Document:

Exhibit
10.3

 

EXECUTION
COPY

 

AVENTINE
RENEWABLE ENERGY HOLDINGS, INC.

2010
EQUITY INCENTIVE PLAN

 

1.                                       Purpose.  The purpose of the
Aventine Renewable Energy Holdings, Inc. 2010 Equity Incentive Plan is to
provide a means through which the Company and its Affiliates may attract and
retain key personnel and to provide a means whereby directors, officers,
employees, consultants and advisors (and prospective directors, officers,
employees, consultants and advisors) of the Company and its Affiliates can
acquire and maintain an equity interest in the Company, or be paid incentive
compensation, which may (but need not) be measured by reference to the value of
Common Shares, thereby strengthening their commitment to the welfare of the
Company and its Affiliates and aligning their interests with those of the
Company’s shareholders.

 

2.                                       Definitions.  The following
definitions shall be applicable throughout the Plan:

 

(a)                                  “Affiliate”
means (i) any person or entity that directly or indirectly controls, is
controlled by or is under common control with the Company and/or (ii) to
the extent provided by the Committee, any person or entity in which the Company
has a significant interest.  The term “control”
(including, with correlative meaning, the terms “controlled by” and “under
common control with”), as applied to any person or entity, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person or entity, whether
through the ownership of voting or other securities, by contract or otherwise.

 

(b)                                 “Award”
means, individually or collectively, any Incentive Stock Option, Nonqualified
Stock Option, Stock Appreciation Right, Restricted Stock, Restricted Stock
Unit, Stock Bonus Award, and Performance Compensation Award granted under the
Plan.

 

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

 

(d)                                 “Business
Combination” has the meaning given such term in the definition
of “Change in Control.”

 

(e)                                  “Cause”
means, in the case of a particular Award, unless the applicable Award agreement
states otherwise, (i) the Company or an Affiliate having “cause” to
terminate a Participant’s employment or service, as defined in any employment
or consulting agreement between the Participant and the Company or an Affiliate
in effect at the time of such termination or (ii) in the absence of any
such employment or consulting agreement (or the absence of any definition of “Cause”
contained therein), (A) the Participant’s commission of, conviction for,
plea of guilty or nolo contendere
to a felony or a crime involving moral turpitude, or other material act or
omission involving dishonesty or fraud, (B) the Participant’s conduct that
results in or is reasonably likely to result in harm to the reputation or
business of the Company or any of its Affiliates in any material way, (C) the
Participant’s failure to perform duties as reasonably directed by the Company
or the Participant’s material violation of any rule, regulation, policy or plan
for the conduct of any service provider to the Company or its Affiliates or its
or their business (which, if curable, is not cured within 10 days after notice
thereof is provided to the Participant) or (D) the Participant’s gross
negligence, willful malfeasance or material act of 

 

 

disloyalty with respect to
the Company or its Affiliates (which, if curable, is not cured within 10 days
after notice thereof is provided to the Participant).  Any determination of whether Cause exists
shall be made by the Committee in its sole discretion.

 

(f)                                    “Change in
Control” shall, in the case of a particular Award, unless the
applicable Award agreement states otherwise or contains a different definition
of “Change in Control,” be deemed to occur upon:

 

(i)                                     Any
sale, lease, exchange or other transfer (in one or a series of related
transactions) of all or substantially all of the assets of the Company;

 

(ii)                                  Any “person”
as such term is used in Section 13(d) and Section 14(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) is or becomes, directly or indirectly, the “beneficial owner”
as defined in Rule 13d-3 under the Exchange Act of securities of the
Company that represent more than 50% of the combined voting power of the
Company’s then outstanding voting securities (the “Outstanding
Company Voting Securities”); provided, however,
that, for purposes of this Section 2(f), the following acquisitions shall
not constitute a Change in Control:  (I) any
acquisition directly from the Company, (II) any acquisition by the
Company, (III) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Affiliate, (IV) any
acquisition by any corporation pursuant to a transaction that complies with
Sections 2(f)(iv)(A) and 2(f)(iv)(B), (V) any acquisition involving
beneficial ownership of less than 50% of the then-outstanding Common Shares
(the “Outstanding Company Common Shares”) or
the Outstanding Company Voting Securities that is determined by the Board,
based on review of public disclosure by the acquiring Person with respect to
its passive investment intent, not to have a purpose or effect of changing or
influencing the control of the Company; provided, however, that
for purposes of this clause (V), any such acquisition in connection with (x) an
actual or threatened election contest with respect to the election or removal
of directors or other actual or threatened solicitation of proxies or consents
or (y) any “Business Combination” (as defined below) shall be presumed to
be for the purpose or with the effect of changing or influencing the control of
the Company;

 

(iii)                               During any period of two (2) consecutive
years, the individuals who at the beginning of such period constituted the
Board together with any individuals subsequently elected to the Board whose
nomination by the shareholders of the Company was approved by a vote of the
then incumbent Board (i.e. those members of the Board who either have been
directors from the beginning of such two-year period or whose election or
nomination for election was previously approved by the Board as provided in
this Section 2(f)(iii)) cease for any reason to constitute a majority of
the Board;

 

(iv)                              The
Board or the shareholders of the Company approve and consummate a merger,
amalgamation or consolidation (a “Business Combination”)
of the Company with any other corporation, unless, following such
Business Combination, (A) all or substantially all of the individuals and
entities that were the beneficial owners of the Outstanding Company Common
Shares and the Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of
the then-outstanding shares of common stock (or, for a non-corporate entity,
equivalent securities) and the

 

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combined voting power of the
then-outstanding voting securities entitled to vote generally in the election
of directors (or, for a non-corporate entity, equivalent governing body), as
the case may be, of the entity resulting from such Business Combination
(including, without limitation, an entity that, as a result of such
transaction, owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Shares and the Outstanding
Company Voting Securities, as the case may be, and (B) at least a majority
of the members of the board of directors (or, for a non-corporate entity,
equivalent governing body) of the entity resulting from such Business
Combination were members of the incumbent Board at the time of the execution of
the initial agreement or of the action of the Board providing for such Business
Combination;

 

(v)                                 The date which
is 10 business days prior to the consummation of complete liquidation of the
Company.

 

(g)                                 “Code”
means the Internal Revenue Code of 1986, as amended, and any successor
thereto.  Reference in the Plan to any
section of the Code shall be deemed to include any regulations or other
interpretative guidance under such section, and any amendments or successor
provisions to such section, regulations or guidance.

 

(h)                                 “Committee”
means a committee of at least two people as the Board may appoint to administer
the Plan or, if no such committee has been appointed by the Board, the Board.

 

(i)                                     “Common Shares”
means the common shares, par value $0.001 per share, of the Company (and any
stock or other securities into which such common shares may be converted or
into which they may be exchanged).

 

(j)                                     “Company”
means Aventine Renewable Energy Holdings, Inc.

 

(k)                                  “Confidential  Information” means any and all confidential and/or proprietary trade secrets,
knowledge, data, or information of the Company including, without limitation,
any: (A) drawings, inventions, methodologies, mask works, ideas,
processes, formulas, source and object codes, data, programs, software source
documents, works of authorship, know-how, improvements, discoveries,
developments, designs and techniques, and all other work product of the
Company, whether or not patentable or registrable under trademark, copyright,
patent or similar laws; (B) information regarding plans for research,
development, new service offerings and/or products, marketing, advertising and
selling, distribution, business plans and strategies, business forecasts,
budgets and unpublished financial statements, licenses, prices and costs,
suppliers, customers, customer history, customer preferences, or distribution
arrangements; (C) any information regarding the skills or compensation of
employees, suppliers, agents, and/or independent contractors of the Company; (D) concepts
and ideas relating to the development and distribution of content in any medium
or to the current, future and proposed products or services of the Company; (E) information
about the Company’s investment program, trading methodology, or portfolio
holdings; or (F) any other information, data or the like that is labeled
confidential or described as confidential.

 

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(l)                                     “Date of Grant”
means the date on which the granting of an Award is authorized, or such other
date as may be specified in such authorization.

 

(m)                               “Effective Date”
means the date as of which this Plan is adopted by the Board.

 

(n)                                 “Eligible
Director” means a person who is (i) a “non-employee
director” within the meaning of Rule 16b-3 under the Exchange Act, and (ii) an
“outside director” within the meaning of Section 162(m) of the Code.

 

(o)                                 “Eligible Person”
means any (i) individual employed by the Company or an Affiliate; provided, however,
that no such employee covered by a collective bargaining agreement shall be an
Eligible Person unless and to the extent that such eligibility is set forth in
such collective bargaining agreement or in an agreement or instrument relating
thereto; (ii) director of the Company or an Affiliate; (iii) consultant
or advisor to the Company or an Affiliate, provided that if the Securities Act
applies such persons must be eligible to be offered securities registrable on Form S-8
under the Securities Act; or (iv) prospective employees, directors,
officers, consultants or advisors who have accepted offers of employment or
consultancy from the Company or its Affiliates (and would satisfy the
provisions of clauses (i) through (iii) above once he or she begins
employment with or begins providing services to the Company or its Affiliates).

