Document:

Exhibit

Exhibit 10.2

        

KANSAS CITY SOUTHERN
2017 EQUITY INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION, RESTRICTED SHARE AND PERFORMANCE SHARE
AWARD AGREEMENT
By this Agreement, Kansas City Southern, a Delaware corporation (the “Company”), grants to you,  
«Employee», an employee of the Company or an Affiliate, (“you”), (i) a non-qualified stock Option to purchase the number of shares of the Company’s Common Stock set forth below, (ii) the number of Restricted Shares set forth below, and (iii) the number of Performance Shares set forth below, which Performance Shares represent a conditional right to receive a number of Shares determined by the satisfaction of performance goals for the applicable Performance Period; all subject to the terms and conditions set forth below and in the attached Exhibit A and in the Kansas City Southern 2017 Equity Incentive Plan (including Committee rules, regulations, policies and procedures established thereunder), as may from time to time be amended (the “Plan”), all of which are an integral part of this Agreement. 
NON-QUALIFIED STOCK OPTION
	
		
	Grant Date:   
	[March 5, 2019]

	Number of Options:
	[Options_Granted]

	Option Price:   
	[$XX.XX]

This Option shall become exercisable in accordance with the schedule below, provided you remain continuously employed by the Company or an Affiliate from the Grant Date to such date.  The term of the Option shall be ten (10) years from the Grant Date unless terminated earlier as provided in Exhibit A or in the Plan.
	
		
	Number of Options Exercisable
	   Date Exercisable

	«Options1»
	[March 5, 2020]

	«Options2»
	[March 5, 2021]

	«Options3»
	[March 5, 2022]

RESTRICTED SHARES
	
		
	Grant Date:   
	[March 5, 2019]

	Number of Restricted Shares:
	«Restricted_Shares_Granted»

	Period of Restriction/Vesting Date:
	[February 25, 2022]

 
PERFORMANCE SHARES
	
		
	Grant Date:   
	[March 5, 2019]

	Number of Performance Shares (at Target):
	«Performance_Shares_Granted»

	3-Year Performance Period
	FY 2019-21

	Period of Restriction / Vesting Date:
	Later of:  (i) [February 25, 2022], or (ii) the date the Committee certifies that the Performance Goals for the FY 2019-21 Performance Period are (or are not) satisfied.

The Award evidenced by this Agreement shall not be effective unless you have indicated your acceptance of this Agreement by signing electronically as provided below promptly after your receipt of this Agreement.  You should print and retain one copy of this Agreement for your records.
Kansas City Southern

By: /s/ ADAM J. GODDERZ    
Adam J. Godderz
General Counsel & Corporate Secretary

ACCEPTED AND AGREED*:
[Name and KSC Participant #]

* Acceptance of your award shall be indicated through the online process provided by Schwab.  By clicking the “Accept” button, you are signing and dating this agreement electronically.  Your electronic signature constitutes a legal signature confirming that you acknowledge and agree to the terms and conditions of this award agreement.

1

EXHIBIT A
to
NON-QUALIFIED STOCK OPTION, RESTRICTED SHARE AWARD, AND 
PERFORMANCE SHARE AWARD AGREEMENT

You received three Awards under this Agreement: an Award of Non-Qualified Stock Options, an Award of Restricted Shares and an Award of Performance Shares.  This Exhibit A consists of three sections.  The first section applies to your Award of Non-Qualified Stock Options.  The second section applies to your Award of Restricted Shares.  The third section applies to your Award of Performance Shares.  The fourth section contains provisions that apply to all your three types of Awards.

Non-Qualified Stock Option Award

1.    Manner of Exercise.  This Option shall be exercised by delivering to the Company (or its authorized agent), during the period in which such Option is exercisable, (i) a notice, which may be electronic, of your intent to purchase a specific number of Shares pursuant to this Option (a “Notice of Exercise”), and (ii) full payment of the Option Price for such specific number of Shares.  Payment may be made by any one or more of the following means:
(a)    cash, personal check, or wire transfer;
(b)    if approved and permitted by the Committee, Shares owned by you with a Fair Market Value on the date of exercise equal to the Option Price, which such Shares must be fully paid, non-assessable, and free and clear from all liens and encumbrances;
(c)    if approved and permitted by the Committee, through the sale of the Shares acquired on exercise of this Option through a broker to whom you have submitted irrevocable instructions to deliver promptly to the Company an amount sufficient to pay for such Shares, together with, if required by the Company, the minimum statutory amount of federal, state, local or foreign withholding taxes payable by reason of such exercise. A copy of such delivery instructions must also be delivered to the Company by you with the Notice of Exercise; or
(d)    if approved and permitted by the Committee, with Restricted Shares owned by you with a Fair Market Value on the date of exercise equal to the Option Price, in which case an equal number of Shares delivered on exercise of the Option will carry the same restrictions as the Restricted Shares tendered to pay the exercise price.
The exercise of the Option shall become effective at the time such a Notice of Exercise has been received by the Company, which must be before the tenth (10th) anniversary of the Grant Date (the “Expiration Date”), unless an earlier date is provided herein.  You shall not have any rights as a stockholder of the Company with respect to the Shares deliverable upon exercise of this Option until ownership of such Shares is recorded in your name on the books of the Company

If the Option is exercised as permitted herein by any person or persons other than you, such Notice of Exercise shall be accompanied by such documentation as Company may reasonably require, including without limitation, evidence of the authority of such person or persons to exercise the Option and evidence satisfactory to Company (if required by the Company) that any death taxes payable with respect to such Shares have been paid or provided for.
2.    Exercisability.  This Option shall become exercisable upon the date(s) specified in this Award Agreement, provided you remain continuously employed by the Company or an Affiliate from the Grant Date to such date(s) the Option becomes exercisable.  This Option shall also become fully exercisable upon your Termination of Employment on account of: (a) Retirement, (b) death or (c) Disability.  For purpose of your Option, Retirement means "Retirement" as defined in the Plan (Termination of Employment after having both attained age 55 and completed 10 years of service or after having attained age 65).

2

3.    Change of Control.  This Option shall become fully exercisable upon your Termination of Employment by reason of your employment being involuntarily terminated (other than for Cause) by the Company within the two (2) year period following a Change of Control.   
4.    Exercise After Termination of Employment.  This Option may be exercised only while you are employed by the Company or an Affiliate, except that this Option may also be exercised after the date on which you have a Termination of Employment (“Termination Date”) as follows:
(i)    if you have a Termination of Employment by reason of your Retirement, you may exercise this Option at any time prior to the Expiration Date;
(ii)    if you have a Termination of Employment by reason of your Disability, you may exercise this Option at any time during the first twelve (12) months after your Termination Date;
(iii)    if you have a Termination of Employment by reason of your death, the executor or administrator of your estate, your heirs or legatees, or beneficiary designated in accordance with the Plan, as applicable, may exercise this Option at any time during the first twelve (12) months after your Termination Date; and
(iv)    if you have a Termination of Employment for any reason other than as described in  subparagraph (i), (ii) or (iii) above, or as provided in paragraph 5, you may exercise this Option at any time during the first three (3) months after your Termination Date;
provided, however, that (x) except as otherwise provided in paragraphs 2 or 3 of this Non-Qualified Stock Option Award section, this Option may be exercised after your Termination Date only to the extent it is exercisable on the Termination Date, and (y) under no circumstances may this Option be exercised on or after the Expiration Date.  For purposes of this paragraph 4, if you are employed by an Affiliate of the Company, you will be deemed to have had a Termination of Employment as of the first day on which such corporation ceases to be an Affiliate of the Company.

5.    Affiliation with Competitor/Dismissal for Cause.  Notwithstanding anything to the contrary contained herein, if you have a Termination of Employment due to a dismissal for Cause, or if you, without Company’s consent, become associated with, employed by, render service to, or own any interest in (other than any non-substantial interest, as the Committee from time to time determines) any business that is in competition with (i) the Company or (ii) any Related Company (as defined below), this Option shall terminate and cease to be exercisable immediately upon such event.  For purposes of this paragraph, Related Company means (i) any individual or entity that directly, or through one or more intermediaries, controls, or is controlled by, or is under common control with, the Company, and (ii) any entity in which the Company owns, directly or indirectly, twenty percent (20%) or more of the combined value of all equity interests.
6.    Limited Transferability of Option.  Except as provided in the immediately following sentence, this Option is exercisable during your lifetime only by you or your guardian or legal representative, and this Option is not transferable except by will or the laws of descent and distribution.  To the extent and in the manner permitted by the Committee, and subject to such terms, conditions, restrictions or limitations as may be prescribed by the Committee, you may transfer this Option to (i) your spouse, sibling, parent, child (including an adopted child) or grandchild (any of which an “Immediate Family Member”); (ii) a trust, the primary beneficiaries of which consist exclusively of you or your Immediate Family Members; or (iii) a corporation, partnership or similar entity, the owners of which consist exclusively of you or your Immediate Family Members.
7.    Fractional or De Minimis Shares.  The Option shall not be exercisable with respect to a fractional share or with respect to fewer that ten (10) Shares, unless the remaining Shares are fewer than ten (10).
8.    Nonstatutory Option.  This Option has been designated by the Committee as a Nonstatutory Option; it does not qualify as an Incentive Stock Option.

3

Restricted Shares Award

1.    Payment.  The Restricted Shares are awarded to you without requirement of payment.
2.    Transfer Restrictions.  Until the restrictions lapse, the Restricted Shares may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by you, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable; provided that the designation of a beneficiary pursuant to the Plan shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.  Certificates will be transferred to you only as provided in paragraph 3 of this Restricted Shares Award section.  
3.    Record of Ownership.  The number of your Restricted Shares with respect to which the restrictions have lapsed will be released from restrictions on the books of the Company.  Delivery may be effected on an uncertificated basis, to the extent not prohibited by applicable law or the rules of the New York Stock Exchange.  To the extent the Shares are delivered in uncertificated form, those Shares shall be deposited directly with Charles Schwab Trust Company, or such other agent designated by the Company, and the Company may utilize electronic or automated methods to transfer the Shares.  Until the restrictions lapse, your Restricted Shares either will be evidenced by certificates held by or on behalf of the Company (in which case you will sign and deliver to the Company a stock power relating to the Restricted Shares so that the Company may cancel the Restricted Shares in the event of forfeiture), or the Restricted Shares will be reflected in a book-entry form or other account maintained by the Company, as determined by the Company.  
4.    Rights as Stockholder.  During the Period of Restriction you will have all of the rights of a stockholder of the Company with respect to the Restricted Shares, except that (i) you will be subject to the provisions of paragraph 2 of this Restricted Shares Award section and (ii) any cash dividends or stock dividends paid with respect to any Restricted Shares which are subject to forfeiture under paragraph 8 of this Restricted Shares Award section will be retained by the Company for your benefit.  The cash dividends or stock dividends so retained by the Company and attributable to your Restricted Shares subject to forfeiture under paragraph 8 of this Restricted Shares Award section will be distributed to you, without adjustment for earnings, in cash or in Shares (depending on the nature of the underlying dividend) when the Restricted Shares are no longer subject to forfeiture under paragraph 8 of this Restricted Shares Award section (whether or not the Restricted Shares remain subject to the provisions of paragraph 2 of this Restricted Shares Award section).  You will not be entitled to any retained dividends attributable to any Restricted Shares which are forfeited pursuant to paragraph 8 of this Restricted Shares Award section.
5.    Lapse of Restrictions Other than Upon Retirement.  The Restricted Shares will vest and no longer be subject to restrictions upon the first of the following events to occur:
(a)  The end of the Period of Restriction, provided your Termination of Employment does not occur prior to that date; or
(b)  Your Termination of Employment by reason of your death; 
(c)  Your Termination of Employment by reason of your Disability; or
(d)  Your Termination of Employment by reason of your employment being involuntarily terminated (other than for Cause) by the Company within the two (2) year period following a Change of Control.
6.    Nonforfeitability of Shares Upon Retirement.  Notwithstanding any provision in this Agreement to the contrary, if you satisfy the conditions for Retirement prior to the expiration of the Period of Restriction, then your Restricted Shares will become non-forfeitable in accordance with (a), (b) or (c) below, as applicable:
(a)  If you first satisfy the conditions for Retirement on or before February 28, 2020, then (i) one-third (1/3) of your Restricted Shares will become non-forfeitable on February 28, 2020 provided you have not incurred a Termination of Employment before such date; (ii) an additional one-third (1/3) of your Restricted 

4

Shares will become non-forfeitable on February 26, 2021 provided you have not incurred a Termination of Employment before such date; and (iii) the final one-third (1/3) of your Restricted Shares will become non-forfeitable on February 25, 2022 provided you have not incurred a Termination of Employment before such date.
(b)  If you first satisfy the conditions for Retirement after February 28, 2020 but on or before February 26, 2021, then (i) one-third (1/3) of your Restricted Shares will become non-forfeitable on the last day of the month during which you first satisfy the conditions for Retirement provided you have not incurred a Termination of Employment before such date; (ii) an additional one-third (1/3) of your Restricted Shares will become non-forfeitable on February 26, 2021 provided you have not incurred a Termination of Employment before such date; and (iii) the final one-third (1/3) of your Restricted Shares will become non-forfeitable on February 25, 2022 provided you have not incurred a Termination of Employment before such date; and 
(c)  If you first satisfy the conditions for Retirement after February 26, 2021 but on or before February 25, 2022, then (i) two-thirds (2/3) of your Restricted Shares will become non-forfeitable on the last day of the month during which you first satisfy the conditions for Retirement provided you have not incurred a Termination of Employment before such date; and (ii) the final one-third (1/3) of your Restricted Shares will become non-forfeitable on February 25, 2022 provided you have not incurred a Termination of Employment before such date. 
Although certain of your Restricted Shares may become non-forfeitable as set forth above prior to the expiration of the Period of Restriction, such Shares shall remain subject to the restrictions on transfer set forth in paragraph 2 of this Restricted Shares Award section until the earlier of your Termination of Employment or the expiration of the Period of Restriction.  For purposes of the foregoing, you will satisfy the conditions for "Retirement" only if you have attained age 55 and completed 10 years of service, or you have attained age 65, prior to your Termination of Employment.
7.    Acceleration of Vesting.  The Committee may at any time or times in its discretion accelerate the vesting of some or all of your Restricted Shares by specifying a date, other than what is provided in this Agreement, on which the Period of Restriction ends and such Shares will no longer be subject to restrictions.  Any such Shares that become vested under this paragraph 7 will not be forfeited under paragraph 8 of this Restricted Shares Award section.
8.    Forfeiture.  If you have a Termination of Employment prior to any of the events specified in paragraphs 5 or 6 of this Restricted Shares Award section, then you will forfeit your Restricted Shares that are not vested upon such Termination of Employment.  All of your rights to and interest in any Restricted Shares that are forfeited under this paragraph 8 will terminate upon forfeiture.  

