 

Section 7.9                                   Action by Company or Subsidiary.  Any action required or
permitted to be taken by the Company or any Subsidiary shall be by resolution
of its board of directors, or by action of one or more members of the board
(including a committee of the board) who are duly authorized to act for the
board, or (except to the extent prohibited by applicable law or applicable rules of
any stock exchange) by a duly authorized officer of the Company or such
Subsidiary.

 

Section 7.10                            Successors.  All obligations of the Company under this Plan shall
be binding upon and inure to the benefit of any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation or otherwise, of all or substantially all of
the business, stock, and/or assets of the Company.

 

Section 7.11                            Indemnification. 
To the fullest extent permitted by law, each person who is or shall have been a
member of the Committee, or of the Board, or an officer of the Company to whom
authority was delegated in accordance with Section 5.3,
or an employee of the Company shall be indemnified and held harmless by the
Company against and from any loss (including amounts paid in settlement), cost,
liability or expense (including reasonable attorneys’ fees) that may be imposed
upon or reasonably incurred by him or her in connection with or resulting from
any claim, action, suit, or proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company’s approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against
him or her, provided he or she shall give the Company an opportunity, at its
own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf, unless such loss, cost,
liability, or expense is a result of his or her own willful misconduct or
except as expressly provided by statute. 
The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company’s charter or bylaws, as a matter of law, or otherwise, or any power
that the Company may have to indemnify them or hold them harmless.

 

A-12

 

Section 7.12                            No Fractional Shares.  Unless otherwise permitted
by the Committee, no fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any award.  The
Committee shall determine whether cash, Stock or other property shall be issued
or paid in lieu of fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.

 

Section 7.13                            Governing Law.  The Plan, all awards
granted hereunder, and all actions taken in connection herewith shall be
governed by and construed in accordance with the laws of the State of Illinois
without reference to principles of conflict of laws, except as superseded by
applicable federal law.

 

Section 7.14                            Benefits
Under Other Plans.  Except as otherwise provided by the Committee,
awards to a Participant (including the grant and the receipt of benefits) under
the Plan shall be disregarded for purposes of determining the Participant’s
benefits under, or contributions to, any Qualified Retirement Plan,
non-qualified plan and any other benefit plans maintained by the Participant’s
employer.  The term “Qualified
Retirement Plan” means any plan of the company or a Subsidiary that
is intended to be qualified under Code Section 401(a).

 

Section 7.15                            Validity.  If any
provision of this Plan is determined to be illegal or invalid for any reason,
said illegality or invalidity shall not affect the remaining parts hereof, but
this Plan shall be construed and enforced as if such illegal or invalid
provision has never been included herein.

 

Section 7.16                            Notice.  Unless otherwise provided in an Award Agreement, all
written notices and all other written communications to the Company provided
for in the Plan, any Award Agreement, shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid  (provided that international mail shall be sent via overnight or two-day
delivery),  or sent by facsimile or prepaid
overnight courier to the Company at the address set forth below.  Such notices, demands, claims and other
communications shall be deemed given:

 

(a)                                  in
the case of delivery by overnight service with guaranteed next day delivery,
the next day or the day designated for delivery;

 

(b)                                  in
the case of certified or registered U.S. mail, five (5) days after deposit
in the U.S. mail; or

 

(c)                                  in
the case of facsimile, the date upon which the transmitting party received
confirmation of receipt by facsimile, telephone or otherwise;

 

provided,
however, that in no event shall any such communications be
deemed to be given later than the date they are actually received, provided
they are actually received.  In the event
a communication is not received, it shall only be deemed received upon the
showing of an original of the applicable receipt, registration or confirmation
from the applicable delivery service provider. 
Communications that are to be delivered by the U.S. mail or by overnight
service to the Company shall be directed to the attention of the Company’s
senior human resource officer and Corporate Secretary.