 

(p)                                 “Exchange Act”
has the meaning given such term in the definition of “Change in Control,” and
any reference in the Plan to any section of (or rule promulgated under)
the Exchange Act shall be deemed to include any rules, regulations or other
interpretative guidance under such section or rule, and any amendments or
successor provisions to such section, rules, regulations or guidance.

 

(q)                                 “Exercise Price”
has the meaning given such term in Section 7(b) of the Plan.

 

(r)                                    “Fair Market
Value” means, as of any date, the
value of Common Shares determined as follows:

 

(i)                                     If the
Common Shares are listed on any established stock exchange or a national market
system will be the closing sales price for such shares (or the closing bid, if
no sales were reported) as quoted on such exchange or system on the day of determination,
as reported in The Wall Street Journal
or such other source as the Committee deems reliable;

 

(ii)                                  If the Common Shares are regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of a Common
Share will be the mean between the high bid and low asked prices for the Common
Shares on the day of determination, as reported in The Wall Street Journal or such other source as the
Committee deems reliable; or

 

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(iii)                               In the
absence of an established market for the Common Shares, the Fair Market Value
will be determined in good faith by the Committee in accordance with Section 409A
of the Code.

 

(s)                                  “Immediate
Family Members” shall have the meaning set forth in Section 16(b).

 

(t)                                    “Incentive Stock
Option” means an Option that is designated by the Committee as
an incentive stock option as described in Section 422 of the Code and
otherwise meets the requirements set forth in the Plan.

 

(u)                                 “Indemnifiable
Person” shall have the meaning set forth in Section 4(e) of
the Plan.

 

(v)                                 “Intellectual Property Products” shall
have the meaning set forth in Section 15(c) of the Plan.

 

(w)                               “Mature
Shares” means Common Shares owned by a Participant that
are not subject to any pledge or security interest and that have been either
previously acquired by the Participant on the open market or meet such other
requirements, if any, as the Committee may determine are necessary in order to
avoid an accounting earnings charge on account of the use of such shares to pay
the Exercise Price or satisfy a withholding obligation of the Participant.

 

(x)                                   “Negative
Discretion” shall mean the discretion authorized by the Plan to
be applied by the Committee to eliminate or reduce the size of a Performance
Compensation Award consistent with Section 162(m) of the Code.

 

(y)                                 “Nonqualified
Stock Option” means an Option that is not designated by the
Committee as an Incentive Stock Option.

 

(z)                                   “Option”
means an Award granted under Section 7 of the Plan.

 

(aa)                            “Option Period”
has the meaning given such term in Section 7(c) of the Plan.

 

(bb)                          “Outstanding
Company Common Shares” has the meaning given such term in the
definition of “Change in Control.”

 

(cc)                            “Outstanding Company Voting Securities”
has the meaning given such term in the definition of “Change in Control.”

 

(dd)                          “Participant”
means an Eligible Person who has been selected by the Committee to participate
in the Plan and to receive an Award pursuant to Section 6 of the Plan.

 

(ee)                            “Performance
Compensation Award” shall mean any Award designated by the
Committee as a Performance Compensation Award pursuant to Section 11 of
the Plan.

 

5

 

(ff)                                “Performance
Criteria” shall mean the criterion or criteria that the
Committee shall select for purposes of establishing the Performance Goal(s) for
a Performance Period with respect to any Performance Compensation Award under
the Plan.

 

(gg)                          “Performance
Formula” shall mean, for a Performance Period, the one or more
objective formulae applied against the relevant Performance Goal to determine,
with regard to the Performance Compensation Award of a particular Participant,
whether all, some portion but less than all, or none of the Performance
Compensation Award has been earned for the Performance Period.

 

(hh)                          “Performance
Goals” shall mean, for a Performance Period, the one or more
goals established by the Committee for the Performance Period based upon the
Performance Criteria.

 

(ii)                                  “Performance
Period” shall mean the one or more periods of time, as the
Committee may select, over which the attainment of one or more Performance
Goals will be measured for the purpose of determining a Participant’s right to,
and the payment of, a Performance Compensation Award.

 

(jj)                                  “Permitted
Transferee” shall have the meaning set forth in Section 16(b) of
the Plan.

 

(kk)                            “Person”
has the meaning given such term in the definition of “Change in Control.”

 

(ll)                                  “Plan”
means this Aventine Renewable Energy Holdings, Inc. 2010 Equity Incentive
Plan.

 

(mm)                      “Restricted
Period” means the period of time determined by the Committee
during which an Award is subject to restrictions or, as applicable, the period
of time within which performance is measured for purposes of determining
whether an Award has been earned.

 

(nn)                          “Restricted
Stock Unit” means an unfunded and unsecured promise to deliver
Common Shares, cash, other securities or other property, subject to certain
restrictions (including, without limitation, a requirement that the Participant
remain continuously employed or provide continuous services for a specified
period of time), granted under Section 9 of the Plan.

 

(oo)                          “Restricted
Stock” means Common Shares, subject to certain specified
restrictions (including, without limitation, a requirement that the Participant
remain continuously employed or provide continuous services for a specified
period of time), granted under Section 9 of the Plan.

 

(pp)                          “SAR Period”
has the meaning given such term in Section 8(b) of the Plan.

 

(qq)                          “Securities Act”
means the Securities Act of 1933, as amended, and any successor thereto.  Reference in the Plan to any section of the
Securities Act shall be deemed to 

 

6

 

include any rules,
regulations or other interpretative guidance under such section, and any
amendments or successor provisions to such section, rules, regulations or
guidance.

 

(rr)                                “Stock
Appreciation Right” or “SAR” means an Award granted under Section 8
of the Plan.

 

(ss)                            “Stock Bonus
Award” means an Award granted under Section 10 of the Plan.

 

(tt)                                “Strike Price”
means, except as otherwise provided by the Committee in the case of Substitute
Awards, (i) in the case of a SAR granted in tandem with an Option, the
Exercise Price of the related Option, or (ii) in the case of a SAR granted
independent of an Option, the Fair Market Value on the Date of Grant.

 

(uu)                          “Subsidiary”
means, with respect to any specified Person:

 

(1)                                  any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Outstanding Company Voting Securities (without
regard to the occurrence of any contingency and after giving effect to any
voting agreement or shareholders’ agreement that effectively transfers voting
power) is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person (or a
combination thereof); and

 

(2)                                  any partnership
(or any comparable foreign entity (a) the sole general partner (or
functional equivalent thereof) or the managing general partner of which is such
Person or Subsidiary of such Person or (b) the only general partners (or
functional equivalents thereof) of which are that Person or one or more
Subsidiaries of that Person (or any combination thereof).

 

(vv)                          “Substitute
Award” has the meaning given such term in Section 5(e).

 

3.                                       Effective
Date; Duration.  The Plan shall be effective as of the
Effective Date.  The expiration date of
the Plan, on and after which date no Awards may be granted hereunder, shall be
the tenth anniversary of the Effective Date; provided,
however, that such expiration shall not
affect Awards then outstanding, and the terms and conditions of the Plan shall
continue to apply to such Awards.

 

4.                                       Administration.  (a) The
Committee shall administer the Plan.  To
the extent required to comply with the provisions of Rule 16b-3
promulgated under the Exchange Act (if the Board is not acting as the Committee
under the Plan) or necessary to obtain the exception for performance-based
compensation under Section 162(m) of the Code, as applicable, it is
intended that each member of the Committee shall, at the time he takes any
action with respect to an Award under the Plan, be an Eligible Director.  However, the fact that a Committee member
shall fail to qualify as an Eligible Director shall not invalidate any Award
granted by the Committee that is otherwise validly granted under the Plan.  The acts of a majority of the members present
at any meeting at which a quorum is present or acts approved in writing by a
majority of the Committee shall be deemed the acts of the Committee.  Whether a quorum is present shall be
determined based on the Committee’s charter as approved by the Board.

 

7

 

(b)                                 Subject to the
provisions of the Plan and applicable law, the Committee shall have the sole
and plenary authority, in addition to other express powers and authorizations
conferred on the Committee by the Plan, to: 
(i) designate Participants; (ii) determine the type or types
of Awards to be granted to a Participant; (iii) determine the number of
Common Shares to be covered by, or with respect to which payments, rights, or
other matters are to be calculated in connection with, Awards; (iv) determine
the terms and conditions of any Award; (v) determine whether, to what
extent, and under what circumstances Awards may be settled or exercised in
cash, Common Shares, other securities, other Awards or other property, or
canceled, forfeited, or suspended and the method or methods by which Awards may
be settled, exercised, canceled, forfeited, or suspended; (vi) determine
whether, to what extent, and under what circumstances the delivery of cash,
Common Shares, other securities, other Awards or other property and other
amounts payable with respect to an Award shall be deferred either automatically
or at the election of the Participant or of the Committee; (vii) interpret,
administer, reconcile any inconsistency in, correct any defect in and/or supply
any omission in the Plan and any instrument or agreement relating to, or Award
granted under, the Plan; (viii) establish, amend, suspend, or waive any rules and
regulations and appoint such agents as the Committee shall deem appropriate for
the proper administration of the Plan; (ix) accelerate the vesting or
exercisability of, payment for or lapse of restrictions on, Awards; and (x) make
any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.