Performance Shares Award

1.    Payment.  The Performance Shares are awarded to you without requirement of payment by you.
2.    Transfer Restrictions.  The Performance Shares are rights that may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by you, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable; provided that the designation of a beneficiary pursuant to Article 14 of the Plan shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.  
3.    Number of Shares Earned.  Your Award of Performance Shares specifies a number of Performance Shares awarded with respect to the FY 2019-21 Performance Period.  The number of Performance Shares designated for the FY 2019-21 Performance Period represents a target number of Shares to be earned if the Company performance goals (the “Performance Goals”) are met for the FY 2019-21 Performance Period.  As of the last day of the FY 2019-21 Performance Period, the Committee will determine, in accordance with the Schedule of Performance Goals below (the "Performance Schedule"), the number of Shares, if any, earned by you.  The earned Shares will be paid as provided in paragraph 7 of this Performance Shares Award section subject to satisfaction of the vesting requirements and 

5

forfeiture provisions of paragraph 4 and paragraph 10 of this Performance Shares Award section.  Notwithstanding any number of Shares otherwise determined eligible to be earned based on the Performance Schedule, the Committee may, in its sole discretion, modify (including by increasing or reducing) the amount of the earned Shares to be paid as provided in paragraph 7 based on such criteria as it shall determine, including, but not limited to, aggregate Company financial results, individual performance, or total shareholder return during the FY 2019-21 Performance Period. 
4.    Vesting.  The number of Shares earned as determined under the Performance Schedule will be paid to you only if you become vested in the Shares.  You will become vested in the Shares on the Vesting Date provided you do not have a Termination of Employment prior to the Vesting Date except as otherwise provided in paragraph 5 and paragraph 6 of this Performance Shares Award section, and subject to any other forfeiture of Shares under paragraph 10 of this Performance Shares Award section.  If you have a Termination of Employment prior to the Vesting Date, then except as provided in paragraph 5 and paragraph 6 of this Performance Shares Award section, you will forfeit all Performance Shares, and will have no right to earn or receive payment of any Shares under this Agreement.
5.    Termination of Employment Due to Retirement.  If you have a Termination of Employment prior to the Vesting Date due to Retirement, a portion of your Performance Shares will be forfeited and you will have no right to earn or receive payment of any Shares with respect to such forfeited portion.  The forfeited portion shall be equal to your Performance Shares times a fraction, the numerator of which is the total number of remaining whole months in the FY 2019-21 Performance Period and the denominator of which is 36 months.  The portion of your Performance Shares not forfeited pursuant to the foregoing shall be earned based on the applicable performance percentage determined in accordance with the Performance Schedule and shall be paid as provided in paragraph 7 of this Performance Shares Award.  For purposes of your Performance Share Award, Retirement means "Retirement" as defined in the Plan (Termination of Employment after either having attained age 65 or having both attained age 55 and completed 10 years of service).  
6.    Termination of Employment Due to Change of Control, Death or Disability.  If you have a Termination of Employment prior to the Vesting Date due to (i) your employment being involuntarily terminated (other than for Cause) by the Company within the two (2) year period following a Change of Control or (ii) your death or Disability, then upon such Termination of Employment, you will be deemed to have earned a number of Shares determined under the Performance Schedule as if the Performance Goals were at Target.  
7.    Payment of Shares.  Except as provided in the following sentence, the Shares, if any, earned by you under this Agreement, and not forfeited under this Agreement, will be delivered to you, or your beneficiary if you are deceased, for the number of Shares earned as soon as practicable after the latest to occur of (a) the Vesting Date, or (b) the determination of the number of all Shares, if any, earned by you under this Agreement with respect to the FY 2019-21 Performance Period.  Notwithstanding the preceding sentence, in the event of vesting prior to the Vesting Date under the provisions of paragraph 6 of this Performance Shares Award section, then the Shares, if any, earned by you will be delivered to you or your beneficiary as soon as practicable after your Termination of Employment.  Delivery of Shares may be effected on an uncertificated basis, to the extent not prohibited by applicable law or the rules of the New York Stock Exchange.  To the extent the Shares are delivered in uncertificated form, your Shares shall be deposited directly with Charles Schwab Trust Company, or such other agent designated by the Company, and the Company may utilize electronic or automated methods to transfer the Shares.
8.    Rights as Stockholder.  Prior to the time you receive a payment of Shares under this Agreement, you will have no rights of a stockholder of the Company with respect to your Performance Shares or any Shares which may be or have been earned by you.  Accordingly, with respect to the Performance Shares or any unearned or earned but unpaid Shares, in addition to the restrictions under paragraph 2 of this Performance Shares Award section, you will not have the right to vote, you will not receive or be entitled to receive cash or non-cash dividends, and you will not have any other beneficial rights as a shareholder of the Company.  
9.    Acceleration of Vesting Date.  The Committee may at any time or times in its discretion waive your obligation to remain employed through the Vesting Date in order to receive any Shares.  In the event of such a waiver, you will receive a payment of those Shares, if any, which would have been paid to you had you remained employed 

6

through the Vesting Date based upon the level of goal achievement under the Performance Schedule.   Waiver of a continued employment condition under this paragraph 9 will not result in an earlier payment of any Shares.
10.    Additional Forfeiture Provision and Repayment Obligation.  Notwithstanding any provisions of this Agreement to the contrary, if the Committee determines that you have engaged in Gross Misconduct as defined in this paragraph 10, then: (a) you will immediately forfeit all Performance Shares awarded to you, and all earned or unearned Shares, for the FY 2018-20 Performance Period under this Agreement, and you will have no right to receive payment of any Shares under this Agreement and (b) you will repay to the Company a number of Shares, or a dollar amount equal to the current Fair Market Value of a number of Shares, equal to the number of Shares previously paid to you under this Agreement.  For purposes of this paragraph 10, Gross Misconduct means intentional conduct in disregard of the Company’s expectations of someone in your position with the Company that has caused significant financial harm to the Company, whether occurring before or after your Termination of Employment.

Provisions Applicable to Your Non-Qualified Stock Option Award, Restricted Shares Award and Performance Share Award

1.    Plan Governs.  The Non-Qualified Stock Option Award, Restricted Shares Award and Performance Share Award and this Agreement are subject to the terms and conditions of the Plan.  The Plan is incorporated in this Agreement by this reference.  All capitalized terms used in this Agreement have the meaning set forth in the Plan unless otherwise defined in this Agreement.  By executing this Agreement, you acknowledge receipt of a copy of the Plan and the prospectus covering the Plan and you acknowledge that the Award is subject to all the terms and provisions of the Plan.  You further agree to accept as binding, conclusive and final all decisions and interpretations by the Plan Committee with respect to any questions arising under the Plan.  By signing this Agreement with respect to your Non-Qualified Stock Option Award, you are not obligated to exercise all or any part of this Option or any other Option.
2.    Tax Withholding.  As of any date that a required tax withholding liability (“Required Withholding”) occurs, you must remit all amounts necessary to satisfy the Required Withholding.   The Company will not deliver Shares to you or release the restrictions on Shares under this Agreement unless you remit (or in appropriate cases agree to remit) or otherwise provide for the Required Withholding as allowed under the Plan, as amended.  
3.    No Right to Employment.  Nothing in this Agreement shall interfere with or limit in any way the right of the Company or an Affiliate to terminate your employment or service at any time, nor confer upon you the right to continue in the employ of the Company or an Affiliate.
4.    Notices.  Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its Corporate Secretary.  Any notice to be given to you shall be addressed to you at the address listed in the Company’s records.  By written notice referencing this paragraph of this Agreement, either party may designate a different address for notices.  Any notice under this Agreement to the Company shall become effective upon receipt by the Company.  Any notice under this Agreement to you will be deemed to have been delivered to you when delivered in person or when deposited in the United States mail, addressed to you at your address on the shareholder records of the Company, or such other address as you have designated under this paragraph.
5.    Tax Consultation.  Your signature on this Agreement means that you understand that you may incur tax consequences as of any date that a number (which may be all or part) of your Restricted Shares or Performance Shares would no longer be forfeited if you were to have a Termination of Employment on such date, and that special tax rules apply with respect to your Non-Qualified Stock Option.  You agree to consult with any tax consultants you think advisable in connection with tax issues regarding your Non-Qualified Stock Option Award, Restricted Shares Award and Performance Share Award and you acknowledge that you are not relying, and will not rely, on the Company or any Affiliate for any tax advice.  Please see Section 17.2 of the Plan regarding Code Section 83(b) elections with respect to your Restricted Shares.
6.    Amendment.  The Company reserves the right to amend the Plan at any time.  The Committee reserves the right to amend this Agreement at any time.

7

7.    Severability.  If any part of this Agreement is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not serve to invalidate any part of this Agreement not declared to be unlawful or invalid.  Any part so declared unlawful or invalid shall, if possible, be construed in a manner which gives effect to the terms of such part to the fullest extent possible while remaining lawful and valid.
8.    Applicable Law.  This Agreement shall be governed by the laws of the State of Delaware other than its laws respecting choice of law.
9.    Headings.  Headings are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.
10.    No Waiver.  The failure of Company in any instance to exercise any of its rights granted under this Agreement or the Plan shall not constitute a waiver of any other rights that may arise under this Agreement.
11.    Right of Recovery.  Notwithstanding any provisions of this Agreement to the contrary, the Company may recover from you any amount paid or payable to you (or the current Fair Market Value of any Shares paid or payable to you) pursuant to this Agreement which is required to be recovered under the rules of any exchange on which the Company's Shares are registered or any amount the Committee determines is appropriate under the Company's policies in effect from time to time regarding the recovery of incentive compensation, including any such policies adopted after the Grant Date of this Agreement.  
12.      Data Privacy. By accepting the Award, you agree that any data, including your personal data, may be exchanged among the Company and its Affiliates to the extent the Company determines necessary or advisable to administer the Plan and the Award, as well as with any third-party engaged by the Company to administer the Plan and the Awards granted under the Plan.

8

Schedule of Performance Goals for Performance Shares

	
				
	FY 2019-21
Performance Level
	Return on Invested Capital (ROIC)1 
(75% Weighting)
	Operating Ratio (OR)2 
(25% Weighting)
	

Earned Percentage of Incentive Target

	 
	 
	 
	 

	2019
	 
	 
	 

	Threshold
	_____%
	_____%
	0%

	Target
	____% - ___%
	____% - ___%
	100%

	Maximum
	___%
	___%
	200%

	 
	 
	 
	 

	2020
	 
	 
	 

	Threshold
	_____%
	_____%
	0%

	Target
	____% - ___%
	____% - ___%
	100%

	Maximum
	___%
	___%
	200%

	 
	 
	 
	 

	2021
	 
	 
	 

	Threshold
	_____%
	_____%
	0%

	Target
	____% - ___%
	____% - ___%
	100%

	Maximum
	___%
	___%
	200%

The number of Shares earned for the FY 2019-21 Performance Period will be equal to the product of:

The average of the earned percentage for each fiscal year
X
Revenue Growth Multiplier 
X
The number of Performance Shares subject to this Award Agreement

In no event, however, shall the number of Performance Shares earned for the FY 2019-21 Performance Period exceed 200% of target. 

To determine the “earned percentage” for a fiscal year, the Committee will compare the Company’s actual performance for the fiscal year to the Performance Goals for such fiscal year as set forth in the above schedule.  If the calculated percentage is between Threshold and Maximum for any fiscal year, then the earned percentage will be prorated.  If the calculated percentage is below Threshold, then the earned percentage for the fiscal year will be 0%.  If the calculated percentage is above Maximum, then the earned percentage will be 200%.  For purposes of the foregoing, any fractional Share earned with respect to the FY 2019-21 Performance Period shall be rounded down to the nearest whole Share.   

