Document:

Exhibit
10.1

 

June 12, 2006

 

 

 

 

Matthew
Gosling

[Address]

 

Dear
Matt:

 

I am very pleased to extend to you this offer to join the Depomed team
as Vice President, Legal and General Counsel, reporting directly to me.  The rate of pay we offer is $24,166.67 per
month (equal to $290,000 per annum).  As
agreed, your first day of employment will be Monday, June 26, 2006.

 

Your
compensation package additionally includes options to acquire 75,000 shares of
Depomed Common Stock; the per-share exercise price will be the closing stock
price on the date employment commences. 
This grant has been approved by Depomed’s Compensation Committee of the
Board of Directors. As provided for in Depomed’s 2004 Equity Plan, these
options will vest over a four-year period.

 

Also, you will be entitled to our complete benefits
package including healthcare insurance and, should you choose to participate, a
401(k) retirement plan.  During your
first year of employment you will be entitled to 14 days of vacation and to the
ten holidays that are observed by the Company.

 

Additionally,
as a condition for employment, it will be necessary that you sign a copy of the
Company’s Confidential Information, Secrecy and Invention Agreement. Consistent
with Company policy, the initial three months of employment are considered
introductory and for the purpose of performance evaluation; employment at
Depomed is considered “at will”.  As
required by law, you must show proof of citizenship, permanent residency in the
U.S. or authorization to work in the U.S. 
To complete the I-9 form, we ask that you bring copies of this
documentation on your first day of employment.

 

Matt,
I am very pleased to extend this offer to you, and on behalf of all the Depomed
employees I look forward to having you join us. As an emerging specialty
pharmaceutical company, your skills and experience will make you an important
member of our Company.  If you elect to
accept this offer, please sign and return one copy of this letter to me.  A pre-addressed, envelope is provided for
your convenience.

 

	
  Sincerely,

  	
  This
  letter correctly sets forth our agreement.

  
	
   

  	
   

  
	
  /s/
  John W. Fara

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signed:

  	
  /s/
  Matthew M. Gosling

  	
   

  
	
  John
  W. Fara, Ph.D.

  	
   

  	
   

  	
   

  
	
  President
  and CEO

  	
  Dated:

  	
  June
  14, 2006Exhibit 10.1

UNITED
INDUSTRIAL CORPORATION

__________________________

2006
LONG TERM INCENTIVE PLAN

__________________________

ARTICLE I

PURPOSE

The purpose of
this Plan is to enhance the profitability and value of the Company for the
benefit of its stockholders by enabling the Company to offer Eligible
Employees, Consultants and Non-Employee Directors cash and stock-based
incentives in the Company to attract, retain and reward such individuals and
strengthen the mutuality of interests between such individuals and the Company’s
stockholders.

ARTICLE II

DEFINITIONS

For purposes of
this Plan, the following terms shall have the following meanings:

2.1      “Acquisition
Event” means a merger or consolidation in which the
Company is not the surviving entity, any transaction that results in the
acquisition of all or substantially all of the Company’s outstanding Common
Stock by a single person or entity or by a group of persons and/or entities
acting in concert, or the sale or transfer of all or substantially all of the
Company’s assets.

2.2      “Affiliate”
means each of the following: (a) any Subsidiary; (b) any Parent; (c) any
corporation, trade or business (including, without limitation, a partnership or
limited liability company) which is directly or indirectly controlled 50% or
more (whether by ownership of stock, assets or an equivalent ownership interest
or voting interest) by the Company; (d) any corporation, trade or business
(including, without limitation, a partnership or limited liability company)
which directly or indirectly controls 50% or more (whether by ownership of
stock, assets or an equivalent ownership interest or voting interest) of the
Company; and (e) any other entity in which the Company or any of its
Affiliates has a material equity interest and which is designated as an “Affiliate”
by resolution of the Committee; provided that the Common Stock subject to any
Award constitutes “service recipient stock” for purposes of Section 409A
of the Code or otherwise does not subject the Award to Section 409A of the
Code.

2.3      “Appreciation
Award” means any Award under the Plan of any Stock
Option, Stock Appreciation Right or Other Stock-Based Award, provided that such
Other Stock-Based Award is based on the appreciation in value of a share of
Common Stock in excess of an amount equal to at least the Fair Market Value of
the Common Stock on the date such Other Stock-Based Award is granted.

2.4      “Award”
means any award under the Plan of any Stock Option, Stock Appreciation Right,
Restricted Stock, Performance Share, Other Stock-Based Award or
Performance-Based Cash Awards. All Awards shall be granted by, confirmed by,
and subject to the terms of, a written agreement executed by the Company and
the Participant.

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

2.6      “Cause”
means with respect to a Participant’s Termination of Employment or Termination
of Consultancy, the following: (a) in the case where there is no
employment agreement, consulting agreement, change in control agreement or
similar agreement in effect between the Company or an Affiliate and the
Participant at the time of the grant of the Award (or where there is such an
agreement but it does not define “cause” (or words of like import)),
termination due to: (i) a Participant’s conviction of, or plea of guilty
or nolo contendere to, a felony; (ii) perpetration by a Participant of an
illegal act, dishonesty, or fraud which could cause significant economic injury
to the Company; (iii) continuing willful and deliberate failure by the
Participant to perform the Participant’s duties in any material respect,
provided that the Participant is given notice and an opportunity to effectuate
a cure as determined by the Committee; or (iv) a Participant’s willful
misconduct with regard to the Company that could have a material adverse effect
on the Company; or (b) in the case where there is an employment agreement,
consulting agreement, change in control agreement or similar agreement in
effect between the Company or an Affiliate and the Participant at the time of
the grant of the Award that defines “cause” (or words of like import), “cause”
as defined under such agreement; provided, however, that with regard to any
agreement under which the definition of “cause” only applies on occurrence of a
change in control, such definition of “cause” shall not apply until a change in
control actually takes place and then only with regard to a termination
thereafter. With respect to a Participant’s Termination of Directorship, “cause”
means an act or failure to act that constitutes cause for removal of a director
under applicable Delaware law.

2.7      “Change
in Control” has the meaning set forth in Section 14.2.

2.8      “Change
in Control Price” has the meaning set forth in Section 14.1.