 

(c)                                  The Committee
may delegate to one or more officers of the Company or any Affiliate the
authority to act on behalf of the Committee with respect to any matter, right,
obligation, or election that is the responsibility of or that is allocated to
the Committee herein, and that may be so delegated as a matter of law, except
for grants of Awards to persons (i) subject to Section 16 of the
Exchange Act or (ii) who are, or who are reasonably expected to be, “covered
employees” for purposes of Section 162(m) of the Code.

 

(d)                                 Unless
otherwise expressly provided in the Plan, all designations, determinations,
interpretations, and other decisions under or with respect to the Plan or any
Award or any documents evidencing Awards granted pursuant to the Plan shall be
within the sole discretion of the Committee, may be made at any time and shall
be final, conclusive and binding upon all persons or entities, including,
without limitation, the Company, any Affiliate, any Participant, any holder or
beneficiary of any Award, and any shareholder of the Company.

 

(e)                                  No member of
the Board, the Committee, delegate of the Committee or any employee or agent of
the Company (each such person, an “Indemnifiable
Person”) shall be liable for any action taken or omitted to
be taken or any determination made in good faith with respect to the Plan or
any Award hereunder.  Each Indemnifiable
Person shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense (including attorneys’ fees) that may be
imposed upon or incurred by such Indemnifiable Person in connection with or
resulting from any action, suit or proceeding to which such Indemnifiable
Person may be a party or in which such Indemnifiable Person may be involved by
reason of any action taken or omitted to be taken under the Plan or any Award
agreement and against and from any and all amounts paid by such Indemnifiable
Person with the Company’s approval, in settlement thereof, or paid by such
Indemnifiable Person in satisfaction of any judgment in any such action, suit
or proceeding against such Indemnifiable Person, provided, that the
Company shall have the right, at its own expense, to assume and defend any such
action, suit or proceeding 

 

8

 

and once the Company gives
notice of its intent to assume the defense, the Company shall have sole control
over such defense with counsel of the Company’s choice.  The foregoing right of indemnification shall
not be available to an Indemnifiable Person to the extent that a final judgment
or other final adjudication (in either case not subject to further appeal)
binding upon such Indemnifiable Person determines that the acts or omissions of
such Indemnifiable Person giving rise to the indemnification claim resulted
from such Indemnifiable Person’s bad faith, fraud or willful criminal act or
omission or that such right of indemnification is otherwise prohibited by law
or by the Company’s Certificate of Incorporation or Bylaws.  The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such
Indemnifiable Persons may be entitled under the Company’s Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any other power
that the Company may have to indemnify such Indemnifiable Persons or hold them
harmless.

 

(f)                                    Notwithstanding
anything to the contrary contained in the Plan, the Board may, in its sole
discretion, at any time and from time to time, grant Awards and administer the
Plan with respect to such Awards.  In any
such case, the Board shall have all the authority granted to the Committee
under the Plan.

 

5.                                       Grant
of Awards; Shares Subject to the Plan; Limitations.  (a) The
Committee may, from time to time, grant Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Stock Bonus Awards and/or Performance
Compensation Awards to one or more Eligible Persons.

 

(b)                                 Awards granted
under the Plan shall be subject to the following limitations:  (i) subject to Section 12 of the
Plan, the Committee is authorized to deliver under the Plan 855,000 Common
Shares.

 

(c)                                  Use of Common
Shares to pay the required Exercise Price or tax obligations, or that are used
or withheld to satisfy tax obligations of the Participant shall,
notwithstanding anything herein to the contrary, not be available again for
other Awards under the Plan.  Shares
underlying Awards under this Plan that are forfeited, cancelled, expire
unexercised, or are settled in cash are available again for Awards under the
Plan.

 

(d)                                 Common Shares
delivered by the Company in settlement of Awards may be authorized and unissued
shares, shares held in the treasury of the Company, shares purchased on the
open market or by private purchase, or a combination of the foregoing.

 

(e)                                  Awards may, in
the sole discretion of the Committee, be granted under the Plan in assumption
of, or in substitution for, outstanding awards previously granted by an entity
acquired by the Company or with which the Company combines (“Substitute Awards”).  The number of Common Shares underlying any
Substitute Awards shall be counted against the aggregate number of Common
Shares available for Awards under the Plan.

 

6.                                       Eligibility.  Participation shall
be limited to Eligible Persons who have entered into an Award agreement or who
have received written notification from the Committee, or from a person
designated by the Committee, that they have been selected to participate in the
Plan.

 

9

 

7.                                       Options.  (a) Generally.  Each Option granted under the Plan shall be
evidenced by an Award agreement (whether in paper or electronic medium
(including email or the posting on a web site maintained by the Company or a
third party under contract with the Company)). 
Each Option so granted shall be subject to the conditions set forth in
this Section 7, and to such other conditions not inconsistent with the
Plan as may be reflected in the applicable Award agreement.  All Options granted under the Plan shall be
Nonqualified Stock Options unless the applicable Award agreement expressly
states that the Option is intended to be an Incentive Stock Option.  Incentive Stock Options shall be granted only
to Eligible Persons who are employees of the Company and its Affiliates, and no
Incentive Stock Option shall be granted to any Eligible Person who is
ineligible to receive an Incentive Stock Option under the Code.  No Option shall be treated as an Incentive
Stock Option unless the Plan has been approved by the shareholders of the Company
in a manner intended to comply with the stockholder approval requirements of Section 422(b)(1) of
the Code, provided that any Option intended to be an Incentive Stock Option
shall not fail to be effective solely on account of a failure to obtain such approval,
but rather such Option shall be treated as a Nonqualified Stock Option unless
and until such approval is obtained.  In
the case of an Incentive Stock Option, the terms and conditions of such grant
shall be subject to and comply with such rules as may be prescribed by Section 422
of the Code.  If for any reason an Option
intended to be an Incentive Stock Option (or any portion thereof) shall not
qualify as an Incentive Stock Option, then, to the extent of such
nonqualification, such Option or portion thereof shall be regarded as a
Nonqualified Stock Option appropriately granted under the Plan.

 

(b)                                 Exercise Price.  The exercise price (“Exercise
Price”) per Common Share for each Option shall not be less
than 100% of the Fair Market Value of such share determined as of the Date of
Grant; provided, however, that in the case of an Incentive Stock
Option granted to an employee who, at the time of the grant of such Option,
owns shares representing more than 10% of the voting power of all classes of
shares of the Company or any Affiliate, the Exercise Price per share shall not
be less than 110% of the Fair Market Value per share on the Date of Grant and
provided further that, notwithstanding any provision herein to the contrary,
the Exercise Price shall not be less than the par value per Common Share.

 

(c)                                  Vesting and Expiration.  Options shall vest and become exercisable in
such manner and on such date or dates determined by the Committee and shall
expire after such period, not to exceed ten years, as may be determined by the
Committee (the “Option Period”); provided, however,
that the Option Period shall not exceed five years from the Date of Grant in
the case of an Incentive Stock Option granted to a Participant who on the Date
of Grant owns shares representing more than 10% of the voting power of all
classes of shares of the Company or any Affiliate; provided,
further, that notwithstanding any vesting
dates set by the Committee, the Committee may, in its sole discretion,
accelerate the exercisability of any Option, which acceleration shall not
affect the terms and conditions of such Option other than with respect to
exercisability.  Unless otherwise
provided by the Committee in an Award agreement:  (i) an Option shall vest and become
exercisable with respect to 100% of the Common Shares subject to such Option on
the third anniversary of the Date of Grant; (ii) the unvested portion of
an Option shall expire upon termination of employment or service of the
Participant granted the Option, and the vested portion of such Option shall
remain exercisable for (A) one year following termination of employment or
service by reason of such Participant’s death or disability (as determined by
the Committee), but not later than the expiration of the Option Period or (B) 90

 

10

 

days following termination
of employment or service for any reason other than such Participant’s death or
disability, and other than such Participant’s termination of employment or
service for Cause, but not later than the expiration of the Option Period; and (iii) both
the unvested and the vested portion of an Option shall expire upon the
termination of the Participant’s employment or service by the Company for
Cause.