 

A-13

 

Article 8

DEFINED TERMS; CONSTRUCTION

 

Section 8.1                                   In
addition to the other definitions contained herein, unless otherwise
specifically provided in an Award Agreement, the following definitions shall
apply:

 

(a)                                  “10% Shareholder” means an individual who,
at the time of grant, owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company.

 

(b)                                  “Award Agreement” means the document (in
whatever medium prescribed by the Committee) which evidences the terms and
conditions of an award under the Plan. 
Such document is referred to as an agreement regardless of whether
Participant signature is required.

 

(c)                                  “Board” means the Board of Directors of the
Company.

 

(d)                                  If
the Participant is subject to an employment agreement (or other similar
agreement) with the Company or a Subsidiary that provides a definition of
termination for “cause,” then, for purposes of this Plan, the term “Cause” shall have meaning set forth in such agreement.  In the absence of such a definition, “Cause”
means (1) any act of (A) fraud or intentional misrepresentation, or (B) embezzlement,
misappropriation or conversion of assets or opportunities of the Company or
Subsidiary, or (2) willful violation of any law, rule or regulation
in connection with the performance of a Participant’s duties (other than
traffic violations or similar offenses), or (3) with respect to any
employee of the Company or Subsidiary, commission of any act of moral turpitude
or conviction of a felony, or (4) the willful or negligent failure of the
Participant to perform his duties in any material respect.

 

(e)                                  “Change in Control” has the meaning ascribed
to it in Section 4.2.

 

(f)                                    “Code” means the Internal Revenue Code of 1986, as amended,
and   any rules, regulations and guidance promulgated thereunder, as
modified from time to time.

 

(g)                                 “Code
Section 409A” means the provisions of Section 409A of the Code
and any rules, regulations and guidance promulgated thereunder.

 

(h)                                 “Committee” means the Committee acting under
Article 5.

 

(i)                                    “Continuing Director” means:

 

(i)                                     any
member of the Board at the beginning of any period of two (2) consecutive
years; and

 

(ii)                                  any
person who subsequently becomes a member of the Board, if (1) such person’s
nomination for election or election to the Board is recommended or approved by
resolution of a majority of the Continuing Directors, or (2) such person
is included as a nominee in a proxy statement of the Company distributed when a
majority of the Board consists of Continuing Directors.

 

A-14

 

(j)                                    “Director” means a member of the board of
directors of the Company or a Subsidiary.

 

(k)                                “Exchange Act” means the Securities Exchange
Act of 1934, as amended from time to time.

 

(l)                                    “Exercise Price” means the price established
with respect to an option or SAR pursuant to Section 2.2.

 

(m)                              “Fair
Market Value” shall, on any
date, mean the officially-quoted closing selling price of the shares on such
date on the principal national securities exchange on which such shares are
listed or admitted to trading (including the New York Stock Exchange, Nasdaq
Stock Market, Inc. or such other market or exchange in which such prices
are regularly quoted) or, if there have been no sales with respect to shares on
such date, the Fair Market Value shall be the value established by the Board in
good faith and in accordance with Code Section 422.

 

(n)                                 “ISO” has the meaning ascribed to it in Section 2.1(a).

 

(o)                                  “Participant” means any individual who has
received, and currently holds, an outstanding award under the Plan.

 

(p)                                  “Prior Plans” means collectively the [Old Second Bancorp, Inc.
1994 Stock Incentive Plan] and the Old Second Bancorp, Inc. 2002 Long Term
Incentive Plan.

 

(q)                                  “Securities Act” means the Securities Act of 1933, as amended
from time to time.

 

(r)                                  “SAR” has the meaning ascribed to it in Section 2.1(b).

 

(s)                                  “Stock” means the common stock of the
Company, $1.00 par value per share.

 

(t)                                    “Subsidiary” means any corporation, affiliate or other entity
which would be a subsidiary corporation with respect to the Company as defined
in Code Section 424(f) and, other than with respect to an ISO, shall
also mean any partnership or joint venture in which the Company and/or other
Subsidiary owns more than fifty percent (50%) of the capital or profits
interests.