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

2.10    “Committee”
means:  (a) with respect to the
application of this Plan to Eligible Employees and Consultants, a committee or
subcommittee of the Board appointed from time to time by the Board, which
committee or subcommittee shall consist of two or more non-employee directors,
each of whom shall be (i) a “non-employee director” as defined in Rule 16b-3;
(ii) to the extent required by Section 162(m) of the Code, an “outside
director” as defined under Section 162(m) of the Code; and (iii) an
“independent director” as defined under Section 303A.02 of the NYSE Listed
Company Manual or such other applicable stock exchange rule; and (b) with
respect to the application of this Plan to Non-Employee Directors, (i) the
Board or (ii) a committee or subcommittee (which may differ from the
committee or subcommittee established for the grant of Awards to employees)
comprised of two or more non-employee directors each of whom qualify as a “non-employee
director” as defined in Rule 16b-3 and an “independent director” as
defined under Section 303A.02 of the NYSE Listed Company Manual. To the
extent that no Committee exists that has the authority to administer this Plan,
the functions of the Committee shall be exercised by the Board. If for any
reason the appointed Committee does not meet the requirements of Rule 16b-3
or Section 162(m) of the Code, such noncompliance shall not affect
the validity of Awards, grants, interpretations or other actions of the
Committee.

 2
 

 

2.11        “Common Stock”
means the Common Stock, $1.00 par value per share, of the Company.

2.12        “Company”
means United Industrial Corporation,  a
Delaware corporation, and its successors by operation of law.

2.13        “Consultant”
means any natural person who provides bona fide consulting or advisory services
to the Company or its Affiliates pursuant to a written agreement, which are not
in connection with the offer and sale of securities in a capital-raising
transaction.

2.14        “Detrimental Activity”
means:

(a)                            disclosing,
divulging, furnishing or making available to anyone at any time, except as
necessary in the furtherance of Participant’s responsibilities to the Company
or any of its Affiliates, either during or subsequent to Participant’s service
relationship with the Company or its Affiliates, any knowledge or information
with respect to confidential or proprietary information, methods, processes,
plans or materials of the Company or any of its Affiliates, or with respect to
any other confidential or proprietary aspects of the business of the Company or
any of its Affiliate, acquired by the Participant at any time prior to the
Participant’s Termination;

(b)                           any
activity while employed or performing services that results, or if known could
reasonably be expected to result, in the Participant’s Termination that is
classified by the Company as a termination for Cause;

(c)                            (i) directly
or indirectly soliciting, enticing or inducing any employee of the Company or
of any of its Affiliates to be employed by an person, firm or corporation which
is, directly or indirectly, in competition with the business or activities of
the Company or any of its Affiliates; (ii) directly or indirectly
approaching any such employee for these purposes; (iii) authorizing or
knowingly approving the taking of such actions by other persons on behalf of
any such person, firm or corporation, or assisting any such person, firm or
corporation in taking such action; (iv) directly or indirectly soliciting,
raiding, enticing or inducing any person, firm or corporation (other than the
U.S. Government or its agencies) who or which is, or at any time from and after
the date of grant of the Award was, a customer of the Company or of any of its
Affiliates to become a customer for the same or similar products which it
purchased from the Company or any of its Affiliates, or any other person, firm
or corporation, or approaching any such customer for such purpose or authorize
or knowingly approving the taking of such actions by any other person; or

(d)                           a material
breach of any agreement between the Participant and the Company or an Affiliate
(including, without limitation, any employment agreement or noncompetition or
nonsolicitation agreement). Unless otherwise determined by the Committee at
grant, Detrimental Activity 

 3
 

 

shall not be deemed to occur after the end of the one-year period
following the Participant’s Termination.

For purposes of subsections (a), (c) and
(d) above, the Chief Executive Officer of the Company has the authority to
provide the Participant with written authorization to engage in the activities
contemplated thereby and no other person shall have authority to provide the
Participant with such authorization.

2.15        “Disability”
means with respect to a Participant’s Termination, a permanent and total
disability as defined in Section 22(e)(3) of the Code. A Disability
shall only be deemed to occur at the time of the determination by the Committee
of the Disability. Notwithstanding the foregoing, for Awards that are subject
to Section 409A of the Code, Disability shall mean that a Participant is
disabled under Section 409A(a)(2)(C)(i) or (ii) of the Code.

2.16        “Effective Date”
means the effective date of this Plan as defined in XVIII.

2.17        “Eligible Employees”
means each employee of the Company or an Affiliate.

2.18        “Exchange Act”means the Securities Exchange Act of
1934, as amended. Any references to any section of the Exchange Act shall also
be a reference to any successor provision.

2.19        “Fair Market Value” means, unless
otherwise required by any applicable provision of the Code or any regulations
issued thereunder, as of any date and except as provided below, the last sales
price reported for the Common Stock on the applicable date: (a) as
reported on the principal national securities exchange in the United States on
which it is then traded or The New York Stock Exchange; or (b) if not traded
on any such national securities exchange or The
New York Stock Exchange, as quoted on an automated quotation system sponsored
by the National Association of Securities Dealers, Inc. or if the Common
Stock shall not have been reported or quoted on such date, on the first day
prior thereto on which the Common Stock was reported or quoted. For purposes of
the grant of any Award, the applicable date shall be the trading day on which
the Award is granted, or if such grant date is not a trading day, the trading
day immediately prior to the date on which the Award is granted. For purposes
of the exercise of any Award, the applicable date shall be the date a notice of
exercise is received by the Committee or, if not a day on which the applicable
market is open, the next day that it is open.

2.20        “Family Member”
means “family member” as defined in Section A.1.(5) of the general
instructions of Form S-8, as may be amended from time to time.

2.21        “GAAP” has
the meaning set forth in Section 11.2(c)(ii).

2.22        “Incentive Stock Option”
means any Stock Option awarded to an Eligible Employee of the Company, its
Subsidiaries and its Parent (if any) under this Plan intended to be and
designated as an “Incentive Stock Option” within the meaning of Section 422
of the Code.

2.23        “Non-Employee Director”
means a director of the Company who is not an active employee of the Company or
an Affiliate.

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2.24        “Non-Qualified Stock Option”
means any Stock Option awarded under this Plan that is not an Incentive Stock
Option.

2.25        “Other Stock-Based Award”
means an Award under Article X of this Plan that is valued in whole or in
part by reference to, or is payable in or otherwise based on, Common Stock,
including, without limitation, a restricted stock unit or an Award valued by
reference to an Affiliate.

2.26        “Parent”
means any parent corporation of the Company within the meaning of Section 424(e) of
the Code.

2.27        “Participant”
means an Eligible Employee, Non-Employee Director or Consultant to whom an
Award has been granted pursuant to this Plan.

2.28        “Performance-Based Cash Award” means
a cash Award under Article XI of this Plan that is payable or otherwise
based on the attainment of certain pre-established performance goals during a
Performance Period.