 

(d)                                 Method of Exercise and Form of Payment.  No Common Shares shall be delivered pursuant
to any exercise of an Option until payment in full of the Exercise Price
therefor is received by the Company and the Participant has paid to the Company
an amount equal to any federal, state, local and non-U.S. income and employment
taxes required to be withheld.  Options
that have become exercisable may be exercised by delivery of written or
electronic notice of exercise to the Company in accordance with the terms of
the Option accompanied by payment of the Exercise Price.  The Exercise Price shall be payable (i) in
cash, check, cash equivalent and/or Common Shares valued at the fair market
value at the time the Option is exercised (including, pursuant to procedures
approved by the Committee, by means of attestation of ownership of a sufficient
number of Common Shares in lieu of actual delivery of such shares to the
Company); provided, that such Common Shares
are not subject to any pledge or other security interest and are Mature Shares
and; (ii) by such other method as the Committee may permit in accordance
with applicable law, in its sole discretion, including without limitation:  (A) in other property having a fair
market value on the date of exercise equal to the Exercise Price or (B) if
there is a public market for the Common Shares at such time, by means of a
broker-assisted “cashless exercise” pursuant to which the Company is delivered
a copy of irrevocable instructions to a stockbroker to sell the Common Shares
otherwise deliverable upon the exercise of the Option and to deliver promptly
to the Company an amount equal to the Exercise Price or (C) by a “net
exercise” method whereby the Company withholds from the delivery of the Common
Shares for which the Option was exercised that number of Common Shares having a
fair market value equal to the aggregate Exercise Price for the Common Shares
for which the Option was exercised.  Any
fractional Common Shares shall be settled in cash.

 

(e)                                  Notification upon Disqualifying Disposition of an
Incentive Stock Option.  Each Participant awarded an Incentive Stock Option
under the Plan shall notify the Company in writing immediately after the date
he makes a disqualifying disposition of any Common Shares acquired pursuant to
the exercise of such Incentive Stock Option. 
A disqualifying disposition is any disposition (including, without
limitation, any sale) of such Common Shares before the later of (A) two
years after the Date of Grant of the Incentive Stock Option or (B) one
year after the date of exercise of the Incentive Stock Option.  The Company may, if determined by the
Committee and in accordance with procedures established by the Committee,
retain possession of any Common Shares acquired pursuant to the exercise of an
Incentive Stock Option as agent for the applicable Participant until the end of
the period described in the preceding sentence.

 

(f)                                    Compliance With Laws, etc.  Notwithstanding the foregoing, in no event
shall a Participant be permitted to exercise an Option in a manner that the
Committee determines would violate the Sarbanes-Oxley Act of 2002, if
applicable, or any other applicable law or the applicable rules and
regulations of the Securities and Exchange Commission or the applicable rules and
regulations of any securities exchange or inter-dealer quotation system on
which the securities of the Company are listed or traded.

 

11

 

8.                                       Stock
Appreciation Rights.  (a) Generally.  Each SAR granted under the Plan shall be
evidenced by an Award agreement (whether in paper or electronic medium
(including email or the posting on a web site maintained by the Company or a
third party under contract with the Company)). 
Each SAR so granted shall be subject to the conditions set forth in this
Section 8, and to such other conditions not inconsistent with the Plan as
may be reflected in the applicable Award agreement.  Any Option granted under the Plan may include
tandem SARs.  The Committee also may
award SARs to Eligible Persons independent of any Option.

 

(b)                                 Exercise Price.  The Exercise Price per
Common Share for each Option shall not be less than 100% of the Fair Market
Value of such share determined as of the Date of Grant

 

(c)                                  Vesting and Expiration.  A SAR granted in connection with an Option
shall become exercisable and shall expire according to the same vesting
schedule and expiration provisions as the corresponding Option.  A SAR granted independent of an Option shall
vest and become exercisable and shall expire in such manner and on such date or
dates determined by the Committee and shall expire after such period, not to
exceed ten years, as may be determined by the Committee (the “SAR Period”); provided, however,
that notwithstanding any vesting dates set by the Committee, the Committee may,
in its sole discretion, accelerate the exercisability of any SAR, which
acceleration shall not affect the terms and conditions of such SAR other than
with respect to exercisability.  Unless
otherwise provided by the Committee in an Award agreement:  (i) a SAR shall vest and become
exercisable with respect to 100% of the Common Shares subject to such SAR on
the third anniversary of the Date of Grant; (ii) the unvested portion of a
SAR shall expire upon termination of employment or service of the Participant
granted the SAR, and the vested portion of such SAR shall remain exercisable
for (A) one year following termination of employment or service by reason
of such Participant’s death or disability (as determined by the Committee), but
not later than the expiration of the SAR Period or (B) 90 days following
termination of employment or service for any reason other than such Participant’s
death or disability, and other than such Participant’s termination of
employment or service for Cause, but not later than the expiration of the SAR
Period; and (iii) both the unvested and the vested portion of a SAR shall
expire upon the termination of the Participant’s employment or service by the
Company for Cause.

 

(d)                                 Method of Exercise.  SARs that have become exercisable may be
exercised by delivery of written or electronic notice of exercise to the
Company in accordance with the terms of the Award, specifying the number of
SARs to be exercised and the date on which such SARs were awarded.  Notwithstanding the foregoing, if on the last
day of the Option Period (or in the case of a SAR independent of an option, the
SAR Period), the fair market value exceeds the Strike Price, the Participant
has not exercised the SAR or the corresponding Option (if applicable), and
neither the SAR nor the corresponding Option (if applicable) has expired, such
SAR shall be deemed to have been exercised by the Participant on such last day
and the Company shall make the appropriate payment therefor.

 

(e)                                  Payment.  Upon the exercise of a SAR, the Company shall
pay to the Participant an amount equal to the number of shares subject to the
SAR that are being exercised multiplied by the excess, if any, of the fair
market value of one Common Share on the exercise date over the Strike Price,
less an amount equal to any federal, state, local and non-U.S. income 

 

12

 

and employment taxes
required to be withheld.  The Company
shall pay such amount in cash, in Common Shares valued at fair market value, or
any combination thereof, as determined by the Committee.  Any fractional Common Share shall be settled
in cash.

 

9.                                       Restricted
Stock and Restricted Stock Units.  (a) Generally.  Each grant of Restricted Stock and Restricted
Stock Units shall be evidenced by an Award agreement (whether in paper or
electronic medium (including email or the posting on a web site maintained by
the Company or a third party under contract with the Company)).  Each such grant shall be subject to the
conditions set forth in this Section 9, and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable Award
agreement.

 

(b)                                 Restricted Accounts; Escrow or Similar Arrangement.  Upon the grant of Restricted Stock, a book
entry in a restricted account shall be established in the Participant’s name at
the Company’s transfer agent and, if the Committee determines that the
Restricted Stock shall be held by the Company or in escrow rather than held in
such restricted account pending the release of the applicable restrictions, the
Committee may require the Participant to additionally execute and deliver to
the Company (i) an escrow agreement satisfactory to the Committee, if
applicable, and (ii) the appropriate share power (endorsed in blank) with
respect to the Restricted Stock covered by such agreement.  If a Participant shall fail to execute an
agreement evidencing an Award of Restricted Stock and, if applicable, an escrow
agreement and blank share power within the amount of time specified by the
Committee, the Award shall be null and void. 
Subject to the restrictions set forth in this Section 9 and the
applicable Award agreement, the Participant generally shall have the rights and
privileges of a shareholder as to such Restricted Stock, including without
limitation the right to vote such Restricted Stock and the right to receive
dividends, if applicable.  To the extent
shares of Restricted Stock are forfeited, any share certificates issued to the
Participant evidencing such shares shall be returned to the Company, and all
rights of the Participant to such shares and as a shareholder with respect
thereto shall terminate without further obligation on the part of the Company.

 

(c)                                  Vesting; Acceleration of Lapse of Restrictions.  Unless otherwise provided by the Committee in
an Award agreement:  (i) the
Restricted Period shall lapse with respect to 100% of the Restricted Stock and
Restricted Stock Units on the third anniversary of the Date of Grant; and (ii) the
unvested portion of Restricted Stock and Restricted Stock Units shall terminate
and be forfeited upon termination of employment or service of the Participant
granted the applicable Award.

 

(d)                                 Delivery of Restricted Stock and Settlement of
Restricted Stock Units.  (i) Upon the expiration of the
Restricted Period with respect to any shares of Restricted Stock, the
restrictions set forth in the applicable Award agreement shall be of no further
force or effect with respect to such shares, except as set forth in the
applicable Award agreement.  If an escrow
arrangement is used, upon such expiration, the Company shall deliver to the
Participant, or his beneficiary, without charge, the share certificate
evidencing the shares of Restricted Stock that have not then been forfeited and
with respect to which the Restricted Period has expired (rounded down to the
nearest full share).  Dividends, if any, that may have
been withheld by the Committee and attributable to any particular share of
Restricted Stock shall be distributed to the Committee and attributable to any
particular share of Restricted Stock shall be distributed to the Participant in
cash or, at the sole discretion of the Committee, in shares of Common Stock
having 

 

13

 

a fair market value equal to
the amount of such dividends, upon the release of restrictions on such share
and, if such share is forfeited, the Participant shall have no right to such
dividends (except as otherwise set forth by the Committee in the applicable
Award agreement).