The “Revenue Growth Multiplier” is determined based on the average of the Company’s annual revenue growth during the 3-year Performance Period relative to the average of the annual revenue growth of all other Class 1 railroads over the same time frame.  The average of the annual revenue growth for each Class 1 railroad shall be determined by first calculating the change in revenue for each applicable year and then computing the 3-year average.  Each Class 1 railroad will then be ranked in order of the highest to lowest average annual revenue growth rate for the 3-year Performance Period. For purposes of determining revenue growth for the Company and for all other North American Class I railroads, revenue includes (a) total revenue for the most recently reported twelve-month period, including fuel surcharge revenue, (b) adjustments for foreign exchange impacts as disclosed in publicly available information, and (c) adjustments for business combinations, acquisitions or dispositions as disclosed in publicly available information. The Revenue Growth Multiplier for purpose of this Award will be based on the following results:

9

	
		
	If the Company’s average annual revenue growth ranking is . . . 

	Then the Revenue Growth Multiplier will be . . .

	1st place
	120%

	2nd place
	110%

	2nd to last place
	90%

	Last place
	80%

	Any other ranking
	100%

 	
	
	 

1ROIC is defined as [TBD].

2OR is defined as [TBD].

10a2018incentivecompensati

                      ROADRUNNER TRANSPORTATION SYSTEMS, INC.                         2018 INCENTIVE COMPENSATION PLAN    PHX 332736409v4  

 

                     ROADRUNNER TRANSPORTATION SYSTEMS, INC.                         2018 INCENTIVE COMPENSATION PLAN   1.  Purpose ................................................................................................................................................... 1  2.  Definitions .............................................................................................................................................. 1  3.  Administration. ....................................................................................................................................... 6  4.  Shares Subject to Plan. ........................................................................................................................... 7  5.  Eligibility ................................................................................................................................................ 8  6.  Specific Terms of Awards. ..................................................................................................................... 8  7.  Certain Provisions Applicable to Awards. ........................................................................................... 14  8.  Change in Control. ............................................................................................................................... 16  9.  General Provisions. .............................................................................................................................. 18      PHX 332736409v4  

 

                  ROADRUNNER TRANSPORTATION SYSTEMS, INC.                         2018 INCENTIVE COMPENSATION PLAN          1.    Purpose.  The purpose of this 2018 INCENTIVE COMPENSATION PLAN (the “Plan”)  is to assist Roadrunner Transportation Systems, Inc., a Delaware corporation, and its Related Entities (as  hereinafter defined) in attracting, motivating, retaining and rewarding high-quality executives and other  employees, officers, directors, consultants and other persons who provide services to the Company or its  Related Entities by enabling such persons to acquire or increase a proprietary interest in the Company in  order to strengthen the mutuality of interests between such persons and the Company’s stockholders, and  providing such persons with performance incentives to expend their maximum efforts in the creation of  stockholder value.          2.    Definitions.  For purposes of the Plan, the following terms shall be defined as set forth  below, in addition to such terms defined in Section 1 hereof and elsewhere herein.                (a)    “Award” means any Option, Stock Appreciation Right, Restricted Stock Award,  Restricted Stock Unit Award, Share granted as a bonus or in lieu of another Award, Dividend Equivalent,  Other Stock-Based Award or Performance Award, together with any other right or interest relating to Shares  or other property (including cash), granted to a Participant under the Plan.                (b)    “Award Agreement” means any written agreement, contract or other instrument or  document evidencing any Award granted by the Committee hereunder.                (c)    “Beneficiary” means the person, persons, trust or trusts that have been designated  by a Participant in his or her most recent written beneficiary designation filed with the Committee to receive  the benefits specified under the Plan upon such Participant’s death or to which Awards or other rights are  transferred if and to the extent permitted under Section 9(b) hereof.  If, upon a Participant’s death, there is  no  designated  Beneficiary  or  surviving  designated  Beneficiary, then  the  term  Beneficiary  means  the  Participant’s estate.                (d)    “Beneficial Owner” and “Beneficial Ownership” shall have the meaning ascribed  to such term in Rule 13d-3 under the Exchange Act and any successor to such Rule.                (e)    “Board” means the Company’s Board of Directors.                (f)    “Business Combination” has the meaning set forth in Section 8(b)(iii) hereof.                (g)    “Cause” shall, with respect to any Participant, have the meaning specified in the  Award Agreement.  In the absence of any definition in the Award Agreement, “Cause” shall have the  equivalent meaning or the same meaning as “cause” or “for cause” set forth in any employment, consulting,  or other agreement for the performance of services between the Participant and the Company or a Related  Entity or, in the absence of any such agreement or any such definition in such agreement, such term shall  mean (i) the failure by the Participant to perform, in a reasonable manner, his or her duties as assigned by  the Company or a Related Entity, (ii) any violation or breach by the Participant of his or her employment,  consulting or other similar agreement with the Company or a Related Entity, if any, (iii) any violation or  breach  by  the  Participant  of  any  non-competition,  non-solicitation,  non-disclosure  and/or  other  similar  agreement with the Company or a Related Entity, (iv) any act by the Participant of dishonesty or bad faith  with respect to the Company or a Related Entity, (v) use of alcohol, drugs or other similar substances in a  manner that adversely affects the Participant’s work performance, or (vi) the commission by the Participant  of any act, misdemeanor, or crime reflecting unfavorably upon the Participant or the Company or any    PHX 332736409v4  

 

   Related Entity.  The good faith determination by the Committee of whether the Participant’s Continuous  Service was terminated by the Company for “Cause” shall be final and binding for all purposes hereunder.                (h)    “Change in Control” has the meaning set forth in Section 8(b) hereof.                (i)    “Clawback Policy” has the meaning set forth in Section 9(g) hereof.                (j)    “Code” means the Internal Revenue Code of 1986, as amended from time to time,  including regulations thereunder and successor provisions and regulations thereto.                (k)    “Committee” means a committee designated by the Board to administer the Plan;  provided, however, that if the Board fails to designate a committee or if there are no longer any members  on the committee so designated by the Board, or for any other reason determined by the Board, then the  Board shall serve as the Committee.  While it is intended that the Committee shall consist of at least two  (2) directors, each of whom shall be (i) a “non-employee director” within the meaning of  Rule 16b-3 (or  any successor rule) under the Exchange Act, unless administration of the Plan by “non-employee directors”  is not then required in order for exemptions under Rule 16b-3 to apply to transactions under the Plan, and  (ii) “Independent”, the failure of the Committee to be so comprised shall not invalidate any Award that  otherwise satisfies the terms of the Plan.                (l)    “Company”  means  Roadrunner  Transportation  Systems,  Inc.,  a  Delaware  corporation, and any successor thereto.                (m)    “Consultant”  means  any  consultant  or  advisor  who  provides  services  to  the  Company  or  any  Related  Entity,  so  long  as  (i) such  person  renders  bona  fide  services  that  are  not  in  connection with the offer and sale of the Company’s securities in a capital-raising transaction, (ii) such  person  does not  directly or  indirectly promote  or  maintain  a  market  for  the Company’s  securities,  and  (iii) the identity of such person would not preclude the Company from offering or selling securities to such  person pursuant to the Plan in reliance on either the exemption from registration provided by Rule 701  under the Securities Act or, if the Company is required to file reports pursuant to Section 13 or 15(d) of the  Exchange Act, registration on a Form S-8 Registration Statement under the Securities Act.                (n)    “Continuing Entity” has the meaning set forth in Section 8(b)(iii) hereof.                (o)    “Continuous  Service”  means  the  uninterrupted  provision  of  services  to  the  Company or any Related Entity in any capacity of Employee, Director, Consultant or other service provider.   Continuous  Service  shall  not  be  considered  to  be  interrupted  in  the  case  of  (i) any  approved  leave  of  absence, (ii) transfers among the Company, any Related Entities, or any successor entities, in any capacity  of Employee, Director, Consultant or other service provider, or (iii) any change in status as long as the  individual remains in the service of the Company or a Related Entity in any capacity of Employee, Director,  Consultant or other service provider (except as otherwise provided in the Award Agreement).  An approved  leave of absence shall include sick leave, military leave, or any other authorized personal leave.                (p)    “Controlling Interest” has the meaning set forth in Section 8(b)(i) hereof.                (q)    “Director” means a member of the Board or the board of directors of any Related  Entity.                (r)    “Disability”  means  a  permanent  and  total  disability  (within  the  meaning  of  Section 22(e) of the Code), as determined by a medical doctor satisfactory to the Committee.                                              2  PHX 332736409v4  

 

                (s)    “Dividend Equivalent” means a right, granted to a Participant under Section 6(g)  hereof, to receive cash, Shares, other Awards or other property equal in value to dividends paid with respect  to a specified number of Shares, or other periodic payments.                (t)    “Effective Date” means the effective date of the Plan, which shall be November 7,  2018.                (u)    “Eligible Person” means each officer, Director, Employee, Consultant and other  person who provides services to the Company or any Related Entity.  The foregoing notwithstanding, only  Employees of the Company, or any parent corporation or subsidiary corporation of the Company (as those  terms are defined in Sections 424(e) and (f) of the Code, respectively), shall be Eligible Persons for purposes  of receiving any Incentive Stock Options.  An Employee on leave of absence may, in the discretion of the  Committee,  be  considered  as  still  in  the  employ  of  the  Company or  a  Related  Entity  for  purposes  of  eligibility for participation in the Plan.                (v)    “Employee”  means  any  person,  including  an  officer  or  Director, who  is  an  employee of the Company or any Related Entity, or is a prospective employee of the Company or any  Related Entity (conditioned upon and effective not earlier than, such person becoming an employee of the  Company or any Related Entity).  The payment of a director’s fee by the Company or a Related Entity shall  not be sufficient to constitute “employment” by the Company.                (w)    “Exchange Act” means the Securities Exchange Act of 1934, as amended from  time to time, including rules thereunder and successor provisions and rules thereto.                (x)    “Fair  Market  Value”  means  the  fair  market  value  of  Shares,  Awards  or  other  property on the date as of which the value is being determined, as determined by the Committee, or under  procedures established by the Committee, subject to the following:                       (i)    If, on such date, the Shares are listed on a national or regional securities  exchange or market system, the Fair Market Value of a Share shall be the closing price of a Share (or the  mean of the closing bid and asked prices of a Share if the Share is so quoted instead) as quoted on the  Nasdaq  National  Market,  The  Nasdaq  Small  Cap  Market  or  such  other  national  or  regional  securities  exchange or market system constituting the primary market for the Share, as reported in The Wall Street  Journal or such other source as the Company deems reliable.  If the relevant date does not fall on a day on  which the Share has traded on such securities exchange or market system, the date on which the Fair Market  Value shall be established shall be the last day on which the Share was so traded prior to the relevant date,  or such other appropriate day as shall be determined by the Board, in its discretion.                       (ii)   If, on such date, the Share are not listed on a national or regional securities  exchange or market system, the Fair Market Value of a Share shall be as determined by the Board in good  faith without regard to any restriction other than a restriction which, by its terms, will never lapse.                (y)    “Freestanding Stock Appreciation Right” has the meaning set forth in Section 6(c)  hereof.                (z)    “Good Reason” shall, with respect to any Participant, have the meaning specified  in the Award Agreement.  In the absence of any definition in the Award Agreement, “Good Reason” shall  have the equivalent meaning or the same meaning as “good reason” or “for good reason” set forth in any  employment, consulting or other agreement for the performance of services between the Participant and the  Company or a Related Entity or, in the absence of any such agreement or any such definition in such  agreement, such term shall mean (i) the assignment to the Participant of any duties inconsistent in any                                              3  PHX 332736409v4  

 

   material respect with the Participant’s duties or responsibilities as assigned by the Company or a Related  Entity, or any other action by the Company or a Related Entity which results in a material diminution in  such duties or responsibilities, excluding for this purpose an action which is remedied by the Company or  a Related Entity promptly after receipt of notice thereof given by the Participant; (ii) the Company’s or  Related Entity’s requiring the Participant to be based at any office or location outside of fifty (50) miles  from the location of employment or service as of the date of Award, except for travel reasonably required  in the performance of the Participant’s responsibilities; or (iii) a material breach by the Company or any  Related Entity of any employment, consulting or other agreement under which the Participant provides  services  to  the  Company  or  any  Related  Entity.   For  purposes  of  this  Plan,  upon  termination  of  a  Participant’s  Continuous  Service,  Good  Reason  shall  not  be  deemed  to  exist  unless  the  Participant’s  termination of Continuous Service for Good Reason occurs within one hundred eighty (180) days following  the initial existence of one of the conditions specified in clauses (i) through (iii) above, the Participant  provides the Company or the Related Entity for which the Participant provides services with written notice  of the existence of such condition with ninety (90) days after the initial existence of the condition, and the  Company fails to remedy the condition within thirty (30) days after its receipt of notice.                (aa)   “Incentive  Stock  Option”  means  any  Option  intended  to  be  designated  as  an  incentive stock option within the meaning of Section 422 of the Code or any successor provision thereto.                (bb)   “Independent”, when referring to either the Board or members of the Committee,  shall have the same meaning as used in the rules of the Listing Market.                (cc)   “Incumbent Board” has the meaning set forth in Section 8(b)(ii) hereof.                (dd)   “Listing  Market”  means  the  New  York  Stock  Exchange  or  any  other  national  securities exchange on which any securities of the Company are listed for trading, and if not listed for  trading, by the rules of the Nasdaq Stock Market.                (ee)   “Major Subsidiaries” has the meaning set forth in Section 8(b)(iii) hereof.                (ff)   “Option”  means  a  right  granted  to  a  Participant  under  Section 6(b)  hereof,  to  purchase Shares or other Awards at a specified price during specified time periods.                (gg)   “Optionee” means a person to whom an Option is granted under this Plan or any  person who succeeds to the rights of such person under this Plan.                (hh)   “Other  Stock-Based  Awards”  means Awards  granted  to  a  Participant  under  Section 6(i) hereof.                (ii)   “Outstanding  Company  Voting  Securities”  has  the  meaning  set  forth  in  Section 8(b)(i) hereof.                (jj)   “Parent”  means  any  corporation  (other  than  the  Company),  whether  now  or  hereafter  existing,  in  an  unbroken  chain  of  corporations  ending  with  the  Company,  if  each  of  the  corporations in the chain (other than the Company) owns stock possessing fifty percent (50%) or more of  the combined voting power of all classes of stock in one of the other corporations in the chain.                (kk)   “Participant” means a person who has been granted an Award under the Plan which  remains outstanding, including a person who is no longer an Eligible Person.                (ll)   “Performance Award” means any Award granted pursuant to Section 6(h) hereof.                                              4  PHX 332736409v4  