2.29        “Performance Period”
means the duration of the period during which receipt of an Award is subject to
the satisfaction of performance criteria, such period as determined by the
Committee in its sole discretion.

2.30        “Performance Share”
means an Award made pursuant to Article IX of this Plan of the right to
receive Common Stock or cash of an equivalent value at the end of a specified
Performance Period.

2.31        “Person”
means any individual, corporation, partnership, limited liability company,
firm, joint venture, association, joint-stock company, trust, incorporated
organization, governmental or regulatory or other entity.

2.32        “Plan”
means this United Industrial Corporation 2006 Long Term Incentive Plan, as
amended from time to time.

2.33        “Reference Stock Option”
has the meaning set forth in Section 7.1.

2.34        “Restricted Stock”
means an Award of shares of Common Stock under this Plan that is subject to
restrictions under Article VIII.

2.35        “Restriction Period”
has the meaning set forth in Subsection 8.3(a).

2.36        “Retirement”
means a voluntary Termination of Employment or Termination of Consultancy at or
after age 65 or such earlier date after age 50 as may be approved by the
Committee, in its sole discretion, at the time of grant, or thereafter provided
that the exercise of such discretion does not make the applicable Award subject
to Section 409A of the Code, except that Retirement shall not include any
Termination with or without Cause. With respect to a Participant’s Termination
of Directorship, Retirement means the failure to stand for reelection or the
failure to be reelected on or after a Participant has attained age 65 or, with
the consent of the Board, provided that the exercise of such discretion does
not make the applicable Award subject to Section 409A of the Code, before
age 65 but after age 50.

 5
 

 

2.37        “Rule 16b-3”
means Rule 16b-3 under Section 16(b) of the Exchange Act
as then in effect or any successor provision.

2.38        “Section 162(m) of the Code”
means the exception for performance-based compensation under Section 162(m) of
the Code and any applicable Treasury regulations thereunder.

2.39        “Section 409A of the Code”
means the nonqualified deferred compensation rules under Section 409A
of the Code and any applicable Treasury regulations thereunder.

2.40        “Securities Act”
means the Securities Act of 1933, as amended and all rules and regulations
promulgated thereunder. Any reference to any section of the Securities Act
shall also be a reference to any successor provision.

2.41        “Stock Appreciation Right”
means the right pursuant to an Award granted under Article VII. A Tandem
Stock Appreciation Right shall mean the right to surrender to the Company all
(or a portion) of a Stock Option in exchange for a number of shares of Common
Stock and/or cash, as determined by the Committee, equal to the difference
between (a) the Fair Market Value on the date such Stock Option (or such
portion thereof) is surrendered, of the Common Stock covered by such Stock
Option (or such portion thereof), and (b) the aggregate exercise price of
such Stock Option (or such portion thereof). A Non-Tandem Stock Appreciation
Right shall mean the right to receive a number of shares of Common Stock and/or
cash, as determined by the Committee, equal to the difference between (i) the
Fair Market Value of a share of Common Stock on the date such right is
exercised, and (ii) the aggregate exercise price of such right, otherwise
than on surrender of a Stock Option.

2.42        “Stock Option”
or “Option” means any option
to purchase shares of Common Stock granted to Eligible Employees, Non-Employee
Directors or Consultants granted pursuant to Article VI.

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

2.44        “Ten Percent Stockholder”
means a person owning stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, its Subsidiaries or its
Parent.

2.45        “Termination”
means a Termination of Consultancy, Termination of Directorship or Termination
of Employment, as applicable.

2.46        “Termination of Consultancy”
means: (a) that the Consultant is no longer acting as a consultant to the
Company or an Affiliate; or (b) when an entity which is retaining a
Participant as a Consultant ceases to be an Affiliate unless the Participant
otherwise is, or thereupon becomes, a Consultant to the Company or another
Affiliate at the time the entity ceases to be an Affiliate. In the event that a
Consultant becomes an Eligible Employee or a Non-Employee Director upon
the termination of his or her consultancy, unless otherwise determined by the
Committee, in its sole discretion, no Termination of Consultancy shall be
deemed to occur until such time as such Consultant is no longer a Consultant,
an Eligible Employee or a Non-Employee Director. Notwithstanding the
foregoing, the Committee may, in 

 6
 

 

its sole discretion, otherwise define Termination of Consultancy in the
Award agreement or, if no rights of a Participant are reduced, may otherwise
define Termination of Consultancy thereafter.

2.47        “Termination of Directorship”
means that the Non-Employee Director has ceased to be a director of the
Company; except that if a Non-Employee Director becomes an Eligible
Employee or a Consultant upon the termination of his or her directorship, his
or her ceasing to be a director of the Company shall not be treated as a
Termination of Directorship unless and until the Participant has a Termination
of Employment or Termination of Consultancy, as the case may be.

2.48        “Termination of Employment”
means: (a) a termination of employment (for reasons other than a military
or personal leave of absence granted by the Company) of a Participant from the
Company and its Affiliates; or (b) when an entity which is employing a
Participant ceases to be an Affiliate, unless the Participant otherwise is, or
thereupon becomes, employed by the Company or another Affiliate at the time the
entity ceases to be an Affiliate. In the event that an Eligible Employee becomes
a Consultant or a Non-Employee Director upon the termination of his or
her employment, unless otherwise determined by the Committee, in its sole
discretion, no Termination of Employment shall be deemed to occur until such
time as such Eligible Employee is no longer an Eligible Employee, a Consultant
or a Non-Employee Director. Notwithstanding the foregoing, the Committee
may, in its sole discretion, otherwise define Termination of Employment in the
Award agreement or, if no rights of a Participant are reduced, may otherwise
define Termination of Employment thereafter.

2.49        “Transfer”
means: (a) when used as a noun, any direct or indirect transfer, sale,
assignment, pledge, hypothecation, encumbrance or other disposition (including
the issuance of equity in a Person), whether for value or no value and whether
voluntary or involuntary (including by operation of law), and (b) when
used as a verb, to directly or indirectly transfer, sell, assign, pledge,
encumber, charge, hypothecate or otherwise dispose of (including the issuance
of equity in a Person) whether for value or for no value and whether
voluntarily or involuntarily (including by operation of law). “Transferred” and
“Transferrable” shall have a correlative meaning.