 

(u)                                 “Termination of Service” means the first day occurring on or
after a grant date on which the Participant ceases to be an employee of, or
service provider to (which, for purposes of this definition, includes
Directors), the Company or any Subsidiary, regardless of the reason for such cessation,
subject to the following:

 

(i)                                     The
Participant’s cessation as an employee or service provider shall not be deemed
to occur by reason of the transfer of the Participant between the Company and a
Subsidiary or between two Subsidiaries.

 

A-15

 

(ii)                                  The
Participant’s cessation as an employee or service provider shall not be deemed
to occur by reason of the Participant’s being on a leave of absence from the
Company or a Subsidiary approved by the Company or Subsidiary otherwise
receiving the Participant’s services.

 

(iii)                               If,
as a result of a sale or other transaction, the Subsidiary for whom Participant
is employed (or to whom the Participant is providing services) ceases to be a
Subsidiary, and the Participant is not, following the transaction, an Employee
of or service provider to the Company or an entity that is then a Subsidiary,
then the occurrence of such transaction shall be treated as the Participant’s
Termination of Service caused by the Participant being discharged by the entity
for whom the Participant is employed or to whom the Participant is providing
services.

 

(iv)                              A
service provider whose services to the Company or a Subsidiary are governed by
a written agreement with the service provider will cease to be a service
provider at the time the term of such written agreement ends (without renewal);
and a service provider whose services to the Company or a Subsidiary are not
governed by a written agreement with the service provider will cease to be a
service provider on the date that is ninety (90) days after the date the
service provider last provides services requested by the Company or any
Subsidiary (as determined by the Committee).

 

(v)                                 Unless
otherwise provided by the Committee, an employee who ceases to be an employee,
but become or remains a Director, or a Director who ceases to be a Director,
but becomes or remains an employee, shall not be deemed to have incurred a
Termination of Service.

 

(vi)                              Notwithstanding
the forgoing, in the event that any award under the Plan constitutes Deferred
Compensation, the term Termination of Service shall be interpreted by the
Committee in a manner not to be inconsistent with the definition of “Separation
from Service” as defined under Code Section 409A.

 

(v)                                   “Voting Securities” means any securities
which ordinarily possess the power to vote in the election of Directors without
the happening of any pre-condition or contingency.

 

Section 8.2                                   In
this Plan, unless otherwise stated or the context otherwise requires, the
following uses apply:

 

(a)                                  actions
permitted under this Plan may be taken at any time and from time to time in the
actor’s reasonable discretion;

 

(b)                                  references
to a statute shall refer to the statute and any successor statute, and to all
regulations promulgated under or implementing the statute or its successor, as
in effect at the relevant time;

 

(c)                                  in
computing periods from a specified date to a later specified date, the words “from”
and “commencing on” (and the like) mean “from and including,” and the words “to,”
“until” and “ending on” (and the like) mean “to, but excluding”;

 

A-16

 

(d)                                  references
to a governmental or quasi-governmental agency, authority or instrumentality
shall also refer to a regulatory body that succeeds to the functions of the
agency, authority or instrumentality;

 

(e)                                  indications
of time of day shall be based upon the time applicable to the location of the
principal headquarters of the Company;

 

(f)                                    “including”
means “including, but not limited to”;

 

(g)                                 all
references to sections, schedules and exhibits are to sections, schedules and
exhibits in or to this Plan unless otherwise specified;

 

(h)                                 all
words used in this Plan will be construed to be of such gender or number as the
circumstances and context require;

 

(i)                                    the
captions and headings of articles, sections, schedules and exhibits appearing
in or attached to this Plan have been inserted solely for convenience of
reference and shall not be considered a part of this Plan nor shall any of them
affect the meaning or interpretation of this Plan or any of its provisions;

 

(j)                                    any
reference to a document or set of documents in this Plan, and the rights and
obligations of the parties under any such documents, shall mean such document
or documents as amended from time to time, and any and all modifications,
extensions, renewals, substitutions or replacements thereof; and

 

(k)                                all
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.

 

A-17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}]]