 

                (mm)   “Performance Period” means that period established by the Committee at the time  any Performance Award is granted or at any time thereafter during which any performance goals specified  by the Committee with respect to such Award are to be measured.                (nn)   “Permitted Assignee” has the meaning set forth in Section 9(b) hereof.                (oo)   “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the  Exchange Act and used in Sections 13(d) and 14(d) thereof, and shall include a “group” as defined in  Section 13(d) thereof.                (pp)   “Prior Plan” means the Roadrunner Transportation Systems, Inc. 2010 Incentive  Compensation Plan.                (qq)   “Related Entity” means any Parent or Subsidiary, and any business, corporation,  partnership, limited liability company or other entity designated by the Committee in which the Company,  a Parent or a Subsidiary holds a substantial ownership interest, directly or indirectly, and with respect to  which the Company may offer or sell securities pursuant to the Plan in reliance upon either Rule 701 under  the Securities Act or, if the Company is required to file reports pursuant to Section 13 or 15(d) of the  Exchange Act, registration on a Form S-8 Registration Statement under the Securities Act.                (rr)   “Restricted Stock” means any Share issued with such risks of forfeiture and other  restrictions as the Committee, in its sole discretion, may impose (including any restriction on the right to  vote  such  Share  and  the  right  to  receive  any  dividends),  which restrictions  may  lapse  separately  or  in  combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.                (ss)   “Restricted  Stock  Award”  means  an  Award  granted  to  a  Participant  under  Section 6(d) hereof.                (tt)   “Restricted  Stock  Unit”  means  a  right  to  receive  Shares,  including  Restricted  Stock, cash measured based upon the value of Shares, or a combination thereof, at the end of a specified  deferral period.                (uu)   “Restricted Stock Unit Award” means an Award of Restricted Stock Units granted  to a Participant under Section 6(e) hereof.                (vv)   “Restriction Period” means the period of time specified by the Committee that  Restricted Stock Awards shall be subject to such restrictions on transferability, risk of forfeiture and other  restrictions, if any, as the Committee may impose.                (ww)   “Rights Offering” means any public offering of Shares solely to the Company’s  stockholders, and shall include any unsubscribed Shares issued pursuant to any standby/backup purchase  agreement executed in connection with the offering.                (xx)   “Rule 16b-3” means Rule 16b-3, as from time to time in effect and applicable to  the Plan and Participants, promulgated by the Securities and Exchange Commission under Section 16 of  the Exchange Act.                (yy)   “Section 409A Plan” has the meaning set forth in Section 7(e)(i) hereof.                (zz)   “Securities Act” means the Securities Act of 1933, as amended from time to time,  including rules thereunder and successor provisions and rules thereto.                                              5  PHX 332736409v4  

 

                (aaa)  “Shares” means the shares of common stock of the Company, par value $0.01 per  share, and such other securities as may be substituted (or resubstituted) for Shares pursuant to Section 9(c)  hereof.                (bbb)  “Stock  Appreciation  Right”  means  a  right  granted  to  a  Participant  under  Section 6(c) hereof.                (ccc)  “Stockholder Approval Date” means the date on which this Plan is approved by  stockholders of the Company eligible to vote in the election of directors, by a vote sufficient to meet the  requirements of Section 422 of the Code, Rule 16b-3 under the Exchange Act and applicable requirements  under the rules of the Listing Market.                (ddd)  “Subsidiary” means any corporation or other entity in which the Company has a  direct or indirect ownership interest of fifty percent (50%) or more of the total combined voting power of  the then outstanding securities or interests of such corporation or other entity entitled to vote generally in  the election of directors or in which the Company has the right to receive fifty percent (50%) or more of  the distribution of profits or fifty percent (50%) or more of the assets on liquidation or dissolution.                (eee)  “Substitute Awards” means Awards granted or Shares issued by the Company in  assumption of, or in substitution or exchange for, Awards previously granted, or the right or obligation to  make future Awards, by a company (i) acquired by the Company or any Related Entity, (ii) which becomes  a Related Entity after the date hereof, or (iii) with which the Company or any Related Entity combines.                (fff)  “Tandem  Stock  Appreciation  Right”  has  the  meaning  set  forth  in Section 6(c)  hereof.          3.    Administration.                (a)    Authority of the Committee.  The Plan shall be administered by the Committee,  except to the extent (and subject to the limitations imposed by Section 3(b) hereof) the Board elects to  administer the Plan, in which case the Plan shall be administered by only those members of the Board who  are Independent members of the Board, in which case references herein to the “Committee” shall be deemed  to include references to the Independent members of the Board.  The Committee shall have full and final  authority, subject to and consistent with the provisions of the Plan, to select Eligible Persons to become  Participants, grant Awards, determine the type, number and other terms and conditions of, and all other  matters relating to, Awards, prescribe Award Agreements (which need not be identical for each Participant)  and rules and regulations for the administration of the Plan, construe and interpret the Plan and Award  Agreements and correct defects, supply omissions or reconcile inconsistencies therein, and to make all other  decisions and determinations as the Committee may deem necessary or advisable for the administration of  the Plan.  In exercising any discretion granted to the Committee under the Plan or pursuant to any Award,  the Committee shall not be required to follow past practices, act in a manner consistent with past practices,  or treat any Eligible Person or Participant in a manner consistent with the treatment of any other Eligible  Persons or Participants.  Decisions of the Committee shall be final, conclusive and binding on all persons  or entities, including the Company, any Related Entity or any Participant or Beneficiary, or any transferee  under Section 9(b) hereof or any other person claiming rights from or through any of the foregoing persons  or entities.                (b)    Manner of Exercise of Committee Authority.  The Committee, and not the Board,  shall  exercise  sole  and  exclusive  discretion  (i) on  any  matter relating  to  a  Participant  then  subject  to  Section 16  of  the  Exchange  Act  with  respect  to  the  Company  to  the  extent  necessary  in  order  that  transactions by such Participant shall be exempt under Rule 16b-3 under the Exchange Act, and (ii) with                                              6  PHX 332736409v4  

 

   respect  to  any  Award  to  an  Independent  Director.   The  express  grant  of  any  specific  power  to  the  Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or  authority of the Committee.  The Committee may delegate to members of the Board, or officers or managers  of the Company or any Related Entity, or committees thereof, the authority, subject to such terms and  limitations as the Committee shall determine, to perform such functions, including administrative functions  as the Committee may determine to the extent that such delegation will not result in the loss of an exemption  under Rule 16b-3(d)(1) for Awards granted to Participants subject to Section 16 of the Exchange Act in  respect of the Company.  The Committee may appoint agents to assist it in administering the Plan.  Any  such  delegations  shall  be  set  forth  in  a  written  instrument  that  specifies  the  persons  authorized  to  act  thereunder  and  the  terms  and  limitations  of  such  authority,  which  writing  shall  be  delivered  to  the  Company’s  Chief  Financial  Officer,  Principal  Accounting  Officer  and  General  Counsel  before  any  authority may be exercised.                (c)    Limitation of Liability.  The Committee and the Board, and each member thereof,  shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her  by any officer or Employee, the Company’s independent auditors, Consultants or any other agents assisting  in the administration of the Plan.  Members of the Committee and the Board, and any officer or Employee  acting at the direction or on behalf of the Committee or the Board, shall not be personally liable for any  action  or  determination  taken  or  made  in  good  faith  with  respect  to  the  Plan,  and  shall,  to  the  extent  permitted by law, be fully indemnified and protected by the Company with respect to any such action or  determination.          4.    Shares Subject to Plan.                (a)    Limitation  on  Overall  Number  of  Shares  Available  for  Delivery  under  Plan.   Subject to adjustment as provided in Section 9(c) hereof, the total number of Shares reserved and available  for delivery under the Plan shall be 3,000,000, increased by 7.5% of any Shares issued by the Company  pursuant to any Rights Offering by the Company after the Stockholder Approval Date and prior to the date  on which the Plan terminates.  Any Shares delivered under the Plan may consist, in whole or in part, of  authorized and unissued shares or treasury shares.                (b)    Application of Limitation to Grants of Awards.  No Award may be granted if the  number  of  Shares  to  be  delivered  in  connection  with  such  an  Award  exceeds  the  number  of  Shares  remaining available for delivery under the Plan, minus the number of Shares that would be counted against  the limit upon settlement of then outstanding Awards.  The Committee may adopt reasonable counting  procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem  or substitute awards) and make adjustments if the number of Shares actually delivered differs from the  number of Shares previously counted in connection with an Award.                (c)    Availability of Shares not Delivered under Awards and Adjustments to Limits.                       (i)    If any Shares subject to an Award, or after the Stockholder Approval Date,  Shares subject to any awards granted under the Prior Plan, are forfeited, expire or otherwise terminate  without issuance of such Shares, or any Award, or after Stockholder Approval Date, Shares subject to any  award granted under the Prior Plan, is settled for cash or otherwise does not result in the issuance of all or  a portion of the Shares subject to such Award or award under the Prior Plan, the Shares to which those  Awards or awards under the Prior Plan were subject, shall, to the extent of such forfeiture, expiration,  termination, non-issuance or cash settlement, again be available for delivery with respect to Awards under  the Plan.                                               7  PHX 332736409v4  

 

                       (ii)  In the event that any Option or other Award granted under this Plan, or  after the Stockholder Approval Date, any award granted under the Prior Plan, is exercised through the  tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company, or  withholding tax liabilities arising from such Option or other Award, or after the Stockholder Approval Date,  any  award  granted  under  the  Prior  Plan,  are  satisfied  by  the  tendering  of  Shares  (either  actually or  by  attestation) or by the withholding of Shares by the Company, then only the number of Shares issued net of  the Shares tendered or withheld shall be counted for purposes of determining the maximum number of  Shares available for grant under the Plan.                       (iii) Substitute  Awards  shall  not  reduce  the  Shares  authorized  for  delivery  under the Plan or authorized for delivery to a Participant in any period.  Additionally, in the event that an  entity acquired by the Company or any Related Entity or with which the Company or any Related Entity  combines has shares available under a pre-existing plan approved by its stockholders and not adopted in  contemplation of such acquisition or combination, the shares available for delivery pursuant to the terms of  such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment  or valuation ratio or formula used in such acquisition or combination to determine the consideration payable  to the holders of common stock of the entities party to such acquisition or combination) may be used for  Awards under the Plan and shall not reduce the Shares authorized for delivery under the Plan if and to the  extent that the use of such Shares would not require approval of the Company’s stockholders under the  rules of the Listing Market.  Awards using such available shares shall not be made after the date awards or  grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination,  and shall only be made to individuals who were not Employees or Directors prior to such acquisition or  combination.                       (iv)  Any  Share  that  again  becomes  available  for  delivery  pursuant  to this  Section 4(c) shall be added back as one (1) Share.                       (v)    Notwithstanding anything in this Section 4(c) to the contrary but subject  to adjustment as provided in Section 9(c) hereof, the maximum aggregate number of Shares that may be  delivered under the Plan as a result of the exercise of Incentive Stock Options shall be 1,000,000 Shares.   In no event shall any Incentive Stock Options be granted under the Plan after the tenth anniversary of the  date on which the Board adopts the Plan.                       (vi)   Notwithstanding anything in this Section 4 to the contrary, but subject to  adjustment as provided in Section 9(c) hereof, in any fiscal year of the Company during any part of which  the Plan is in effect, no Participant who is a Director but is not also an Employee or Consultant may be  granted any Awards that have a “fair value” as of the date of grant, as determined in accordance with FASB  ASC Topic 718 (or any other applicable accounting guidance), that exceeds $75,000 in the aggregate.                (d)    No Further Awards under Prior Plan.  In light of the adoption of this Plan, no  further awards shall be made under the Prior Plan after the Stockholder Approval Date.          5.    Eligibility.  Awards may be granted under the Plan only to Eligible Persons.         6.     Specific Terms of Awards.                (a)    General.  Awards may be granted on the terms and conditions set forth in this  Section 6.  In addition, the Committee may impose on any Award or the exercise thereof, at the date of  grant or thereafter (subject to Section 9(f) hereof), such additional terms and conditions, not inconsistent  with the provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture of  Awards  in  the  event  of  termination  of  the  Participant’s  Continuous  Service  and  terms  permitting  a                                              8  PHX 332736409v4  