ARTICLE III

ADMINISTRATION

3.1          The Committee. The
Plan shall be administered and interpreted by the Committee.

3.2          Grants of Awards.
The Committee shall have full authority to grant, pursuant to the terms of this
Plan, to Eligible Employees, Consultants and Non-Employee Directors: (i) Stock
Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, (iv) Performance
Shares; (v) Other Stock-Based Awards, and (vi) Performance-Based Cash
Awards, although Non-Employee Directors are not eligible to receive
Performance-Based Cash Awards. In particular, the Committee shall have the
authority:

(a)                            to select
the Eligible Employees, Consultants and Non-Employee Directors to whom Awards
may from time to time be granted hereunder;

 7
 

 

(b)                           to
determine whether and to what extent Awards, or any combination thereof, are to
be granted hereunder to one or more Eligible Employees, Consultants or
Non-Employee Directors;

(c)                            to
determine the number of shares of Common Stock to be covered by each Award
granted hereunder;

(d)                           to
determine the terms and conditions, not inconsistent with the terms of this
Plan, of any Award granted hereunder (including, but not limited to, the
exercise or purchase price (if any), any restriction or limitation, any vesting
schedule or acceleration thereof, or any forfeiture restrictions or waiver
thereof, regarding any Award and the shares of Common Stock relating thereto,
based on such factors, if any, as the Committee shall determine, in its sole
discretion);

(e)                            to
determine whether, to what extent and under what circumstances grants of
Options and other Awards under this Plan are to operate on a tandem basis
and/or in conjunction with or apart from other awards made by the Company
outside of this Plan;

(f)                              to
determine whether and under what circumstances a Stock Option may be settled in
cash, Common Stock and/or Restricted Stock under Section 6.3(d);

(g)                           to
determine whether, to what extent and under what circumstances Common Stock and
other amounts payable with respect to an Award under this Plan shall be
deferred either automatically or at the election of the Participant in any
case, subject to, and in accordance with, Section 409A of the Code;

(h)                           to
determine whether a Stock Option is an Incentive Stock Option or Non-Qualified
Stock Option;

(i)                               to
determine whether to require a Participant, as a condition of the granting of
any Award, to not sell or otherwise dispose of shares acquired pursuant to the
exercise of an Award for a period of time as determined by the Committee, in
its sole discretion, following the date of the acquisition of such Award; and

3.3          Guidelines.
Subject to Article XV hereof, the Committee shall, in its sole discretion,
have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing this Plan and perform all acts, including
the delegation of its responsibilities (to the extent permitted by applicable
law and applicable stock exchange rules), as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of this Plan and
any Award issued under this Plan (and any agreements relating thereto); and to
otherwise supervise the administration of this Plan. The Committee may, in its
sole discretion, correct any defect, supply any omission or reconcile any
inconsistency in this Plan or in any agreement relating thereto in the manner
and to the extent it shall deem necessary to effectuate the purpose and intent
of this Plan. The Committee may, in its sole discretion, adopt special
guidelines and 

 8
 

 

provisions for persons who are residing in or employed in, or subject
to, the taxes of, any domestic or foreign jurisdictions to comply with
applicable tax and securities laws of such domestic or foreign jurisdictions. This
Plan is intended to comply with the applicable requirements of Rule 16b-3
and with respect to Awards intended to be “performance-based,” the applicable
provisions of Section 162(m) of the Code, and this Plan shall be
limited, construed and interpreted in a manner so as to comply therewith.

3.4          Decisions Final.
Any decision, interpretation or other action made or taken in good faith by or
at the direction of the Company, the Board or the Committee (or any of its
members) arising out of or in connection with this Plan shall be within the absolute
discretion of all and each of them, as the case may be, and shall be final,
binding and conclusive on the Company and all employees and Participants and
their respective heirs, executors, administrators, successors and assigns.

3.5          Procedures.
If the Committee is appointed, the Board shall designate one of the members of
the Committee as chairman and the Committee shall hold meetings, subject to the
By-Laws of the Company, at such times and places as it shall deem advisable,
including, without limitation, by telephone conference or by written consent to
the extent permitted by applicable law. A majority of the Committee members
shall constitute a quorum. All determinations of the Committee shall be made by
a majority of its members. Any decision or determination reduced to writing and
signed by all the Committee members in accordance with the By-Laws of the
Company shall be fully effective as if it had been made by a vote at a meeting
duly called and held. The Committee shall keep minutes of its meetings and
shall make such rules and regulations for the conduct of its business as
it shall deem advisable.

3.6          Designation of Consultants/Liability.

(a)                            The
Committee may, in its sole discretion, designate employees of the Company and
professional advisors to assist the Committee in the administration of this
Plan and (to the extent permitted by applicable law and applicable exchange
rules) may grant authority to officers to grant Awards and/or execute
agreements or other documents on behalf of the Committee.

(b)                           The
Committee may, in its sole discretion, employ such legal counsel, consultants
and agents as it may deem desirable for the administration of this Plan and may
rely upon any opinion received from any such counsel or consultant and any computation
received from any such consultant or agent. Expenses incurred by the Committee
or the Board in the engagement of any such counsel, consultant or agent shall
be paid by the Company. The Committee, its members and any person designated
pursuant to sub-section (a) above shall not be liable for any action
or determination made in good faith with respect to this Plan. To the maximum
extent permitted by applicable law, no officer of the Company or member or
former member of the Committee or of the Board shall be liable for any action
or determination made in good faith with respect to this Plan or any Award
granted under it.

 9
 

 

3.7          Indemnification.
To the maximum extent permitted by applicable law and the Certificate of
Incorporation and By-Laws of the Company and to the extent not covered by
insurance directly insuring such person, each officer or employee of the
Company or any Affiliate and member or former member of the Committee or the
Board shall be indemnified and held harmless by the Company against any cost or
expense (including reasonable fees of counsel reasonably acceptable to the
Committee) or liability (including any sum paid in settlement of a claim with
the approval of the Committee), and advanced amounts necessary to pay the
foregoing at the earliest time and to the fullest extent permitted, arising out
of any act or omission to act in connection with the administration of this
Plan, except to the extent arising out of such officer’s, employee’s, member’s
or former member’s fraud. Such indemnification shall be in addition to any
rights of indemnification the officers, employees, directors or members or
former officers, directors or members may have under applicable law or under
the Certificate of Incorporation or By-Laws of the Company or any Affiliate. Notwithstanding
anything else herein, this indemnification will not apply to the actions or
determinations made by an individual with regard to Awards granted to him or
her under this Plan.