 

(ii)                                  Unless
otherwise provided by the Committee in an Award agreement, upon the expiration of
the Restricted Period with respect to any outstanding Restricted Stock Units,
the Company shall deliver to the Participant, or his beneficiary, without
charge, one Common Share for each such outstanding Restricted Stock Unit; provided, however,
that the Committee may, in its sole discretion, elect to (i) pay cash or
part cash and part Common Share in lieu of delivering only Common Shares in
respect of such Restricted Stock Units or (ii) defer the delivery of
Common Shares (or cash or part Common Shares and part cash, as the case may be)
beyond the expiration of the Restricted Period if such delivery would result in
a violation of applicable law until such time as is no longer the case.  If a cash payment is made in lieu of
delivering Common Shares, the amount of such payment shall be equal to the fair
market value of the Common Shares as of the date on which the Restricted Period
lapsed with respect to such Restricted Stock Units, less an amount equal to any
federal, state, local and non-U.S. income and employment taxes required to be
withheld.

 

10.                                 Stock
Bonus Awards.  The Committee may issue unrestricted Common
Shares, or other Awards denominated in Common Shares, under the Plan to
Eligible Persons, either alone or in tandem with other awards, in such amounts
as the Committee shall from time to time in its sole discretion determine.  Each Stock Bonus Award granted under the Plan
shall be evidenced by an Award agreement (whether in paper or electronic medium
(including email or the posting on a web site maintained by the Company or a
third party under contract with the Company)). 
Each Stock Bonus Award so granted shall be subject to such conditions
not inconsistent with the Plan as may be reflected in the applicable Award
agreement.

 

11.                                 Performance
Compensation Awards.  (a) Generally.  The Committee shall have the authority, at
the time of grant of any Award described in Sections 7 through 10 of the
Plan, to designate such Award as a Performance Compensation Award intended to
qualify as “performance-based compensation” under Section 162(m) of
the Code.  The Committee shall have the
authority to make an award of a cash bonus to any Participant and designate
such Award as a Performance Compensation Award intended to qualify as “performance-based
compensation” under Section 162(m) of the Code.

 

(b)                                 Discretion of Committee with Respect to Performance
Compensation Awards.  With regard to a particular Performance
Period, the Committee shall have sole discretion to select the length of such
Performance Period, the type(s) of Performance Compensation Awards to be
issued, the Performance Criteria that will be used to establish the Performance
Goal(s), the kind(s) and/or level(s) of the Performance Goals(s) that
is (are) to apply and the Performance Formula. 
Within the first 90 days of a Performance Period (or, if longer or
shorter, within the maximum period allowed under Section 162(m) of
the Code, if applicable), the Committee shall, with regard to the Performance
Compensation Awards to be issued for such Performance Period, exercise its
discretion with respect to each of the matters enumerated in the immediately
preceding sentence and record the same in writing.

 

14

 

(c)                                  Performance Criteria.  The Performance Criteria that will be used to
establish the Performance Goal(s) shall be based on the attainment of
specific levels of performance of the Company (and/or one or more Affiliates,
divisions or operational units, or any combination of the foregoing) and shall
include the following:  (i) net
earnings or net income (before or after taxes); (ii) basic or diluted
earnings per share (before or after taxes); (iii) net revenue or revenue
growth; (iv) gross profit or gross profit growth; (v) operating
profit (before or after taxes); (vi) return measures (including, but not
limited to, return on assets, capital, invested capital, equity, or sales); (vii) cash
flow (including, but not limited to, operating cash flow, free cash flow, and
cash flow return on capital); (viii) earnings before or after taxes,
interest, depreciation and/or amortization; (ix) gross or operating
margins; (x) productivity ratios; (xi) share price (including, but
not limited to, growth measures and total shareholder return);
(xii) expense targets; (xiii) margins; (xiv) operating
efficiency; (xv) objective measures of customer satisfaction;
(xvi) working capital targets; (xvii) measures of economic value
added; (xviii) inventory control; (xix) enterprise value;
(xx) sales; (xxi) debt levels and net debt; (xxii) combined ratio;
(xxiii) timely launch of new facilities; (xxiv) client retention;
(xxv) employee retention; (xxvi) timely completion of new product
rollouts; and (xxvii)  objective measures of personal targets, goals
or completion of projects.  Any one or
more of the Performance Criteria may be used on an absolute or relative basis
to measure the performance of the Company and/or one or more Affiliates as a
whole or any business unit(s) of the Company and/or one or more Affiliates
or any combination thereof, as the Committee may deem appropriate, or any of
the above Performance Criteria may be compared to the performance of a selected
group of comparison companies, or a published or special index that the
Committee, in its sole discretion, deems appropriate, or as compared to various
stock market indices.  The Committee also
has the authority to provide for accelerated vesting of any Award based on the
achievement of Performance Goals pursuant to the Performance Criteria specified
in this paragraph.  To the extent
required under Section 162(m) of the Code, the Committee shall,
within the first 90 days of a Performance Period (or, if longer or shorter,
within the maximum period allowed under Section 162(m) of the Code),
define in an objective fashion the manner of calculating the Performance
Criteria it selects to use for such Performance Period and thereafter promptly
communicate such Performance Criteria to the Participant.

 

(d)                                 Modification of Performance Goal(s).  In the event that applicable tax and/or securities
laws change to permit Committee discretion to alter the governing Performance
Criteria without obtaining shareholder approval of such alterations, the
Committee shall have sole discretion to make such alterations without obtaining
shareholder approval.  The Committee is
authorized at any time during the first 90 days of a Performance Period (or, if
longer or shorter, within the maximum period allowed under Section 162(m) of
the Code, if applicable), or at any time thereafter to the extent the exercise
of such authority at such time would not cause the Performance Compensation
Awards granted to any Participant for such Performance Period to fail to
qualify as “performance-based compensation” under Section 162(m) of
the Code, in its sole discretion, to adjust or modify the calculation of a
Performance Goal for such Performance Period, based on and in order to
appropriately reflect the following events: 
(i) asset write-downs; (ii) litigation or claim judgments or
settlements; (iii) the effect of changes in tax laws, accounting
principles, or other laws or regulatory rules affecting reported results; (iv) any
reorganization and restructuring programs; (v) extraordinary nonrecurring
items as described in Accounting Principles Board Opinion No. 30 (or any successor
pronouncement thereto) and/or in management’s discussion and analysis of
financial condition and results of operations appearing 

 

15

 

in the Company’s annual
report to shareholders for the applicable year; (vi) acquisitions or
divestitures; (vii) any other specific unusual or nonrecurring events, or
objectively determinable category thereof; (viii) foreign exchange gains
and losses; and (ix) a change in the Company’s fiscal year.

 

(e)                                  Payment of Performance Compensation Awards.  (i) Condition
to Receipt of Payment.  Unless
otherwise provided in the applicable Award agreement, a Participant must be
employed by the Company on the last day of a Performance Period to be eligible
for payment in respect of a Performance Compensation Award for such Performance
Period.

 

(ii)                                  Limitation.  A Participant shall be eligible to receive
payment in respect of a Performance Compensation Award only to the extent
that:  (A) the Performance Goals for
such period are achieved; and (B) all or some of the portion of such
Participant’s Performance Compensation Award has been earned for the
Performance Period based on the application of the Performance Formula to such
achieved Performance Goals.

 

(iii)                               Certification.  Following the completion of a Performance
Period, the Committee shall review and certify in writing whether, and to what
extent, the Performance Goals for the Performance Period have been achieved
and, if so, calculate and certify in writing that amount of the Performance
Compensation Awards earned for the period based upon the Performance
Formula.  The Committee shall then
determine the amount of each Participant’s Performance Compensation Award
actually payable for the Performance Period and, in so doing, may apply
Negative Discretion.

 

(iv)                              Use of Negative Discretion.  In determining the actual amount of an
individual Participant’s Performance Compensation Award for a Performance
Period, the Committee may reduce or eliminate the amount of the Performance
Compensation Award earned under the Performance Formula in the Performance
Period through the use of Negative Discretion if, in its sole judgment, such
reduction or elimination is appropriate. 
The Committee shall not have the discretion, except as is otherwise provided
in the Plan, to (A) grant or provide payment in respect of Performance
Compensation Awards for a Performance Period if the Performance Goals for such
Performance Period have not been attained; or (B) increase a Performance
Compensation Award above the applicable limitations set forth in Section 5
of the Plan.

 

(f)                                    Timing of Award Payments.  Performance Compensation Awards granted for a
Performance Period shall be paid to Participants as soon as administratively
practicable following completion of the certifications required by this Section 11,
but in no event later than two-and-one-half months following the end of the
fiscal year during which the Performance Period is completed.