 

   Participant to make elections relating to his or her Award.  Except in cases in which the Committee is  authorized  to  require  other  forms  of  consideration  under  the  Plan,  or  to  the  extent  other  forms  of  consideration must be paid to satisfy the requirements of Delaware law, no consideration other than services  may be required for the grant (as opposed to the exercise) of any Award.                (b)    Options.  The Committee is authorized to grant Options to any Eligible Person on  the following terms and conditions:                       (i)    Exercise  Price.   Other  than  in  connection  with  Substitute  Awards,  the  exercise price per Share purchasable under an Option shall be determined by the Committee, provided that  such exercise price shall not be less than one hundred percent (100%) of the Fair Market Value of a Share  on the date of grant of the Option and shall not, in any event, be less than the par value of a Share on the  date of grant of the Option.  If an Employee owns or is deemed to own (by reason of the attribution rules  applicable under Section 424(d) of the Code) more than ten percent (10%) of the combined voting power  of all classes of stock of the Company (or any parent corporation or subsidiary corporation of the Company,  as those terms are defined in Sections 424(e) and (f) of the Code, respectively) and an Incentive Stock  Option  is  granted  to  such  Employee,  the  exercise  price  of  such Incentive  Stock  Option  (to  the  extent  required by the Code at the time of grant) shall be no less than one hundred ten percent (110%) of the Fair  Market  Value  of  a  Share  on  the  date  such  Incentive  Stock  Option  is  granted.   Other  than  pursuant  to  Sections 9(c)(i) and (ii) hereof, the Committee shall not be permitted to (A) lower the exercise price per  Share of an Option after it is granted, (B) cancel an Option when the exercise price per Share exceeds the  Fair Market Value of the underlying Shares in exchange for cash or another Award (other than in connection  with Substitute Awards), (C) cancel an outstanding Option in exchange for an Option with an exercise price  that is less than the exercise price of the original Options or (D) take any other action with respect to an  Option that may be treated as a repricing pursuant to the applicable rules of the Listing Market, without  approval of the Company’s stockholders.                       (ii)  Time and Method of Exercise.  The Committee shall determine the time  or  times  at  which  or  the  circumstances  under  which  an  Option  may  be  exercised  in  whole  or  in  part  (including based on achievement of performance goals and/or future service requirements), the method by  which notice of exercise is to be given and the form of exercise notice to be used, the time or times at which  Options shall cease to be or become exercisable following termination of Continuous Service or upon other  conditions, the methods by which the exercise price may be paid or deemed to be paid (including in the  discretion of the Committee a cashless exercise procedure), the form of such payment, including, without  limitation,  cash,  Shares  (including  without  limitation  the  withholding  of  Shares  otherwise  deliverable  pursuant to the Award), other Awards or awards granted under other plans of the Company or a Related  Entity, or other property (including notes or other contractual obligations of Participants to make payment  on  a  deferred  basis  provided  that  such  deferred  payments  are  not  in  violation  of  Section  13(k)  of  the  Exchange Act, or any rule or regulation adopted thereunder or any other applicable law), and the methods  by or forms in which Shares will be delivered or deemed to be delivered to Participants.                       (iii)  Form of Settlement.  The Committee may, in its sole discretion, provide  that the Shares to be issued upon exercise of an Option shall be in the form of Restricted Stock or other  similar securities.                       (iv)   Incentive Stock Options.  The terms of any Incentive Stock Option granted  under the Plan shall comply in all respects with the provisions of Section 422 of the Code.  Anything in the  Plan to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options (including any  Stock Appreciation Right issued in tandem therewith) shall be interpreted, amended or altered, nor shall  any discretion or authority granted under the Plan be exercised, so as to disqualify either the Plan or any  Incentive Stock Option under Section 422 of the Code, unless the Participant has first requested, or consents                                             9  PHX 332736409v4  

 

   to, the change that will result in such disqualification.  Thus, if and to the extent required to comply with  Section 422 of the Code, Options granted as Incentive Stock Options shall be subject to the following  special terms and conditions:                              (A)   the Option shall not be exercisable for more than ten (10) years  after the date such Incentive Stock Option is granted; provided, however, that if a Participant owns or is  deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than ten percent  (10%) of the combined voting power of all classes of stock of the Company (or any parent corporation or  subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) of the Code,  respectively) and the Incentive Stock Option is granted to such Participant, the term of the Incentive Stock  Option shall be (to the extent required by the Code at the time of the grant) for no more than five (5) years  from the date of grant;                              (B)   the aggregate Fair Market Value (determined as of the date the  Incentive Stock Option is granted) of the Shares with respect to which Incentive Stock Options granted  under  the  Plan  and  all  other  option  plans  of  the  Company  (and  any  parent  corporation  or  subsidiary  corporation of the Company, as those terms are defined in Sections 424(e) and (f) of the Code, respectively)  that become exercisable for the first time by the Participant during any calendar year shall not (to the extent  required by the Code at the time of the grant) exceed $100,000; and                              (C)   if Shares acquired by exercise of an Incentive Stock Option are  disposed of within two (2) years following the date the Incentive Stock Option is granted or one (1) year  following  the  transfer  of  such  Shares  to  the  Participant  upon  exercise,  the  Participant  shall,  promptly  following such disposition, notify the Company in writing of the date and terms of such disposition and  provide such other information regarding the disposition as the Committee may reasonably require.                (c)    Stock Appreciation Rights.  The Committee may grant Stock Appreciation Rights  to  any  Eligible  Person  in  conjunction  with  all  or  part  of  any  Option  granted  under  the  Plan  or  at  any  subsequent time during the term of such Option (a “Tandem Stock Appreciation Right”), or without regard  to any Option (a “Freestanding Stock Appreciation Right”), in each case upon such terms and conditions  as the Committee  may establish in its sole discretion, not inconsistent with the provisions of the Plan,  including the following:                       (i)    Right  to  Payment.   A  Stock  Appreciation  Right  shall  confer  on  the  Participant to whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market  Value of one (1) Share on the date of exercise over (B) the grant price of the Stock Appreciation Right as  determined by the Committee.  The grant price of a Stock Appreciation Right shall not be less than one  hundred  percent  (100%)  of  the  Fair  Market  Value  of  a  Share  on  the  date  of  grant,  in  the  case  of  a  Freestanding Stock Appreciation Right, or less than the associated Option exercise price, in the case of a  Tandem Stock Appreciation Right.  Other than pursuant to Sections 9(c)(i) and (ii) hereof, the Committee  shall not be permitted to (A) lower the grant price per Share of a Stock Appreciation Right after it is granted,  (B) cancel a Stock Appreciation Right when the grant price per Share exceeds the Fair Market Value of the  underlying  Shares  in  exchange  for  another  Award  (other  than  in connection  with  Substitute  Awards),  (C) cancel an outstanding Stock Appreciation Right in exchange for a Stock Appreciation Right with a  grant price that is less than the grant price of the original Stock Appreciation Right, or (D) take any other  action  with  respect  to  a  Stock  Appreciation  Right  that  may  be  treated  as  a  repricing  pursuant  to  the  applicable rules of the Listing Market, without stockholder approval.                       (ii)  Other  Terms.   The  Committee  shall  determine  at  the  date  of  grant  or  thereafter, the time or times at which and the circumstances under which a Stock Appreciation Right may  be exercised in whole or in part (including based on achievement of performance goals and/or future service                                             10  PHX 332736409v4  

 

   requirements), the time or times at which Stock Appreciation Rights shall cease to be or become exercisable  following termination of Continuous Service or upon other conditions, the method of exercise, method of  settlement,  form  of  consideration  payable  in  settlement,  method  by  or  forms  in  which  Shares  will  be  delivered or deemed to be delivered to Participants, whether or not a Stock Appreciation Right shall be in  tandem  or  in  combination  with  any  other  Award,  and  any  other  terms  and  conditions  of  any  Stock  Appreciation Right.                       (iii)  Tandem  Stock  Appreciation  Rights.   Any  Tandem  Stock  Appreciation  Right may be granted at the same time as the related Option is granted or, for Options that are not Incentive  Stock Options, at any time thereafter before exercise or expiration of such Option.  Any Tandem Stock  Appreciation  Right  related  to  an  Option  may  be  exercised  only  when  the  related  Option  would  be  exercisable and the Fair Market Value of the Shares subject to the related Option exceeds the exercise price  at which Shares can be acquired pursuant to the Option.  In addition, if a Tandem Stock Appreciation Right  exists with respect to less than the full number of Shares covered by a related Option, then an exercise or  termination of such Option shall not reduce the number of Shares to which the Tandem Stock Appreciation  Right applies until the number of Shares then exercisable under such Option equals the number of Shares  to  which  the  Tandem  Stock  Appreciation  Right  applies.   Any  Option  related  to  a  Tandem  Stock  Appreciation Right shall no longer be exercisable to the extent the Tandem Stock Appreciation Right has  been exercised, and any Tandem Stock Appreciation Right shall no longer be exercisable to the extent the  related Option has been exercised.                (d)    Restricted Stock Awards.  The Committee is authorized to grant Restricted Stock  Awards to any Eligible Person on the following terms and conditions:                       (i)    Grant and Restrictions.  Restricted Stock Awards shall be subject to such  restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose,  or as otherwise provided in this Plan during the Restriction Period.  The terms of any Restricted Stock  Award  granted  under  the  Plan  shall  be  set  forth  in  a  written  Award  Agreement  which  shall  contain  provisions determined by the Committee and not inconsistent with the Plan.  The restrictions may lapse  separately or in combination at such times, under such circumstances (including based on achievement of  performance goals and/or future service requirements), in such installments or otherwise, as the Committee  may determine at the date of grant or thereafter.  Except to the extent restricted under the terms of the Plan  and any Award Agreement relating to a Restricted Stock Award, a Participant granted Restricted Stock  shall have all of the rights of a stockholder, including the right to vote the Restricted Stock and the right to  receive dividends thereon (subject to any mandatory reinvestment or other requirement imposed by the  Committee).  During the period that the Restricted Stock Award is subject to a risk of forfeiture, subject to  Section 9(b) below and except as otherwise provided in the Award Agreement, the Restricted Stock may  not be sold, transferred, pledged, hypothecated, margined or otherwise encumbered by the Participant or  Beneficiary.                       (ii)  Forfeiture.   Except  as  otherwise  determined  by  the  Committee,  upon  termination of a Participant’s Continuous Service during the applicable Restriction Period, the Participant’s  Restricted Stock that is at that time subject to a risk of forfeiture that has not lapsed or otherwise been  satisfied shall be forfeited and reacquired by the Company; provided, that, subject to the limitations set  forth in Section 6(j)(ii) hereof, the Committee may provide, by resolution or other action or in any Award  Agreement, or may determine in any individual case, that forfeiture conditions relating to Restricted Stock  Awards shall be waived in whole or in part in the event of terminations resulting from specified causes, and  the Committee may in other cases waive in whole or in part the forfeiture of Restricted Stock.                       (iii) Certificates for Stock.  Restricted Stock granted under the Plan may be  evidenced in such manner as the Committee shall determine.  If certificates representing Restricted Stock                                            11  PHX 332736409v4  