ARTICLE IV

SHARE LIMITATION

4.1          Shares.

(a)                            General
Limitations. The aggregate number of shares of Common Stock that may be
issued or used for reference purposes or with respect to which Awards may be
granted under this Plan shall not exceed 1,787,204 shares (subject to any
increase or decrease pursuant to Section 4.2), which may be either
authorized and unissued Common Stock or Common Stock held in or acquired for
the treasury of the Company or both. Any shares of Common Stock that are
subject to Awards other than Appreciation Awards shall be counted against this
limit as 3 shares for every share granted. If any Option, Stock Appreciation
Right or Other Stock-Based Award that is an Appreciation Award granted under
this Plan expires, terminates or is canceled for any reason without having been
exercised in full, the number of shares of Common Stock underlying any
unexercised Award shall again be available for the purpose of Awards under the
Plan. If any shares of Restricted Stock, Performance Shares or Other
Stock-Based Awards that are not Appreciation Awards granted under this Plan are
forfeited for any reason, the number of forfeited shares of Restricted Stock,
Performance Shares or Other Stock-Based Awards that are not Appreciation Awards
shall again be available for the purposes of Awards under the Plan, as provided
in this Section 4.1(a). If a Tandem Stock Appreciation Right or a Limited
Stock Appreciation Right is granted in tandem with an Option, such grant shall
only apply once against the maximum number of shares of Common Stock which may
be issued under this Plan. In addition, subject to the sentence below, in
determining the number of shares of Common Stock available for Awards, if,
pursuant to any applicable Committee procedures, Common Stock has been
delivered or exchanged by a Participant as full or partial payment to the
Company 

 10
 

 

                                                            for
payment of the exercise price, or for payment of withholding taxes, or if the
number shares of Common Stock otherwise deliverable has been reduced for
payment of the exercise price or for payment of withholding taxes, the number
of shares of Common Stock exchanged as payment in connection with the exercise
or for withholding or reduced shall again be available for purpose of Awards
under this Plan. Notwithstanding anything herein to the contrary, any share of
Common Stock that again becomes available for grant pursuant to this Section 4.1(a) shall
be added back as one share of Common Stock if such share were subject to an
Appreciation Award granted under the Plan and as 3 shares if such share was
subject to an Award other than an Appreciation Award granted under the Plan.

(b)           Individual
Participant Limitations.

(i)                                     The
maximum number of shares of Common Stock subject to any Award of Stock Options,
Stock Appreciation Rights or shares of Restricted Stock for which the grant of
such Award or the lapse of the relevant Restriction Period is subject to the
attainment of Performance Goals in accordance with Section 8.3(a)(ii) herein
which may be granted under this Plan during any fiscal year of the Company to
each Eligible Employee or Consultant shall be 50,000 shares per type of Award
(which shall be subject to any further increase or decrease pursuant to Section 4.2),
provided that the maximum number of shares of Common Stock for all types of
Awards does not exceed 50,000 (which shall be subject to any further increase
or decrease pursuant to Section 4.2) during any fiscal year of the Company.
If a Tandem Stock Appreciation Right is granted or a Limited Stock Appreciation
Right is granted in tandem with a Stock Option, it shall apply against the
Eligible Employee’s or Consultant’s individual share limitations for both Stock
Appreciation Rights and Stock Options.

(ii)           The maximum number
of shares of Common Stock subject to any Award of Stock Options (other than
Incentive Stock Options), Stock Appreciation Rights or Other Stock-Based Awards
which may be granted under this Plan during any fiscal year of the Company to
each Non-Employee Director shall be 25,000 shares per type of Award (which
shall be subject to any further increase or decrease pursuant to Section 4.2),
provided that the maximum number of shares of Common Stock for all types of
Awards does not exceed 25,000 (which shall be subject to any further increase
or decrease pursuant to Section 4.2) during any fiscal year of the Company.
If a Tandem Stock Appreciation Right is granted or a Limited Stock Appreciation
Right is granted in tandem with a Stock Option, it shall apply against the
Non-Employee Director’s individual share limitations for both Stock
Appreciation Rights and Stock Options.

(iii)          There are no annual
individual Eligible Employee or Consultant share limitations on Restricted
Stock for which the grant of 

 11
 

 

such Award or
the lapse of the relevant Restriction Period is not subject to attainment of
Performance Goals in accordance with Section 8.3(a)(ii) hereof.

(iv)          The maximum value at
grant of Performance Shares which may be granted under this Plan with respect
to any fiscal year of the Company to each Eligible Employee or Consultant shall
be $2,500,000. Each Performance Share shall be referenced to one share of
Common Stock and shall be charged against the available shares under this Plan
at the time the unit value measurement is converted to a referenced number of
shares of Common Stock in accordance with Section 9.1.

(v)           The maximum payment
under any Performance-Based Cash Award payable with respect to any fiscal year
of the Company and for which the grant of such Award is subject to the
attainment of Performance Goals in accordance with Section 11.2(c) herein
which may be granted under this Plan with respect to any fiscal year of the
Company to each Eligible Employee or Consultant shall be $5,000,000.

(vi)          The individual
Participant limitations set forth in this Section 4.1(b) shall be
cumulative; that is, to the extent that shares of Common Stock for which Awards
are permitted to be granted to an Eligible Employee or a Consultant during a
fiscal year are not covered by an Award to such Eligible Employee or Consultant
in a fiscal year, the number of shares of Common Stock available for Awards to
such Eligible Employee or Consultant shall automatically increase in the
subsequent fiscal years during the term of the Plan until used.

4.2          Changes. 

(a)                            The
existence of this Plan and the Awards granted hereunder shall not affect in any
way the right or power of the Board or the stockholders of the Company to make
or authorize (i) any adjustment, recapitalization, reorganization or other
change in the Company’s capital structure or its business, (ii) any merger
or consolidation of the Company or any Affiliate, (iii) any issuance of
bonds, debentures, preferred or prior preference stock ahead of or affecting
the Common Stock, (iv) the dissolution or liquidation of the Company or
any Affiliate, (v) any sale or transfer of all or part of the assets or
business of the Company or any Affiliate or (vi) any other corporate act
or proceeding.