 

12.                                 Changes
in Capital Structure and Similar Events.  In the event of (a) any dividend or
other distribution (whether in the form of cash, Common Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, amalgamation, consolidation, split-up,
split-off, combination, repurchase or exchange of Common Shares or other
securities of the Company, issuance of warrants or other rights to acquire
Common Shares or other securities of the Company, or other similar corporate
transaction or event (including, 

 

16

 

without
limitation, a Change in Control) that affects the Common Shares, or (b) unusual
or nonrecurring events (including, without limitation, a Change in Control)
affecting the Company, any Affiliate, or the financial statements of the
Company or any Affiliate, or changes in applicable rules, rulings, regulations
or other requirements of any governmental body or securities exchange or
inter-dealer quotation system, accounting principles or law, such that in
either case an adjustment is determined by the Committee in its sole discretion
to be necessary or appropriate, then the Committee shall make any such
adjustments in such manner as it may deem equitable, including without
limitation any or all of the following:

 

(i)                                     adjusting any
or all of (A) the number of Common Shares or other securities of the
Company (or number and kind of other securities or other property) that may be
delivered in respect of Awards or with respect to which Awards may be granted
under the Plan (including, without limitation, adjusting any or all of the
limitations under Section 5 of the Plan) and (B) the terms of any
outstanding Award, including, without limitation, (1) the number of Common
Shares or other securities of the Company (or number and kind of other
securities or other property) subject to outstanding Awards or to which
outstanding Awards relate, (2) the Exercise Price or Strike Price with
respect to any Award or (3) any applicable performance measures
(including, without limitation, Performance Criteria and Performance Goals);

 

(ii)                                  providing for a
substitution or assumption of Awards, accelerating the exercisability of, lapse
of restrictions on, or termination of, Awards or providing for a period of time
for exercise prior to the occurrence of such event; and

 

(iii)                               canceling any
one or more outstanding Awards and causing to be paid to the holders thereof,
in cash, Common Shares, other securities or other property, or any combination
thereof, the value of such Awards, if any, as determined by the Committee
(which if applicable may be based upon the price per Common Share received or
to be received by other shareholders of the Company in such event), including
without limitation, in the case of an outstanding Option or SAR, a cash payment
in an amount equal to the excess, if any, of the fair market value (as of a
date specified by the Committee) of the Common Shares subject to such Option or
SAR over the aggregate Exercise Price or Strike Price of such Option or SAR,
respectively (it being understood that, in such event, any Option or SAR having
a per share Exercise Price or Strike Price equal to, or in excess of, the fair
market value of a Common Share subject thereto may be canceled and terminated
without any payment or consideration therefor);

 

provided, however, that in the case of any “equity
restructuring” (within the meaning of the Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 123 (revised 2004)), the
Committee shall make an equitable or proportionate adjustment to outstanding
Awards to reflect such equity restructuring. 
Any adjustment in Incentive Stock Options under this Section 12
(other than any cancellation of Incentive Stock Options) shall be made only to
the extent not constituting a “modification” within the meaning of Section 424(h)(3) of
the Code, and any adjustments under this Section 12 shall be made in a
manner that does not adversely affect the exemption provided pursuant to Rule 16b-3
under the Exchange Act.  The Company
shall give each Participant notice of an adjustment hereunder and, upon notice,
such adjustment shall be conclusive and binding for all purposes.

 

17

 

13.                                 Effect
of Change in Control.  Except to the
extent otherwise provided in an Award agreement, in the event of a Change in
Control, notwithstanding any provision of the Plan to the contrary, the
Committee may provide that, with respect to all or any portion of a particular
outstanding Award or Awards:

 

(a)                                  the then outstanding Options and SARs shall become immediately
exercisable as of a time prior to the Change in Control;

 

(b)                                 the Restricted Period shall expire as of a time prior to the Change in
Control (including without limitation a waiver of any applicable Performance
Goals);

 

(c)                                  Performance Periods in effect on the date the Change in Control occurs
shall end on such date, and the Committee shall (i) determine the extent
to which Performance Goals with respect to each such Performance Period have
been met based upon such audited or unaudited financial information or other
information then available as it deems relevant and (ii) cause the
Participant to receive partial or full payment of Awards for each such
Performance Period based upon the Committee’s determination of the degree of
attainment of the Performance Goals, or assuming that the applicable “target”
levels of performance have been attained or on such other basis determined by
the Committee.

 

To the
extent practicable, any actions taken by the Committee under the immediately
preceding clauses (a) through (c) shall occur in a manner and at a
time which allows affected Participants the ability to participate in the
Change in Control transactions with respect to the Common Shares subject to
their Awards.

 

14.                                 Amendments
and Termination.  (a) Amendment and Termination of the Plan.  The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time; provided, that (i) no amendment to Section 11(c) or
Section 14(b) (to the extent required by the proviso in such Section 14(b))
shall be made without shareholder approval and (ii) no such amendment,
alteration, suspension, discontinuation or termination shall be made without
shareholder approval if such approval is necessary to comply with any tax or
regulatory requirement applicable to the Plan (including, without limitation,
as necessary to comply with any rules or requirements of any securities
exchange or inter-dealer quotation system on which the Common Shares may be
listed or quoted or to prevent the Company from being denied a tax deduction
under Section 162(m) of the Code); provided,
further, that any such amendment,
alteration, suspension, discontinuance or termination that would materially and
adversely affect the rights of any Participant or any holder or beneficiary of
any Award theretofore granted shall not to that extent be effective without the
consent of the affected Participant, holder or beneficiary.

 

(b)                                 Amendment of Award Agreements.  The Committee may, to the extent consistent
with the terms of any applicable Award agreement, waive any conditions or
rights under, amend any terms of, or alter, suspend, discontinue, cancel or
terminate, any Award theretofore granted or the associated Award agreement,
prospectively or retroactively; provided
that any such waiver, amendment, alteration, suspension, discontinuance,
cancellation or termination that would materially and adversely affect the
rights of any Participant with respect to any Award theretofore granted shall
not to that extent be effective without the consent of the 

 

18

 

affected Participant; provided, further,
that without shareholder approval, except as otherwise permitted under Section 12
of the Plan, (i) no amendment or modification may reduce the Exercise
Price of any Option or the Strike Price of any SAR, (ii) the Committee may
not cancel any outstanding Option or SAR and replace it with a new Option or
SAR, another Award or cash and (iii) the Committee may not take any other
action that is considered a “repricing” for purposes of the shareholder
approval rules of the applicable securities exchange or inter-dealer
quotation system on which the Common Shares are listed or quoted.

 

15.                                 Restrictive
Covenants.  (a)  Confidentiality.  By accepting an Award under the Plan, and as a condition
thereof, each Participant agrees not to, at any time, either during their
employment or thereafter, divulge, use, publish or in any other manner reveal,
directly or indirectly, to any person, firm, corporation or any other form of
business organization or arrangement, and to keep in the strictest confidence
any Confidential Information, except (i) as may be necessary to the
performance of the Participant’s duties to the Company, (ii) with the
Company’s express written consent, (iii) to the extent that any such
information is in or becomes in the public domain other than as a result of the
Participant’s breach of any of his or her obligations under this Section 15(a),
or (iv) where required to be disclosed by court order, subpoena or other
government process and in such event, the Participant shall cooperate with the
Company in attempting to keep such information confidential to the maximum
extent possible.  Upon the request of the
Company or an Affiliate, the Participant agrees to promptly deliver to the
Company the originals and all copies, in whatever medium, of all such Confidential
Information.

 

(b)                                 Non-Disparagement.  By accepting an
Award under the Plan, and as a condition thereof, the Participant acknowledges
and agrees that he or she will not defame or publicly criticize the services,
business, integrity, veracity or personal or professional reputation of the
Company, including its officers, directors, partners, executives or agents, in
either a professional or personal manner at any time during or following his or
her employment.