 

   are registered in the name of the Participant, the Committee  may require that such certificates bear an  appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock,  that the Company retain physical possession of the certificates, and that the Participant deliver a stock  power to the Company, endorsed in blank, relating to the Restricted Stock.                       (iv)   Dividends and Splits.  As a condition to the grant of a Restricted Stock  Award, the Committee may require or permit a Participant to elect that any cash dividends paid on a Share  of Restricted Stock be automatically reinvested in additional Shares of Restricted Stock or applied to the  purchase of additional Awards under the Plan, or may require that payment be delayed (with or without  interest at such rate, if any, as the Committee shall determine) and remain subject to restrictions and a risk  of forfeiture to the same extent as the Restricted Stock with respect to which such cash dividend is payable,  in each case in a manner that does not violate the requirements of Section 409A of the Code.  Unless  otherwise  determined  by  the  Committee,  Shares  distributed  in  connection  with  a  stock  split  or  stock  dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture  to the same extent as the Restricted Stock with respect to which such Shares or other property have been  distributed.                (e)    Restricted Stock Unit Award.  The Committee is authorized to grant Restricted  Stock Unit Awards to any Eligible Person on the following terms and conditions:                       (i)    Award and Restrictions.  Satisfaction of a Restricted Stock Unit Award  shall occur upon expiration of the deferral period specified for such Restricted Stock Unit Award by the  Committee (or, if permitted by the Committee, as elected by the Participant in a manner that does not violate  the requirements of Section 409A of the Code).  In addition, a Restricted Stock Unit Award shall be subject  to such restrictions (which may include a risk of forfeiture) as the Committee may impose, if any, which  restrictions may lapse at the expiration of the deferral period or at earlier specified times (including based  on achievement of performance goals and/or future service requirements), separately or in combination, in  installments  or  otherwise,  as  the  Committee  may  determine.   A  Restricted  Stock  Unit  Award  may  be  satisfied by delivery of Shares, cash equal to the Fair Market Value of the specified number of Shares  covered by the Restricted Stock Units, or a combination thereof, as determined by the Committee at the  date of grant or thereafter.  Prior to satisfaction of a Restricted Stock Unit Award, a Restricted Stock Unit  Award carries no voting or dividend or other rights associated with Share ownership.  Prior to satisfaction  of a Restricted Stock Unit Award, except as otherwise provided in an Award Agreement and as permitted  under Section 409A of the Code, a Restricted Stock Unit Award may not be sold, transferred, pledged,  hypothecated, margined or otherwise encumbered by the Participant or any Beneficiary.                       (ii)  Forfeiture.   Except  as  otherwise  determined  by  the  Committee,  upon  termination of a Participant’s Continuous Service during the applicable deferral period or portion thereof  to which forfeiture conditions apply (as provided in the Award Agreement evidencing the Restricted Stock  Unit Award), the Participant’s Restricted Stock Unit Award that is at that time subject to a risk of forfeiture  that has not lapsed or otherwise been satisfied shall be forfeited; provided, that, subject to the limitations  set forth in Section 6(j)(ii) hereof, the Committee may provide, by resolution or other action or in any  Award  Agreement,  or  may  determine  in  any  individual  case,  that forfeiture  conditions  relating  to  a  Restricted Stock Unit Award shall be waived in whole or in part in the event of terminations resulting from  specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of any  Restricted Stock Unit Award.                       (iii)  Dividend Equivalents.  Unless otherwise determined by the Committee at  the date of grant, any Dividend Equivalents that are granted with respect to any Restricted Stock Unit Award  shall be either (A) paid with respect to such Restricted Stock Unit Award at the dividend payment date in  cash or in Shares of unrestricted stock having a Fair Market Value equal to the amount of such dividends,                                            12  PHX 332736409v4  

 

   or (B) deferred (with or without interest as determined by the Committee in its sole discretion) with respect  to  such  Restricted  Stock  Unit  Award  and  the  amount  or  value  thereof  may  be  automatically  deemed  reinvested  in  additional  Restricted  Stock  Units,  other  Awards  or  other  investment  vehicles,  as  the  Committee  shall  determine  or  permit  the  Participant  to  elect.  The  applicable  Award  Agreement  shall  specify whether any Dividend Equivalents shall be paid at the dividend payment date, deferred or deferred  at the election of the Participant.  If the Participant may elect to defer the Dividend Equivalents, such  election shall be made within thirty (30) days after the grant date of the Restricted Stock Unit Award, but  in no event later than twelve (12) months before the first date on which any portion of such Restricted Stock  Unit Award vests (or at such other times prescribed by the Committee as shall not result in a violation of  Section 409A of the Code).                (f)    Bonus Stock and Awards in lieu of Obligations.  The Committee is authorized to  grant Shares to any Eligible Persons as a bonus, or to grant Shares or other Awards in lieu of obligations to  pay cash or deliver other property under the Plan or under other plans or compensatory arrangements,  provided that, in the case of Eligible Persons subject to Section 16 of the Exchange Act, the amount of such  grants remains within the discretion of the Committee to the extent necessary to ensure that acquisitions of  Shares or other Awards are exempt from liability under Section 16(b) of the Exchange Act.  Shares or  Awards granted hereunder shall be subject to such other terms as shall be determined by the Committee.                (g)    Dividend  Equivalents.   The  Committee  is  authorized  to  grant  Dividend  Equivalents to any Eligible Person entitling the Eligible Person to receive cash, Shares, other Awards, or  other property equal in value to the dividends paid with respect to a specified number of Shares, or other  periodic payments.  Dividend Equivalents may be awarded on a free-standing basis or in connection with  another Award.  The Committee may provide that Dividend Equivalents shall be paid or distributed when  accrued  or  at  some  later  date,  or  whether  such  Dividend  Equivalents  shall  be  deemed  to  have  been  reinvested in additional Shares, Awards, or other investment vehicles, and subject to such restrictions on  transferability  and  risks  of  forfeiture,  as  the  Committee  may  specify.   Any  such  determination  by  the  Committee  shall  be  made  at  the  grant  date  of  the  applicable  Award.   Notwithstanding  the  foregoing,  Dividend  Equivalents  credited  in  connection  with  an  Award  that vests  based  on  the  achievement  of  performance goals shall be subject to restrictions and risk of forfeiture to the same extent as the Award with  respect to which such Dividend Equivalents have been credited.                (h)    Performance Awards.  The Committee is authorized to grant Performance Awards  to any Eligible Person payable in cash, Shares, or other Awards, on terms and conditions established by the  Committee.  The performance criteria to be achieved during any Performance Period and the length of the  Performance Period shall be determined by the Committee upon the grant of each Performance Award.   Except as provided in Section 8 or as may be provided in an Award Agreement, Performance Awards will  be distributed only after the end of the relevant Performance Period.  The performance goals to be achieved  for each Performance Period shall be conclusively determined by the Committee and may be based upon  any criteria that the Committee, in its sole discretion, shall determine should be used for that purpose.  The  amount of the Award to be distributed shall be conclusively determined by the Committee.  Performance  Awards may be paid in a lump sum or in installments following the close of the Performance Period or, in  accordance with procedures established by the Committee, on a deferred basis in a manner that does not  violate the requirements of Section 409A of the Code.                (i)    Other Stock-Based Awards.  The Committee is authorized, subject to limitations  under applicable law, to grant to any Eligible Person such other Awards that may be denominated or payable  in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares, as deemed by the  Committee to be consistent with the purposes of the Plan.  Other Stock-Based Awards may be granted to  Participants either alone or in addition to other Awards granted under the Plan, and such Other Stock-Based  Awards shall also be available as a form of payment in the settlement of other Awards granted under the                                            13  PHX 332736409v4  

 

   Plan.  The Committee shall determine the terms and conditions of such Awards.  Shares delivered pursuant  to an Award in the nature of a purchase right granted under this Section 6(i) shall be purchased for such  consideration, (including without limitation loans from the Company or a Related Entity provided that such  loans are not in violation of Section 13(k) of the Exchange Act or any rule or regulation adopted thereunder  or any other applicable law) paid for at such times, by such methods, and in such forms, including, without  limitation, cash, Shares, other Awards or other property, as the Committee shall determine.                (j)    Certain  Vesting  Requirements  and  Limitations  on  Waiver  of  Forfeiture  Restrictions.   Except  for  certain  limited  situations  (including  death,  disability,  retirement,  a  Change  in  Control referred to in Section 8, grants to new hires to replace forfeited compensation, grants representing  payment of earned Performance Awards or other incentive compensation, Substitute Awards or grants to  Directors):                       (i)    Restricted Stock Awards, Restricted Stock Unit Awards, and Other Stock- Based Awards (A) that are not subject to performance-based vesting requirements shall vest over a period  of not less than one (1) year from date of grant (but permitting pro-rata vesting over such time); and (B)  that are subject to performance-based vesting requirements shall vest over a period of not less than one (1)  year; and                       (ii)   The Committee shall not waive the vesting requirements set forth in the  foregoing clause (i).                The limitations set forth in this Section 6(j) shall not apply with respect to up to ninety-five  percent  (95%)  of  the  maximum  number  of  Shares  available  for  delivery  under  the  Plan  (subject  to  adjustment as provided in Section 9(c) hereof).         7.     Certain Provisions Applicable to Awards.                (a)    Stand-Alone, Additional, Tandem, and Substitute Awards.  Awards granted under  the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with,  or  in  substitution  or  exchange  for,  any  other  Award  or  any  award  granted  under  another  plan  of  the  Company, any Related Entity, or any business entity to be acquired by the Company or a Related Entity, or  any  other  right  of  a  Participant  to  receive  payment  from  the  Company or any Related Entity.  Such  additional, tandem, and substitute or exchange Awards may be granted at any time.  If an Award is granted  in substitution or exchange for another Award or award, the Committee shall require the surrender of such  other Award or award in consideration for the grant of the new Award.  In addition, Awards may be granted  in lieu of cash compensation, including in lieu of cash amounts payable under other plans of the Company  or any Related Entity, in which the value of Shares subject to the Award is equivalent in value to the cash  compensation (for example, Restricted Stock or Restricted Stock Units), or in which the exercise price,  grant price or purchase price of the Award in the nature of a right that may be exercised is equal to the Fair  Market Value of the underlying Shares minus the value of the cash compensation surrendered (for example,  Options or Stock Appreciation Right granted with an exercise price or grant price “discounted” by the  amount of the cash compensation surrendered), provided that any such determination to grant an Award in  lieu  of  cash  compensation  must  be  made  in  a  manner  intended  to be  exempt  from  or  comply  with  Section 409A of the Code.                (b)    Term of Awards.  The term of each Award shall be for such period as may be  determined by the Committee; provided, that in no event shall the term of any Option or Stock Appreciation  Right exceed a period of ten (10) years (or in the case of an Incentive Stock Option such shorter term as  may be required under Section 422 of the Code); provided, however, that in the event that on the last day  of the term of an Option or a Stock Appreciation Right, other than an Incentive Stock Option, (i) the exercise                                             14  PHX 332736409v4  

 

   of  the  Option  or  Stock  Appreciation  Right  is  prohibited  by  applicable  law,  or  (ii) Shares  may  not  be  purchased, or sold by certain employees or directors of the Company due to the “black-out period” of a  Company policy or a “lock-up” agreement undertaken in connection with an issuance of securities by the  Company, the term of the Option or Stock Appreciation Right may be extended by the Committee for a  period of up to thirty (30) days following the end of the legal prohibition, black-out period or lock-up  agreement, provided that such extension of the term of the Option or Stock Appreciation Right would not  cause the Option or Stock Appreciation Right to violate the requirements of Section 409A of the Code.                (c)    Form and Timing of Payment under Awards; Deferrals.  Subject to the terms of  the Plan and any applicable Award Agreement, payments to be made by the Company or a Related Entity  upon the exercise of an Option or other Award or settlement of an Award may be made in such forms as  the Committee shall determine, including, without limitation, cash, Shares, other Awards or other property,  and may be made in a single payment or transfer, in installments, or on a deferred basis, provided that any  determination to pay in installments or on a deferred basis shall be made by the Committee at the date of  grant.  Any installment or deferral provided for in the preceding sentence shall, however, subject to the  terms of the Plan, be subject to the Company’s compliance with the provisions of the Sarbanes-Oxley Act  of  2002,  as  amended,  the  rules  and  regulations  adopted  by  the  Securities  and  Exchange  Commission  thereunder, all applicable rules of the Listing Market and any other applicable law, and in a manner intended  to  be  exempt  from  or  otherwise  satisfy  the  requirements  of  Section  409A  of  the  Code.   Subject  to  Sections 6(j) and 7(e) hereof, the settlement of any Award may be accelerated, and cash paid in lieu of  Shares in connection with such settlement, in the sole discretion of the Committee or upon occurrence of  one or more specified events (in addition to a Change in Control).  Any such settlement shall be at a value  determined by the Committee in its sole discretion, which, without limitation, may in the case of an Option  or Stock Appreciation Right be limited to the amount if any by which the Fair Market Value of a Share on  the settlement date exceeds the exercise or grant price.  Installment or deferred payments may be required  by the Committee (subject to Section 7(e) hereof Plan, including the consent provisions thereof in the case  of any deferral of an outstanding Award not provided for in the original Award Agreement) or permitted at  the election of the Participant on terms and conditions established by the Committee.  The acceleration of  the settlement of any Award, and the payment of any Award in installments or on a deferred basis, all shall  be done in a manner that is intended to be exempt from or otherwise satisfy the requirements of Section  409A of the Code.  The Committee may, without limitation, make provision for the payment or crediting  of  a  reasonable  interest  rate  on  installment  or  deferred  payments  or  the  grant  or  crediting  of  Dividend  Equivalents or other amounts in respect of installment or deferred payments denominated in Shares.                (d)    Exemptions from Section 16(b) Liability.  It is the intent of the Company that the  grant of any Awards to or other transaction by a Participant who is subject to Section 16 of the Exchange  Act shall be exempt from Section 16 of the Exchange Act pursuant to an applicable exemption (except for  transactions acknowledged in writing to be non-exempt by such Participant).  Accordingly, if any provision  of this Plan or any Award Agreement does not comply with the requirements of Rule 16b-3 then applicable  to any such transaction, such provision shall be construed or deemed amended to the extent necessary to  conform to the applicable requirements of Rule 16b-3 so that such Participant shall avoid liability under  Section 16(b) of the Exchange Act.                (e)    Code Section 409A.                       (i)    The  Award  Agreement  for  any  Award  that  the  Committee  reasonably  determines to constitute a “nonqualified deferred compensation plan” under Section 409A of the Code (a  “Section 409A Plan”), and the provisions of the Section 409A Plan applicable to that Award, shall be  construed in a manner consistent with the applicable requirements of Section 409A of the Code, and the  Committee,  in  its  sole  discretion  and  without  the  consent  of  any  Participant,  may  amend  any  Award  Agreement  (and  the  provisions  of  the  Plan  applicable  thereto)  if  and  to  the  extent  that  the  Committee                                            15  PHX 332736409v4  