(b)                           Subject to
the provisions of Section 4.2(d), in the event of any such change in the
capital structure or business of the Company by reason of any stock split,
reverse stock split, stock dividend, extraordinary dividend (whether cash or
stock), combination or reclassification of shares, recapitalization, merger,
consolidation, spin-off, reorganization, partial or complete liquidation,
issuance of rights or warrants to purchase any Common Stock or securities
convertible into Common Stock, any sale or transfer of all or part of the
Company’s assets or business, or any other 

 12
 

 

                                                corporate
transaction or event having an effect similar to any of the foregoing and
effected without receipt of consideration by the Company and the Committee
determines in its sole discretion that an adjustment is necessary or
appropriate under the Plan to prevent substantial dilution or enlargement of the
rights granted to, or available for, Participants under the Plan, then the
aggregate number and kind of shares that thereafter may be issued under this
Plan, the number and kind of shares or other property (including cash) to be
issued upon exercise of an outstanding Award or under other Awards granted
under this Plan and the purchase price thereof shall be appropriately adjusted
consistent with such change in such manner as the Committee may, in its sole
discretion, deem equitable to prevent substantial dilution or enlargement of
the rights granted to, or available for, Participants under this Plan, and any
such adjustment determined by the Committee shall be final, binding and
conclusive on the Company and all Participants and employees and their respective
heirs, executors, administrators, successors and assigns. In connection with
any event described in this paragraph, the Committee may provide, in its sole
discretion, for the cancellation of any outstanding Awards and payment in cash
or other property in exchange therefor. Except as provided in this Section 4.2
or in the applicable Award agreement, a Participant shall have no rights by
reason of any issuance by the Company of any class or securities convertible
into stock of any class, any subdivision or consolidation of shares of stock of
any class, the payment of any stock dividend, any other increase or decrease in
the number of shares of stock of any class, any sale or transfer of all or part
of the Company’s assets or business or any other change affecting the Company’s
capital structure or business.

(c)                            Fractional
shares of Common Stock resulting from any adjustment in Awards pursuant to Section 4.2(a) or
(b) shall be aggregated until, and eliminated at, the time of exercise by
rounding-down for fractions less than one-half and rounding-up for fractions
equal to or greater than one-half. No cash settlements shall be made with
respect to fractional shares eliminated by rounding. Notice of any adjustment
shall be given by the Committee to each Participant whose Award has been
adjusted and such adjustment (whether or not such notice is given) shall be
effective and binding for all purposes of this Plan.

(d)                           In the
event of an Acquisition Event, the Committee may, in its sole discretion,
terminate all outstanding and unexercised Stock Options or Stock Appreciation
Rights or any Other Stock Based Award that provides for a Participant elected
exercise effective as of the date of the Acquisition Event, by delivering
notice of termination to each Participant at least 20 days prior to the date of
consummation of the Acquisition Event, in which case during the period from the
date on which such notice of termination is delivered to the consummation of
the Acquisition Event, each such Participant shall have the right to exercise
in full all of his or her Stock Options or Stock Appreciation Rights that are
then outstanding (without 

 13
 

 

                                                regard
to any limitations on exercisability otherwise contained in the Award
agreements), but any such exercise shall be contingent on the occurrence of the
Acquisition Event, and, provided that, if the Acquisition Event does not take
place within a specified period after giving such notice for any reason
whatsoever, the notice and exercise pursuant thereto shall be null and void.

If an Acquisition Event occurs but the Committee does not terminate the
outstanding Awards pursuant to this Section 4.2(d), then the provisions of
Section 4.2(b) and Article XIV shall apply.

4.3          Minimum Purchase Price.
Notwithstanding any provision of this Plan to the contrary, if authorized but
previously unissued shares of Common Stock are issued under this Plan, such
shares shall not be issued for a consideration that is less than as permitted
under applicable law.

4.4          Assumption of Awards. Awards
that were granted on or prior to the Effective Date under the (i) United
Industrial Corporation 1994 Stock Option Plan, as amended, (ii) United
Industrial Corporation 1996 Stock Option Plan for Nonemployee Directors, as
amended, and (iii) United Industrial Corporation 2004 Stock Option Plan,
shall be transferred and assumed by the Plan as of the Effective Date, and
shall be subject to this Plan’s share reserves and provisions in respect of
adjustments as set forth above in Section 4.1 and 4.2; provided that such
Awards shall otherwise continue to be governed by the terms of the applicable
agreement in effect prior to such assumption and transfer.

ARTICLE V

ELIGIBILITY AND GENERAL
REQUIREMENTS FOR AWARDS

5.1          General Eligibility.
All Eligible Employees, Consultants, Non-Employee Directors and prospective
employees and consultants are eligible to be granted Awards, subject to the
terms and conditions of this Plan. Eligibility for the grant of Awards and
actual participation in this Plan shall be determined by the Committee in its
sole discretion.

5.2          Incentive Stock Options.
Notwithstanding anything herein to the contrary, only Eligible Employees of the
Company, its Subsidiaries and its Parent (if any) are eligible to be granted
Incentive Stock Options under this Plan. Eligibility for the grant of an
Incentive Stock Option and actual participation in this Plan shall be
determined by the Committee in its sole discretion.

5.3          General Requirement.
The vesting and exercise of Awards granted to a prospective employee or
consultant are conditioned upon such individual actually becoming an Eligible
Employee or Consultant.

5.4          Minimum Vesting Conditions. All
Awards other than Cash-Based Performance Awards must be granted subject to a
minimum one-year vesting condition, other than in the case of the Participant’s
death during that one-year period or in the case of a Change in Control if
applicable pursuant to Article XIV.

 

 14

 

 

ARTICLE VI

STOCK OPTIONS

6.1          Options.
Stock Options may be granted alone or in addition to other Awards granted under
this Plan. Each Stock Option granted under this Plan shall be of one of two
types: (a) an Incentive Stock Option or (b) a Non-Qualified Stock
Option.

6.2          Grants. The
Committee shall, in its sole discretion, have the authority to grant to any
Eligible Employee (subject to Section 5.2) Incentive Stock Options,
Non-Qualified Stock Options, or both types of Stock Options. The Committee shall,
in its sole discretion, have the authority to grant any Consultant or
Non-Employee Director Non-Qualified Stock Options. To the extent that any Stock
Option does not qualify as an Incentive Stock Option (whether because of its
provisions or the time or manner of its exercise or otherwise), such Stock
Option or the portion thereof which does not qualify shall constitute a
separate Non-Qualified Stock Option.

6.3          Terms of Options.
Options granted under this Plan shall be subject to the following terms and
conditions and shall be in such form and contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee, in
its sole discretion, shall deem desirable:

(a)                            Exercise
Price. The exercise price per share of Common Stock subject to a Stock
Option shall be determined by the Committee at the time of grant, provided that
the per share exercise price of a Stock Option shall not be less than 100% (or,
in the case of an Incentive Stock Option granted to a Ten Percent Stockholder,
110%) of the Fair Market Value of the Common Stock at the time of grant.

(b)                           Stock
Option Term. The term of each Stock Option shall be fixed by the Committee,
provided that no Stock Option shall be exercisable more than 10 years after the
date the Option is granted; and provided further that the term of an Incentive
Stock Option granted to a Ten Percent Stockholder shall not exceed five years.