 

(c)                                  Post-Employment Property.  By accepting an
Award under the Plan, and as a condition thereof, the Participant agrees that
any work of authorship, invention, design, discovery, development, technique,
improvement, source code, hardware, device, data, apparatus, practice, process,
method or other work product whatever (whether patentable or subject to
copyright, or not, and hereinafter collectively called “discovery”) related to
the business of the Company that the Participant, either solely or in
collaboration with others, has made or may make, discover, invent, develop,
perfect, or reduce to practice during his or her employment, whether or not
during regular business hours and created, conceived or prepared on the Company’s
premises or otherwise shall be the sole and complete property of the
Company.  More particularly, and without
limiting the foregoing, the Participant agrees that all of the foregoing and
any (i) inventions (whether patentable or not, and without regard to
whether any patent therefor is ever sought), (ii) marks, names, or logos
(whether or not registrable as trade or service marks, and without regard to
whether registration therefor is ever sought), (iii) works of authorship
(without regard to whether any claim of copyright therein is ever registered),
and (iv) trade secrets, ideas, and concepts ((i) — (iv) collectively,
“Intellectual Property Products”)
created, conceived, or prepared on the Company’s premises or otherwise, whether
or not during normal business hours, shall perpetually and throughout the world
be the exclusive property of the Company, as shall all tangible media
(including, but not limited to, papers, 

 

19

 

computer
media of all types, and models) in which such Intellectual Property Products
shall be recorded or otherwise fixed. 
The Participant further agrees promptly to disclose in writing and
deliver to the Company all Intellectual Property Products created during his or
her engagement by the Company, whether or not during normal business
hours.  The Participant agrees that all
works of authorship created by the Participant during his or her engagement by
the Company shall be works made for hire of which the Company is the author and
owner of copyright.  To the extent that
any competent decision-making authority should ever determine that any work of authorship
created by the Participant during his or her engagement by the Company is not a
work made for hire, by accepting an Award, the Participant assigns all right,
title and interest in the copyright therein, in perpetuity and throughout the
world, to the Company.  To the extent
that this Plan does not otherwise serve to grant or otherwise vest in the
Company all rights in any Intellectual Property Product created by the
Participant during his or her engagement by the Company, by accepting an Award,
the Participant assigns all right, title and interest therein, in perpetuity
and throughout the world, to the Company. 
The Participant agrees to execute, immediately upon the Company’s
reasonable request and without charge, any further assignments, applications,
conveyances or other instruments, at any time, whether or not the Participant
is engaged by the Company at the time such request is made, in order to permit
the Company and/or its respective assigns to protect, perfect, register,
record, maintain, or enhance their rights in any Intellectual Property Product;
provided, that, the Company shall bear the cost of any such
assignments, applications or consequences. 
Upon termination of the Participant’s employment by the Company for any
reason whatsoever, and at any earlier time the Company so requests, the
Participant will immediately deliver to the custody of the person designated by
the Company all originals and copies of any documents and other property of the
Company in the Participant’s possession, under the Participant’s control or to
which he or she may have access.

 

For
purposes of this Section 15, the term “Company” shall include the
Company and its Affiliates.

 

16.                                 General.  (a) Award Agreements.  Each Award under the Plan shall be evidenced
by an Award agreement, which shall be delivered to the Participant (whether in
paper or electronic medium (including email or the posting on a web site
maintained by the Company or a third party under contract with the Company))
and shall specify the terms and conditions of the Award and any rules applicable
thereto, including without limitation, the effect on such Award of the death,
disability or termination of employment or service of a Participant, or of such
other events as may be determined by the Committee.

 

(b)                                 Nontransferability.  (i) Each Award shall be exercisable only
by a Participant during the Participant’s lifetime, or, if permissible under
applicable law, by the Participant’s legal guardian or representative.  No Award may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a Participant other
than by will or by the laws of descent and distribution and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against the Company or an Affiliate; provided that
the designation of a beneficiary shall not constitute an assignment,
alienation, pledge, attachment, sale, transfer or encumbrance.

 

(ii)                                  Notwithstanding
the foregoing, the Committee may, in its sole discretion, permit Awards (other
than Incentive Stock Options) to be transferred by a Participant, 

 

20

 

without consideration,
subject to such rules as the Committee may adopt consistent with any applicable
Award agreement to preserve the purposes of the Plan, to:  (A) any person who is a “family member”
of the Participant, as such term is used in the instructions to Form S-8
under the Securities Act (collectively, the “Immediate
Family Members”); (B) a trust solely for the benefit of
the Participant and his or her Immediate Family Members; or (C) a
partnership or limited liability company whose only partners or stockholders
are the Participant and his or her Immediate Family Members; or (D) any
other transferee as may be approved either (I) by the Board or the
Committee in its sole discretion, or (II) as provided in the applicable
Award agreement. (each transferee described in clauses (A), (B) (C) and
(D) above is hereinafter referred to as a “Permitted
Transferee”); provided,
that the Participant gives the Committee advance written notice describing the
terms and conditions of the proposed transfer and the Committee notifies the
Participant in writing that such a transfer would comply with the requirements
of the Plan.

 

(iii)                               The terms of
any Award transferred in accordance with the immediately preceding sentence
shall apply to the Permitted Transferee and any reference in the Plan, or in
any applicable Award agreement, to a Participant shall be deemed to refer to
the Permitted Transferee, except that (A) Permitted Transferees shall not
be entitled to transfer any Award, other than by will or the laws of descent
and distribution; (B) Permitted Transferees shall not be entitled to
exercise any transferred Option unless there shall be in effect a registration
statement on an appropriate form covering the Common Shares to be acquired
pursuant to the exercise of such Option if the Committee determines, consistent
with any applicable Award agreement, that such a registration statement is
necessary or appropriate; (C) the Committee or the Company shall not be
required to provide any notice to a Permitted Transferee, whether or not such
notice is or would otherwise have been required to be given to the Participant
under the Plan or otherwise; and (D) the consequences of the termination
of the Participant’s employment by, or services to, the Company or an Affiliate
under the terms of the Plan and the applicable Award agreement shall continue
to be applied with respect to the Participant, including, without limitation,
that an Option shall be exercisable by the Permitted Transferee only to the
extent, and for the periods, specified in the Plan and the applicable Award
agreement.

 

(c)                                  Tax Withholding.  (i) A Participant shall be required to
pay to the Company or any Affiliate, and the Company or any Affiliate shall
have the right and is hereby authorized to withhold, from any cash, Common
Shares, other securities or other property deliverable under any Award or from
any compensation or other amounts owing to a Participant, the amount (in cash,
Common Shares, other securities or other property) of any required withholding
taxes in respect of an Award, its exercise, or any payment or transfer under an
Award or under the Plan and to take such other action as may be necessary in
the opinion of the Committee or the Company to satisfy all obligations for the
payment of such withholding and taxes.

 

(ii)                                  Without
limiting the generality of clause (i) above, the Committee may, in its
sole discretion, permit a Participant to satisfy, in whole or in part, the
foregoing withholding liability by (A) the delivery of Common Shares
(which are not subject to any pledge or other security interest and are Mature
Shares) owned by the Participant having a fair market value equal to such
withholding liability or (B) having the Company withhold from the number
of Common Shares otherwise issuable or deliverable pursuant to the exercise or
settlement of the 

 

21

 

Award a number of shares
with a fair market value equal to such withholding liability (but no more than
the minimum required statutory withholding liability).

 

(d)                                 No Claim to Awards; No Rights to Continued
Employment; Waiver.  No employee of the Company or an Affiliate,
or other person, shall have any claim or right to be granted an Award under the
Plan or, having been selected for the grant of an Award, to be selected for a
grant of any other Award.  There is no
obligation for uniformity of treatment of Participants or holders or
beneficiaries of Awards.  The terms and
conditions of Awards and the Committee’s determinations and interpretations
with respect thereto need not be the same with respect to each Participant and
may be made selectively among Participants, whether or not such Participants
are similarly situated.  Neither the Plan
nor any action taken hereunder shall be construed as giving any Participant any
right to be retained in the employ or service of the Company or an Affiliate, nor
shall it be construed as giving any Participant any rights to continued service
on the Board.  The Company or any of its
Affiliates may at any time dismiss a Participant from employment or discontinue
any consulting relationship, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or any Award
agreement.  By accepting an Award under
the Plan, a Participant shall thereby be deemed to have waived any claim to
continued exercise or vesting of an Award or to damages or severance
entitlement related to non-continuation of the Award beyond the period provided
under the Plan or any Award agreement, notwithstanding any provision to the
contrary in any written employment contract or other agreement between the Company
and its Affiliates and the Participant, whether any such agreement is executed
before, on or after the Date of Grant.

 

(e)                                  International Participants.  With respect to Participants who reside or
work outside of the United States of America, the Committee may in its sole
discretion amend the terms of the Plan or outstanding Awards with respect to
such Participants in order to conform such terms with the requirements of local
law or to obtain more favorable tax or other treatment for a Participant, the Company
or its Affiliates.

 

(f)                                    Designation and Change of Beneficiary.  Each Participant may file with the Committee
a written designation of one or more persons as the beneficiary(ies) who shall
be entitled to receive the amounts payable with respect to an Award, if any,
due under the Plan upon his death.  A
Participant may, from time to time, revoke or change his beneficiary
designation without the consent of any prior beneficiary by filing a new
designation with the Committee.  The last
such designation received by the Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant’s death, and in no event
shall it be effective as of a date prior to such receipt.  If no beneficiary designation is filed by a
Participant, the beneficiary shall be deemed to be his or her spouse or, if the
Participant is unmarried at the time of death, his or her estate.