 

   determines  that  such  amendment  is  necessary  or  appropriate  to  comply  with  the  requirements  of  Section 409A of the Code.                       (ii)  If any Award constitutes a Section 409A Plan, then the Award shall be  subject to the following additional requirements, if and to the extent required to comply with Section 409A  of the Code:                             (A)    Payments under the Section 409A Plan may be made only upon  (u) the Participant’s “separation from service”, (v) the date the Participant becomes “disabled”, (w) the  Participant’s  death,  (x) a  “specified  time  (or  pursuant  to  a  fixed  schedule)”  specified  in  the  Award  Agreement at the date of the deferral of such compensation, (y) a “change in the ownership or effective  control of the corporation, or in the ownership of a substantial portion of the assets” of the Company, or  (z) the occurrence of an “unforeseeable emergency”;                             (B)    The  time  or  schedule  for  any  payment  of  the  deferred  compensation may not be accelerated, except to the extent provided in applicable Treasury Regulations or  other applicable guidance issued by the Internal Revenue Service;                             (C)    Any elections with respect to the deferral of such compensation or  the time and form of distribution of such deferred compensation shall comply with the requirements of  Section 409A(a)(4) of the Code; and                              (D)   In  the  case  of  any  Participant  who  is  “specified  employee”,  a  distribution on account of a “separation from service” may not be made before the date which is six (6)  months  after  the  date  of  the  Participant’s  “separation  from  service”  (or,  if  earlier,  the  date  of  the  Participant’s death).   For purposes of the foregoing, the terms in quotations shall have the same meanings as those terms have  for purposes of Section 409A of the Code, and the limitations set forth herein shall be applied in such  manner (and only to the extent) as shall be necessary to comply with any requirements of Section 409A of  the Code that are applicable to the Award.                       (iii)  Notwithstanding the foregoing, or any provision of this Plan or any Award  Agreement,  the  Company  does  not  make  any  representation  to  any Participant  or  Beneficiary  that  any  Awards made pursuant to this Plan are exempt from, or satisfy, the requirements of, Section 409A of the  Code,  and  the  Company  shall  have  no  liability  or  other  obligation  to  indemnify  or  hold  harmless  the  Participant or any Beneficiary for any tax, additional tax, interest or penalties that the Participant or any  Beneficiary  may  incur  in  the  event  that  any  provision  of  this  Plan, or any Award Agreement, or any  amendment or modification thereof, or any other action taken with respect thereto, is deemed to violate any  of the requirements of Section 409A of the Code.          8.    Change in Control.                (a)    Effect  of  “Change  in  Control”.   If  and  only  to  the  extent  provided  in  any  employment or other agreement between the Participant and the Company or any Related Entity, or in any  Award Agreement, or to the extent otherwise determined by the Committee in its sole discretion and without  any  requirement  that  each  Participant  be  treated  consistently, and  except  as  otherwise  provided  in  Section 8(a)(iv) hereof, upon a Change in Control:                                              16  PHX 332736409v4  

 

                       (i)    any Option or Stock Appreciation Right that was not previously vested  and exercisable as of the time of the Change in Control, shall become immediately vested and exercisable,  subject to applicable restrictions set forth in Section 9(a) hereof;                       (ii)  any restrictions, deferral of settlement, and forfeiture conditions applicable  to a Restricted Stock Award, Restricted Stock Unit Award or an Other Stock-Based Award subject only to  future service requirements granted under the Plan shall lapse and such Awards shall be deemed fully vested  as of the time of the Change in Control, except to the extent of any waiver by the Participant and subject to  applicable restrictions set forth in Section 9(a) hereof;                       (iii)  with  respect  to  any  outstanding  Award  subject  to  achievement  of  performance  goals  and  conditions  under  the  Plan,  the  Committee may,  in  its  discretion,  consider  such  Awards to have been earned and payable based on achievement of performance goals as of the date of the  Change in Control and/or the time elapsed in the Performance Period as of the Change in Control Date or  based upon target performance (either in full or pro-rata based on the portion of the Performance Period  completed as of the Change in Control), except to the extent of any waiver by the Participant and subject  to applicable restrictions set forth in Section 9(a); and                       (iv)   except as otherwise provided in any employment or other agreement for  services between the Participant and the Company or any Subsidiary, and unless the Committee otherwise  determines in a specific instance, each outstanding Option, Stock Appreciation Right, Restricted Stock  Award, Restricted Stock Unit Award or Other Stock-Based Award shall not be accelerated as described in  Sections 8(a)(i), (ii) and (iii), if either (A) the Company is the surviving entity in the Change in Control and  the  Option,  Stock  Appreciation  Right,  Restricted  Stock  Award,  Restricted  Stock  Unit  Award  or  Other  Stock-Based Award continues to be outstanding after the Change in Control on substantially the same terms  and conditions as were applicable immediately prior to the Change in Control or (B) the successor company  or its parent company assumes or substitutes for the applicable Award, as determined in accordance with  Section 9(c)(ii) hereof.                (b)    Definition  of  “Change  in  Control”.   Unless  otherwise  specified in any Award  Agreement, a “Change in Control” shall mean the occurrence of any of the following:                       (i)    the  acquisition  by  any  Person  of  Beneficial  Ownership  (within  the  meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) of the  combined voting power of the then outstanding voting securities of the Company entitled to vote generally  in  the  election  of  directors  (the  “Outstanding  Company  Voting  Securities”)  (the  foregoing  Beneficial  Ownership hereinafter being referred to as a “Controlling Interest”); provided, however, that for purposes  of this Section 8(b), the following acquisitions shall not constitute or result in a Change in Control:  (v) any  acquisition directly from the Company; (w) any acquisition by the Company; (x) any acquisition by any  Person that as of the Effective Date owns Beneficial Ownership of a Controlling Interest; (y) any acquisition  by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Related  Entity; or (z) any acquisition by any entity pursuant to a transaction which complies with clauses (1), (2)  and (3) of subsection (iii) below;                       (ii)  during any period of two (2) consecutive years (not including any period  prior to the Effective Date) individuals who constitute the Board on the Effective Date (the “Incumbent  Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any  individual becoming a director subsequent to the Effective Date whose election, or nomination for election  by  the  Company’s  stockholders,  was  approved  by  a  vote  of  at  least  a  majority  of  the  directors  then  comprising  the  Incumbent  Board  shall  be  considered  as  though such  individual  were  a  member  of  the  Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office                                             17  PHX 332736409v4  

 

   occurs as a result of an actual or threatened election contest with respect to the election or removal of  directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other  than the Board;                       (iii)  consummation of (A) a reorganization, merger, statutory share exchange  or  consolidation  or  similar  transaction  involving  (x) the  Company  or  (y) any  one  or  more  Subsidiaries  whose  combined  revenues  for  the  prior  fiscal  year  represented  more  than  fifty  percent  (50%)  of  the  consolidated  revenues  of  the  Company  and  its  Subsidiaries  for  the  prior  fiscal  year  (the  “Major  Subsidiaries”), or (B) a sale or other disposition of all or substantially all of the assets of the Company or  the Major Subsidiaries, or the acquisition of assets or equity of another entity by the Company or any of its  Subsidiaries (each of the events referred to in clauses (A) and (B) sometimes hereinafter being referred to  a “Business Combination”), unless, following such Business Combination, (1) all or substantially all of the  individuals and entities who were the Beneficial Owners, respectively, of the Outstanding Company Voting  Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more  than fifty percent (50%) of the combined voting power of the then outstanding voting securities entitled to  vote generally in the election of members of the board of directors (or comparable governing body of an  entity that does not have such a board), as the case may be, of the entity resulting from such Business  Combination  (including,  without  limitation,  an  entity  which  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)  (the  “Continuing  Entity”)  in  substantially  the  same  proportions  as  their  ownership,  immediately  prior  to  such  Business  Combination,  of  the  Outstanding  Company  Voting  Securities,  (excluding any outstanding voting securities of the Continuing Entity that such Beneficial Owners hold  immediately following the consummation of the Business Combination as a result of their ownership, prior  to such consummation, of voting securities of any company or other entity involved in or forming part of  such Business Combination other than the Company), (2) no Person (excluding any employee benefit plan  (or related trust) of the Company or any Continuing Entity or any entity controlled by the Continuing Entity  or any Person that as of the Effective Date owns Beneficial Ownership of a Controlling Interest) beneficially  owns,  directly  or  indirectly,  fifty  percent  (50%)  or  more  of  the  combined  voting  power  of  the  then  outstanding voting securities of the Continuing Entity except to the extent that such ownership existed prior  to the Business Combination and (3) at least a majority of the members of the Board of Directors or other  governing body of the Continuing Entity were members of the Incumbent Board at the time of the execution  of the initial agreement, or of the action of the Board, providing for such Business Combination; or                       (iv)  approval by the stockholders of the Company of a complete liquidation or  dissolution of the Company.          9.    General Provisions.                (a)    Compliance with Legal and Other Requirements.  The Company may, to the extent  deemed necessary or advisable by the Committee, postpone the issuance or delivery of Shares or payment  of other benefits under any Award until completion of such registration or qualification of such Shares or  other required action under any federal or state law, rule or regulation, listing or other required action with  respect to the Listing Market, or compliance with any other obligation of the Company, as the Committee,  may  consider  appropriate,  and  may  require  any  Participant  to  make  such  representations,  furnish  such  information  and  comply  with  or  be  subject  to  such  other  conditions  as  it  may  consider  appropriate  in  connection  with  the  issuance  or  delivery  of  Shares  or  payment  of  other  benefits  in  compliance  with  applicable laws, rules, and regulations, listing requirements, or other obligations.                (b)    Limits  on  Transferability;  Beneficiaries.   No  Award  or  other  right  or  interest  granted under the Plan shall be pledged, hypothecated or otherwise encumbered or subject to any lien,  obligation  or  liability  of  such  Participant  to  any  party,  or  assigned  or  transferred  by  such  Participant                                            18  PHX 332736409v4  

 

   otherwise  than  by  will  or the  laws  of  descent  and  distribution or to  a  Beneficiary upon  the  death  of  a  Participant, and such Awards or rights that may be exercisable shall be exercised during the lifetime of the  Participant only by the Participant or his or her guardian or legal representative, except that Awards and  other rights (other than Incentive Stock Options and Stock Appreciation Rights in tandem therewith) may  be transferred to one or more Beneficiaries or other transferees during the lifetime of the Participant, and  may be exercised by such transferees in accordance with the terms of such Award, but only if and to the  extent such transfers are permitted by the Committee pursuant to the express terms of an Award Agreement  (subject to any terms and conditions which the Committee may impose thereon), are by gift or pursuant to  a domestic relations order, and are to a “Permitted Assignee” that is a permissible transferee under the  applicable rules of the Securities and Exchange Commission for registration of securities on a Form S-8  registration statement.  For this purpose, a “Permitted Assignee” shall mean (i) the Participant’s spouse,  children or grandchildren (including any adopted and step children or grandchildren), parents, grandparents  or siblings, (ii) a trust for the benefit of one or more of the Participant or the persons referred to in clause  (i),  (iii) a  partnership,  limited  liability  company  or  corporation  in  which  the  Participant  or  the  persons  referred to in clauses (i) and (ii) are the only partners, members or stockholders, or (iv) a foundation in  which any person or entity designated in clauses (i), (ii) or (iii) above control the management of assets.  A  Beneficiary, transferee, or other person claiming any rights under the Plan from or through any Participant  shall  be  subject  to  all  terms  and  conditions  of  the  Plan  and  any  Award  Agreement  applicable  to  such  Participant, except as otherwise determined by the Committee, and to any additional terms and conditions  deemed necessary or appropriate by the Committee.                (c)    Adjustments.                       (i)    Adjustments to Awards.  In the event that any extraordinary dividend or  other  distribution  (whether  in  the  form  of  cash,  Shares,  or  other  property),  recapitalization,  forward  or  reverse  split,  reorganization,  merger,  consolidation,  spin-off,  combination,  repurchase,  share  exchange,  liquidation, dissolution or other similar corporate transaction or event affects the Shares and/or such other  securities of the Company or any other issuer, then the Committee shall, in such manner as it may deem  appropriate and equitable, substitute, exchange or adjust any or all of (A) the number and kind of Shares  which may be delivered in connection with Awards granted thereafter, (B) the number and kind of Shares  subject to or deliverable in respect of outstanding Awards, (C) the exercise price, grant price or purchase  price relating to any Award and/or make provision for payment of cash or other property in respect of any  outstanding Award, and (D) any other aspect of any Award that the Committee determines to be appropriate  in order to prevent the reduction or enlargement of benefits under any Award.                       (ii)   Adjustments in Case of Certain Transactions.  In the event of any merger,  consolidation or other reorganization in which the Company does not survive, or in the event of any Change  in Control (and subject to the provisions of Section 8 hereof relating to the vesting of Awards in the event  of  any  Change  in  Control),  any  outstanding  Awards  may  be  dealt with  in  accordance  with  any  of  the  following approaches, without the requirement of obtaining any consent or agreement of a Participant as  such, as determined by the agreement effectuating the transaction or, if and to the extent not so determined,  as determined by the Committee: (A) the continuation of the outstanding Awards by the Company, if the  Company is a surviving entity, (B) the assumption or substitution for, as those terms are defined below, the  outstanding Awards by the surviving entity or its parent or subsidiary, (C) full exercisability or vesting and  accelerated expiration of the outstanding Awards, or (D) settlement of the value of the outstanding Awards  in cash or cash equivalents or other property followed by cancellation of such Awards (which value, in the  case of Options or Stock Appreciation Rights, shall be measured by the amount, if any, by which the Fair  Market Value of a Share exceeds the exercise or grant price of the Option or Stock Appreciation Right as  of the effective date of the transaction).  For the purposes of this Plan, an Option, Stock Appreciation Right,  Restricted Stock Award, Restricted Stock Unit Award, Performance Award or Other Stock-Based Award  shall be considered assumed or substituted for if following the applicable transaction the Award confers the                                            19  PHX 332736409v4  