(c)                            Exercisability.
Stock Options shall be exercisable at such time or times and subject to such
terms and conditions as shall be determined by the Committee at grant. If the
Committee provides, in its discretion, that any Stock Option is exercisable
subject to certain limitations (including, without limitation, that such Stock
Option is exercisable only in installments or within certain time periods), the
Committee may waive such limitations on the exercisability at any time at or
after grant in whole or in part (including, without limitation, waiver of the
installment exercise provisions or acceleration of the time at which such Stock
Option may be exercised), based on such factors, if any, as the Committee shall
determine, in its sole discretion. Unless otherwise determined by the Committee
at grant, the Option agreement shall provide that (i) in the event the
Participant engages in Detrimental Activity prior to any exercise of the Stock
Option, all Stock Options held by the Participant shall thereupon terminate and
expire, (ii) as a condition of the exercise of a 

 15
 

 

                                                Stock
Option, the Participant shall be required to certify (or shall be deemed to
have certified) at the time of exercise in a manner acceptable to the Company
that the Participant is in compliance with the terms and conditions of the Plan
and that the Participant has not engaged in, and does not intend to engage in,
any Detrimental Activity, and (iii) in the event the Participant engages
in Detrimental Activity during the one-year period commencing on the later of
the date the Stock Option is exercised or the date of the Participant’s Termination,
the Company shall be entitled to recover from the Participant at any time
within one year after such date, and the Participant shall pay over to the
Company, an amount equal to any gain realized as a result of the exercise
(whether at the time of exercise or thereafter).

(d)                           Method
of Exercise. Subject to whatever installment exercise and waiting period
provisions apply under subsection (c) above, to the extent vested, Stock
Options may be exercised in whole or in part at any time during the Option
term, by giving written notice of exercise to the Company specifying the number
of shares of Common Stock to be purchased. Such notice shall be accompanied by
payment in full of the purchase price as follows: (i) in cash or by check,
bank draft or money order payable to the order of the Company; (ii) solely
to the extent permitted by applicable law, if the Common Stock is traded on a
national securities exchange, The New York Stock Exchange or quoted on a
national quotation system sponsored by the National Association of Securities
Dealers, and the Committee authorizes, through a procedure whereby the
Participant delivers irrevocable instructions to a broker reasonably acceptable
to the Committee to deliver promptly to the Company an amount equal to the
purchase price; or (iii) on such other terms and conditions as may be
acceptable to the Committee (including, without limitation, the relinquishment
of Stock Options or by payment in full or in part in the form of Common Stock
owned by the Participant based on the Fair Market Value of the Common Stock on
the payment date as determined by the Committee, in its sole discretion). No
shares of Common Stock shall be issued until payment therefor, as provided
herein, has been made or provided for.

(e)                            Non-Transferability
of Options. No Stock Option shall be Transferable by the Participant
otherwise than by will or by the laws of descent and distribution, and all
Stock Options shall be exercisable, during the Participant’s lifetime, only by
the Participant. Notwithstanding the foregoing, the Committee may determine, in
its sole discretion, at the time of grant or thereafter that a Non-Qualified
Stock Option that is otherwise not Transferable pursuant to this Section is
Transferable to a Family Member in whole or in part and in such circumstances,
and under such conditions, as determined by the Committee, in its sole
discretion. A Non-Qualified Stock Option that is Transferred to a Family Member
pursuant to the preceding sentence (i) may not be subsequently Transferred
otherwise than by will or by the laws of descent and distribution and (ii) 

 16
 

 

                                                remains
subject to the terms of this Plan and the applicable Award agreement. Any
shares of Common Stock acquired upon the exercise of a Non-Qualified Stock
Option by a permissible transferee of a Non-Qualified Stock Option or a
permissible transferee pursuant to a Transfer after the exercise of the
Non-Qualified Stock Option shall be subject to the terms of this Plan and the
applicable Award agreement.

(f)                              Incentive
Stock Option Limitations. To the extent that the aggregate Fair Market
Value (determined as of the time of grant) of the Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by an Eligible
Employee during any calendar year under this Plan and/or any other stock option
plan of the Company, any Subsidiary or any Parent exceeds $100,000, such
Options shall be treated as Non-Qualified Stock Options. Should any
provision of this Plan not be necessary in order for the Stock Options to
qualify as Incentive Stock Options, or should any additional provisions be
required, the Committee may, in its sole discretion, amend this Plan
accordingly, without the necessity of obtaining the approval of the
stockholders of the Company.

(g)                           Form,
Modification, Extension and Renewal of Stock Options. Subject to the terms
and conditions and within the limitations of this Plan, Stock Options shall be
evidenced by such form of agreement or grant as is approved by the Committee,
and the Committee may, in its sole discretion (i) modify, extend or renew
outstanding Stock Options granted under this Plan (provided that the rights of
a Participant are not reduced without his or her consent and provided further
that such action does not subject the Stock Options to Section 409A of the
Code), and (ii) accept the surrender of outstanding Stock Options (up to
the extent not theretofore exercised) and authorize the granting of new Stock
Options in substitution therefor (to the extent not theretofore exercised). Notwithstanding
the foregoing, an outstanding Option may not be modified to reduce the exercise
price thereof nor may a new Option at a lower price be substituted for a
surrendered Option (other than adjustments or substitutions in accordance with Section 4.2),
unless such action is approved by the stockholders of the Company.

(h)                           Early
Exercise. The Committee may provide that a Stock Option include a provision
whereby the Participant may elect at any time before the Participant’s
Termination to exercise the Stock Option as to any part or all of the shares of
Common Stock subject to the Stock Option prior to the full vesting of the Stock
Option and such shares shall be subject to the provisions of Article VIII
and treated as Restricted Stock. Any unvested shares of Common Stock so
purchased may be subject to a repurchase option in favor of the Company or to
any other restriction the Committee determines to be appropriate.

 17
 

 

(i)                               Other
Terms and Conditions. Stock Options may contain such other provisions,
which shall not be inconsistent with any of the terms of this Plan, as the
Committee shall, in its sole discretion, deem appropriate.

ARTICLE VII

STOCK APPRECIATION RIGHTS

7.1          Tandem
Stock Appreciation Rights. Stock
Appreciation Rights may be granted in conjunction with all or part of any Stock
Option (a “Reference Stock Option”) granted under this Plan (“Tandem Stock
Appreciation Rights”). In the case of a Non-Qualified Stock Option, such rights
may be granted either at or after the time of the grant of such Reference Stock
Option. In the case of an Incentive Stock Option, such rights may be granted
only at the time of the grant of such Reference Stock Option.