 

(g)                                 Termination of Employment/Service.  Unless determined otherwise by the Committee
at any point following such event:  (i) neither
a temporary absence from employment or service due to illness, vacation or
leave of absence nor a transfer from employment or service with the Company to
employment or service with an Affiliate (or vice-versa) shall be considered a
termination of employment or service with the Company or an Affiliate; and (ii) if
a Participant’s employment with the Company and its Affiliates terminates, but
such Participant 

 

22

 

continues to provide
services to the Company and its Affiliates in a non-employee capacity (or
vice-versa), such change in status shall not be considered a termination of
employment with the Company or an Affiliate.

 

(h)                                 No Rights as a Stockholder.  Except as otherwise specifically provided in
the Plan or any Award agreement, no person shall be entitled to the privileges
of ownership in respect of Common Shares that are subject to Awards hereunder
until such shares have been issued or delivered to that person.

 

(i)                                     Government and Other Regulations.  (i) The obligation of the Company to
settle Awards in Common Shares or other consideration shall be subject to all
applicable laws, rules, and regulations, and to such approvals by governmental
agencies as may be required. 
Notwithstanding any terms or conditions of any Award to the contrary,
the Company shall be under no obligation to offer to sell or to sell, and shall
be prohibited from offering to sell or selling, any Common Shares pursuant to
an Award unless such shares have been properly registered for sale pursuant to
the Securities Act with the Securities and Exchange Commission or unless the
Company has received an opinion of counsel, satisfactory to the Company, that
such shares may be offered or sold without such registration pursuant to an
available exemption therefrom and the terms and conditions of such exemption
have been fully complied with.  The
Company shall be under no obligation to register for sale under the Securities
Act any of the Common Shares to be offered or sold under the Plan.  The Committee shall have the authority to
provide that all certificates for Common Shares or other securities of the
Company or any Affiliate delivered under the Plan shall be subject to such stop
transfer orders and other restrictions as the Committee may deem advisable
under the Plan, the applicable Award agreement, the federal securities laws, or
the rules, regulations and other requirements of the Securities and Exchange
Commission, any securities exchange or inter-dealer quotation system upon which
such shares or other securities are then listed or quoted and any other
applicable federal, state, local or non-U.S. laws, and, without limiting the
generality of Section 9 of the Plan, the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to
such restrictions.  Notwithstanding any
provision in the Plan to the contrary, the Committee reserves the right to add
any additional terms or provisions to any Award granted under the Plan that it
in its sole discretion deems necessary or advisable in order that such Award
complies with the legal requirements of any governmental entity to whose
jurisdiction the Award is subject.

 

(ii)                                  The Committee
may cancel an Award or any portion thereof if it determines, in its sole
discretion, that legal or contractual restrictions and/or blockage and/or other
market considerations would make the Company’s acquisition of Common Shares
from the public markets, the Company’s issuance of Common Shares to the
Participant, the Participant’s acquisition of Common Shares from the Company
and/or the Participant’s sale of Common Shares to the public markets, illegal,
impracticable or inadvisable.  If the Committee
determines to cancel all or any portion of an Award in accordance with the
foregoing, the Company shall pay to the Participant an amount equal to the
excess of (A) the aggregate fair market value of the Common Shares subject
to such Award or portion thereof canceled (determined as of the applicable
exercise date, or the date that the shares would have been vested or delivered,
as applicable), over (B) the aggregate Exercise Price or Strike Price (in
the case of an Option or SAR, respectively) or any amount payable as a
condition of delivery of Common Shares (in the 

 

23

 

case of any other
Award).  Such amount shall be delivered
to the Participant as soon as practicable following the cancellation of such
Award or portion thereof.

 

(j)                                     Payments to Persons Other Than Participants.  If the Committee shall find that any person
to whom any amount is payable under the Plan is unable to care for his affairs
because of illness or accident, or is a minor, or has died, then any payment
due to such person or his estate (unless a prior claim therefor has been made
by a duly appointed legal representative) may, if the Committee so directs the
Company, be paid to his spouse, child, relative, an institution maintaining or
having custody of such person, or any other person deemed by the Committee to
be a proper recipient on behalf of such person otherwise entitled to
payment.  Any such payment shall be a
complete discharge of the liability of the Committee and the Company therefor.

 

(k)                                  Nonexclusivity of the Plan.  Neither the adoption of this Plan by the
Board nor the submission of this Plan to the shareholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options or other
equity-based awards otherwise than under this Plan, and such arrangements may
be either applicable generally or only in specific cases.

 

(l)                                     No Trust or Fund Created.  Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate, on the one hand, and a
Participant or other person or entity, on the other hand.  No provision of the Plan or any Award shall
require the Company, for the purpose of satisfying any obligations under the
Plan, to purchase assets or place any assets in a trust or other entity to
which contributions are made or otherwise to segregate any assets, nor shall
the Company maintain separate bank accounts, books, records or other evidence
of the existence of a segregated or separately maintained or administered fund
for such purposes.  Participants shall
have no rights under the Plan other than as unsecured general creditors of the
Company, except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they shall have the same
rights as other employees under general law.

 

(m)                               Reliance on Reports.  Each member of the Committee and each member
of the Board shall be fully justified in acting or failing to act, as the case
may be, and shall not be liable for having so acted or failed to act in good
faith, in reliance upon any report made by the independent public accountant of
the Company and its Affiliates and/or any other information furnished in
connection with the Plan by any agent of the Company or the Committee or the
Board, other than himself.

 

(n)                                 Relationship to Other Benefits.  No payment under the Plan shall be taken into
account in determining any benefits under any pension, retirement, profit
sharing, group insurance or other benefit plan of the Company except as
otherwise specifically provided in such other plan.

 

(o)                                 Governing Law.  The Plan shall be governed by and construed
in accordance with the internal laws of the State of New York applicable to
contracts made and 

 

24

 

performed wholly within the
State of New York, without giving effect to the conflict of laws provisions
thereof.

 

(p)                                 Severability.  If any provision of the Plan or any Award or
Award agreement is or becomes or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction or as to any person or entity or Award, or
would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
the applicable laws, or if it cannot be construed or deemed amended without, in
the determination of the Committee, materially altering the intent of the Plan
or the Award, such provision shall be construed or deemed stricken as to such
jurisdiction, person or entity or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.

 

(q)                                 Obligations Binding on Successors.  The obligations of the Company under the Plan
shall be binding upon any successor corporation or organization resulting from
the merger, amalgamation, consolidation or other reorganization of the Company,
or upon any successor corporation or organization succeeding to substantially
all of the assets and business of the Company.

 

(r)                                    Code Section 162(m) Approval.  If so determined by the Committee, the
provisions of the Plan regarding Performance Compensation Awards shall be
disclosed and reapproved by shareholders no later than the first shareholder
meeting that occurs in the fifth year following the year in which shareholders
previously approved such provisions, in each case in order for certain Awards
granted after such time to be exempt from the deduction limitations of Section 162(m) of
the Code.  Nothing in this clause,
however, shall affect the validity of Awards granted after such time if such
shareholder approval has not been obtained.

 

(s)                                  Expenses; Gender; Titles and Headings.  The expenses of administering the Plan shall
be borne by the Company and its Affiliates. 
Masculine pronouns and other words of masculine gender shall refer to
both men and women.  The titles and
headings of the sections in the Plan are for convenience of reference only, and
in the event of any conflict, the text of the Plan, rather than such titles or
headings shall control.

 

(t)                                    Other
Agreements. 
Notwithstanding the above, the Committee may require, as a condition to
the grant of and/or the receipt of Common Shares under an Award, that the
Participant execute lock-up, shareholder or other agreements, as it may
determine in its sole and absolute discretion.

 

(u)                                 Payments.  Participants shall be
required to pay, to the extent required by applicable law, any amounts required
to receive Common Shares under any Award made under the Plan.

 

*     *     
*

 

As adopted by the Board of Directors of Aventine Renewable Energy
Holdings, Inc. on March 15, 2010.

 

25Exhibit
10.4

 

Aventine Renewable Energy
Holdings, Inc. Director Compensation

 

Cash
Compensation

 

·                                          $50,000 annual cash retainer, payable in equal quarterly installments;

·                                          Additional $25,000 annual retainer to the chairman of the Board;

·                                          Additional committee chair retainers of $10,000 per year for the chair of
the audit committee and $5,000 for other committee chairs;

·                                          $1,500 per Board meeting attended ($750 for telephonic meetings); and

·                                          $750 per committee meeting attended, either in person or by phone.

 

Equity
Compensation

 

·                                          Annual grant at
the beginning of each year in the amount of $35,000 in restricted stock units (“RSU”), which vest after one year of
the grant;

·                                          Additional
annual grant at the beginning of each year in the amount of $40,000 RSU to the
chairman of the Board;

·                                          After vesting,
RSU must be held for the duration of a director’s Board service, and they will
only be converted into shares after retirement or other termination.

 

Note: the CEO will not be entitled to any of the
foregoing terms.

 

1

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