 

   right to purchase or receive, for each Share subject to the Option, Stock Appreciation Right, Restricted  Stock Award, Restricted Stock Unit Award, Performance Award or Other Stock-Based Award immediately  prior to the applicable transaction, on substantially the same vesting and other terms and conditions as were  applicable to the Award immediately prior to the applicable transaction, the consideration (whether stock,  cash or other securities or property) received in the applicable transaction by holders of Shares for each  Share held on the effective date of such transaction (and if holders were offered a choice of consideration,  the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however,  that if such consideration received in the applicable transaction is not solely common stock of the successor  company or its parent or subsidiary, the Committee may, with the consent of the successor company or its  parent or subsidiary, provide that the consideration to be received upon the exercise or vesting of an Option,  Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, Performance Award or  Other Stock-Based Award, for each Share subject thereto, will be solely common stock of the successor  company or its parent or subsidiary substantially equal in fair market value to the per share consideration  received by holders of Shares in the applicable transaction.  The determination of such substantial equality  of value of consideration shall be made by the Committee in its sole discretion and its determination shall  be conclusive and binding.  The Committee shall give written notice of any proposed transaction referred  to in this Section 9(c)(ii) a reasonable period of time prior to the closing date for such transaction (which  notice may be given either before or after the approval of such transaction), in order that Participants may  have a reasonable period of time prior to the closing date of such transaction within which to exercise any  Awards that are then exercisable (including any Awards that may become exercisable upon the closing date  of such transaction).  A Participant may condition his or her exercise of any Awards upon the consummation  of the transaction.                       (iii) Other Adjustments.  The Committee is authorized to make adjustments in  the terms and conditions of, and the criteria included in, Awards (including Awards subject to satisfaction  of performance goals, or performance goals and conditions relating thereto) in recognition of unusual or  nonrecurring events (including, without limitation, acquisitions and dispositions of businesses and assets)  affecting the Company, any Related Entity or any business unit, or the financial statements of the Company  or any Related Entity, or in response to changes in applicable laws, regulations, accounting principles, tax  rates  and  regulations  or  business  conditions  or  in view  of  the Committee’s  assessment  of  the  business  strategy  of  the  Company,  any  Related  Entity  or  business  unit  thereof,  performance  of  comparable  organizations, economic and business conditions, personal performance of a  Participant, and any other  circumstances deemed relevant.                (d)    Award Agreements.  Each Award Agreement shall either be (i) in writing in a form  approved by the Committee and executed by the Company by an officer duly authorized to act on its behalf,  or (ii) an electronic notice in a form approved by the Committee and recorded by the Company (or its  designee) in an electronic recordkeeping system used for the purpose of tracking one or more types of  Awards  as  the  Committee  may  provide;  in  each  case  and  if  required  by  the  Committee,  the  Award  Agreement shall be executed or otherwise electronically accepted by the recipient of the Award in such  form and manner as the Committee may require.  The Committee may authorize any officer of the Company  to execute any or all Award Agreements on behalf of the Company.  The Award Agreement shall set forth  the  material  terms  and  conditions  of  the  Award  as  established  by  the  Committee  consistent  with  the  provisions of the Plan.                (e)    Taxes.  The Company and any Related Entity are authorized to withhold from any  Award granted, any payment relating to an Award under the Plan, including from a distribution of Shares,  or any payroll or other payment to a Participant, amounts of withholding and other taxes due or potentially  payable  in  connection  with  any  transaction  involving  an  Award, and  to  take  such  other  action  as  the  Committee may deem advisable to enable the Company or any Related Entity and Participants to satisfy  obligations for the payment of withholding taxes and other tax obligations relating to any Award.  This                                            20  PHX 332736409v4  

 

   authority shall include authority to withhold or receive Shares or other property and to make cash payments  in respect thereof in satisfaction of a Participant’s tax obligations, either on a mandatory or elective basis  in the discretion of the Committee.  The amount of withholding tax paid with respect to an Award by the  withholding of Shares otherwise deliverable pursuant to the Award or by delivering Shares already owned  shall not exceed the maximum statutory withholding required with respect to that Award (or such other  limit as the Committee shall impose, including without limitation, any limit imposed to avoid or limit any  financial accounting expense relating to the Award).                (f)    Changes  to  the  Plan  and  Awards.   The  Board  may  amend,  alter,  suspend,  discontinue or terminate the Plan, or the Committee’s authority to grant Awards under the Plan, without the  consent of stockholders or Participants, except that any amendment or alteration to the Plan shall be subject  to the approval of the Company’s stockholders not later than the annual meeting next following such Board  action if such stockholder approval is required by any federal or state law or regulation (including, without  limitation, Rule 16b-3) or the rules of the Listing Market, and the Board may otherwise, in its discretion,  determine to submit other such changes to the Plan to stockholders for approval; provided, that, except as  otherwise permitted by the Plan or Award Agreement, without the consent of an affected Participant, no  such Board action may materially and adversely affect the rights of such Participant under the terms of any  previously granted and outstanding Award.  The Committee may waive any conditions or rights under, or  amend, alter, suspend, discontinue or terminate any Award theretofore granted and any Award Agreement  relating thereto, except as otherwise provided in the Plan; provided that, except as otherwise permitted by  the Plan or Award Agreement, without the consent of an affected Participant, no such Committee or the  Board action may materially and adversely affect the rights of such Participant under terms of such Award.                (g)    Clawback of Benefits.                       (i)    The Company may (A) cause the cancellation of any Award, (B) require  reimbursement of any Award by a Participant or Beneficiary, and (C) effect any other right of recoupment  of equity or other compensation provided under this Plan or otherwise in accordance with any Company  policies that currently exist or that may from time to time be adopted or modified in the future by the  Company and/or applicable law (each, a “Clawback Policy”).  In addition, a Participant may be required to  repay to the Company certain previously paid compensation, whether provided under this Plan or an Award  Agreement or otherwise, in accordance with any Clawback Policy.  By accepting an Award, a Participant  is also agreeing to be bound by any existing or future Clawback Policy adopted by the Company, or any  amendments that may from time to time be made to the Clawback Policy in the future by the Company in  its  discretion  (including  without  limitation  any  Clawback  Policy  adopted  or  amended  to  comply  with  applicable laws or stock exchange requirements) and is further agreeing that all of the Participant’s Award  Agreements (and/or awards issued under the Prior Plan) may be unilaterally amended by the Company,  without the Participant’s consent, to the extent that the Company in its discretion determines to be necessary  or appropriate to comply with any Clawback Policy.                       (ii)  If the Participant, without the consent of the Company, while employed  by or providing services to the Company or any Related Entity or after termination of such employment or  service, violates a non-competition, non-solicitation or non-disclosure covenant or agreement, then (A) any  outstanding,  vested  or  unvested,  earned  or  unearned  portion  of the  Award  may,  at  the  Committee’s  discretion, be canceled and (B) the Committee, in its discretion, may require the Participant or other person  to whom any payment has been made or Shares or other property have been transferred in connection with  the Award to forfeit and pay over to the Company, on demand, all or any portion of the gain (whether or  not taxable) realized upon the exercise of any Option or Stock Appreciation Right and the value realized  (whether or not taxable) on the vesting or payment of any other Award during the time period specified in  the Award Agreement or otherwise specified by the Committee.                                             21  PHX 332736409v4  

 

                (h)    Limitation on Rights Conferred under Plan.  Neither the Plan nor any action taken  hereunder or under any Award shall be construed as (i) giving any Eligible Person or Participant the right  to continue as an Eligible Person or Participant or in the employ or service of the Company or a Related  Entity; (ii) interfering in any way with the right of the Company or a Related Entity to terminate any Eligible  Person’s or Participant’s Continuous Service at any time, (iii) giving an Eligible Person or Participant any  claim  to  be  granted  any  Award under  the  Plan  or  to  be  treated  uniformly  with  other  Participants  and  Employees, or (iv) conferring on a Participant any of the rights of a stockholder of the Company or any  Related Entity including, without limitation, any right to receive dividends or distributions, any right to  vote or act by written consent, any right to attend meetings of stockholders or any right to receive any  information concerning the Company’s or any Related Entity’s business, financial condition, results of  operation or prospects, unless and until such time as the Participant is duly issued Shares on the stock books  or is otherwise reflected as a stockholder on the books and records of the Company or any Related Entity  in accordance with the terms of an Award.  None of the Company, its officers or its directors shall have any  fiduciary obligation to the Participant with respect to any Awards unless and until the Participant is duly  issued Shares pursuant to the Award on the stock books of the Company or is otherwise reflected as a  stockholder on the books and records of the Company in accordance with the terms of an Award.  Neither  the Company, nor any Related Entity, nor any of their respective officers, directors, representatives or  agents is granting any rights under the Plan to the Participant whatsoever, oral or written, express or implied,  other than those rights expressly set forth in this Plan or the Award Agreement.                (i)    Unfunded Status of Awards; Creation of Trusts.  The Plan is intended to constitute  an “unfunded” plan for incentive and deferred compensation.  With respect to any payments not yet made  to a Participant or obligation to deliver Shares pursuant to an Award, nothing contained in the Plan or any  Award Agreement shall give any such Participant any rights that are greater than those of a general creditor  of the Company or Related Entity that issues the Award; provided that the Committee may authorize the  creation  of  trusts  and  deposit  therein  cash,  Shares,  other  Awards  or  other  property,  or  make  other  arrangements to meet the obligations of the Company or Related Entity under the Plan.  Such trusts or other  arrangements shall be consistent with the “unfunded” status of the Plan unless the Committee otherwise  determines with the consent of each affected Participant.  The trustee of such trusts may be authorized to  dispose  of  trust  assets  and  reinvest  the  proceeds  in  alternative  investments,  subject  to  such  terms  and  conditions as the Committee may specify and in accordance with applicable law.                (j)    Nonexclusivity of the Plan.  Neither the adoption of the Plan by the Board nor its  submission to the stockholders of the Company for approval shall be construed as creating any limitations  on the power of the Board or a committee thereof to adopt such other incentive arrangements as it may  deem desirable.                (k)    Payments  in  the  Event  of  Forfeitures;  Fractional  Shares.   Unless  otherwise  determined by the Committee, in the event of a forfeiture of an Award with respect to which a Participant  paid  cash  or  other  consideration,  the  Participant  shall  be  repaid  the  amount  of  such  cash  or  other  consideration.  No fractional Shares shall be issued or delivered pursuant to the Plan or any Award.  The  Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of  such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise  eliminated.                (l)    Governing  Law.   Except  as  otherwise  provided  in  any  Award  Agreement,  the  validity,  construction  and effect  of  the  Plan,  any  rules  and  regulations  under  the  Plan,  and any  Award  Agreement shall be determined in accordance with the laws of the State of Delaware without giving effect  to principles of conflict of laws, and applicable federal law.                                              22  PHX 332736409v4  

 

                (m)    Non-U.S.  Laws.   The  Committee  shall  have  the  authority  to  adopt  such  modifications, procedures, and subplans as may be necessary or desirable to comply with provisions of the  laws of foreign countries in which the Company or its Related Entities may operate to assure the viability  of the benefits from Awards granted to Participants performing services in such countries and to meet the  objectives of the Plan.                (n)    Plan Effective Date and Stockholder Approval; Termination of Plan.  The Plan  shall become effective on the Effective Date, subject to subsequent approval, within twelve (12) months of  its adoption by the Board, by stockholders of the Company eligible to vote in the election of directors, by  a vote sufficient to meet the requirements of Section 422 of the Code, Rule 16b-3 (if applicable), applicable  requirements under the rules of any stock exchange or automated quotation system on which the Shares  may be listed or quoted, and other laws, regulations, and obligations of the Company applicable to the Plan.   Awards may be granted subject to stockholder approval, but may not be exercised or otherwise settled in  the event the stockholder approval is not obtained.  The Plan shall terminate at the earliest of (i) such time  as no Shares remain available for issuance under the Plan, (ii) termination of this Plan by the Board, or  (iii) the tenth (10th) anniversary of the Stockholder Approval Date.  Awards outstanding upon expiration of  the Plan shall remain in effect until they have been exercised or terminated, or have expired.                (o)    Construction and Interpretation.  Whenever used herein, nouns in the singular shall  include the plural, and the masculine pronoun shall include the feminine gender. Headings of Articles and  Sections hereof are inserted for convenience and reference and constitute no part of the Plan.                (p)    Severability.   If  any  provision  of  the  Plan  or  any  Award  Agreement  shall  be  determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions  hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions  shall remain enforceable in any other jurisdiction.                                              23  PHX 332736409v4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00293-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00293-of-00352.parquet"}]]