7.2          Terms
and Conditions of Tandem Stock Appreciation Rights.
Tandem Stock Appreciation Rights granted hereunder shall be subject to such
terms and conditions, not inconsistent with the provisions of this Plan, as
shall be determined from time to time by the Committee in its sole discretion,
and the following:

(a)                            Exercise
Price. The exercise price per share of Common Stock subject to a Tandem
Stock Appreciation Right shall be determined by the Committee at the time of
grant, provided that the per share exercise price of a Tandem Stock
Appreciation Right shall not be less than 100% of the Fair Market Value of the
Common Stock at the time of grant.

(b)                           Term.
A Tandem Stock Appreciation Right or applicable portion thereof granted with
respect to a Reference Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the Reference Stock Option,
except that, unless otherwise determined by the Committee, in its sole
discretion, at the time of grant, a Tandem Stock Appreciation Right granted
with respect to less than the full number of shares covered by the Reference
Stock Option shall not be reduced until and then only to the extent the
exercise or termination of the Reference Stock Option causes the number of
shares covered by the Tandem Stock Appreciation Right to exceed the number of
shares remaining available and unexercised under the Reference Stock Option.

(c)                            Exercisability.
Tandem Stock Appreciation Rights shall be exercisable only at such time or
times and to the extent that the Reference Stock Options to which they relate
shall be exercisable in accordance with the provisions of Article VI, and
shall be subject to the provisions of Section 6.3(c).

(d)                           Method
of Exercise. A Tandem Stock Appreciation Right may be exercised by the
Participant by surrendering the applicable portion of the Reference Stock
Option. Upon such exercise and surrender, the Participant shall be entitled to
receive the payment determined in the 

 18
 

 

                                                manner
prescribed in this Section 7.2. Stock Options which have been so
surrendered, in whole or in part, shall no longer be exercisable to the extent
the related Tandem Stock Appreciation Rights have been exercised.

(e)                            Payment.
Upon the exercise of a Tandem Stock Appreciation Right, a Participant shall be
entitled to receive up to, but no more than, an amount in cash and/or shares of
Common Stock (as chosen by the Committee in its sole discretion at grant, or
thereafter if no rights of a Participant are reduced) equal in value to the
excess of the Fair Market Value of one share of Common Stock over the Option
exercise price per share specified in the Reference Stock Option agreement,
multiplied by the number of shares in respect of which the Tandem Stock
Appreciation Right shall have been exercised.

(f)                              Deemed
Exercise of Reference Stock Option. Upon the exercise of a Tandem Stock
Appreciation Right, the Reference Stock Option or part thereof to which such
Stock Appreciation Right is related shall be deemed to have been exercised for
the purpose of the limitation set forth in Article IV of the Plan on the
number of shares of Common Stock to be issued under the Plan.

(g)                           Non-Transferability.
Tandem Stock Appreciation Rights shall be Transferable only when and to the
extent that the underlying Stock Option would be Transferable under Section 6.3(e) of
the Plan.

7.3          Non-Tandem
Stock Appreciation Rights. Non-Tandem Stock
Appreciation Rights may also be granted without reference to any Stock Options
granted under this Plan.

7.4          Terms
and Conditions of Non-Tandem Stock Appreciation Rights.
Non-Tandem Stock Appreciation Rights granted hereunder shall be subject to such
terms and conditions, not inconsistent with the provisions of this Plan, as
shall be determined from time to time by the Committee in its sole discretion,
and the following:

(a)                            Exercise
Price. The exercise price per share of Common Stock subject to a Non-Tandem
Stock Appreciation Right shall be determined by the Committee at the time of
grant, provided that the per share exercise price of a Non-Tandem Stock
Appreciation Right shall not be less than 100% of the Fair Market Value of the
Common Stock at the time of grant.

(b)                           Term.
The term of each Non-Tandem Stock Appreciation Right shall be fixed by the
Committee, but shall not be greater than 10 years after the date the right is
granted.

(c)                            Exercisability.
Non-Tandem Stock Appreciation Rights shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the
Committee at grant. If the Committee provides, in its discretion, that any such
right is exercisable subject to certain limitations (including, without
limitation, that it is exercisable only in installments or within certain time
periods), the Committee may waive 

 19
 

 

                                                such
limitations on the exercisability at any time at or after grant in whole or in
part (including, without limitation, waiver of the installment exercise
provisions or acceleration of the time at which such right may be exercised),
based on such factors, if any, as the Committee shall determine, in its sole
discretion. Unless otherwise determined by the Committee at grant, the Award
agreement shall provide that (i) in the event the Participant engages in
Detrimental Activity prior to any exercise of the Non-Tandem Stock Appreciation
Right, all Non-Tandem Stock Appreciation Rights held by the Participant shall
thereupon terminate and expire, (ii) as a condition of the exercise of a
Non-Tandem Stock Appreciation Right, the Participant shall be required to
certify (or shall be deemed to have certified) at the time of exercise in a
manner acceptable to the Company that the Participant is in compliance with the
terms and conditions of the Plan and that the Participant has not engaged in,
and does not intend to engage in, any Detrimental Activity, and (iii) in
the event the Participant engages in Detrimental Activity during the one-year
period commencing on the later of the date the Non-Tandem Stock Appreciation
Right is exercised or the date of the Participant’s Termination, the Company
shall be entitled to recover from the Participant at any time within one year
after such date, and the Participant shall pay over to the Company, an amount
equal to any gain realized as a result of the exercise (whether at the time of
exercise or thereafter).

(d)                           Method
of Exercise. Subject to whatever installment exercise and waiting period
provisions apply under subsection (c) above, Non-Tandem Stock Appreciation
Rights may be exercised in whole or in part at any time in accordance with the
applicable Award agreement, by giving written notice of exercise to the Company
specifying the number of Non-Tandem Stock Appreciation Rights to be exercised.

(e)                            Payment.
Upon the exercise of a Non-Tandem Stock Appreciation Right a Participant shall
be entitled to receive, for each right exercised, up to, but no more than, an
amount in cash and/or shares of Common Stock (as chosen by the Committee in its
sole discretion at grant, or thereafter if no rights of a Participant are
reduced) equal in value to the excess of the Fair Market Value of one share of
Common Stock on the date the right is exercised over the Fair Market Value of
one share of Common Stock on the date the right was awarded to the Participant.

(f)                              Non-Transferability.
No Non-Tandem Stock Appreciation Rights shall be Transferable by the
Participant otherwise than by will or by the laws of descent and distribution,
and all such rights shall be exercisable, during the Participant’s lifetime,
only by the Participant.

7.5          Limited
Stock Appreciation Rights. The Committee
may, in its sole discretion, grant Tandem and Non-Tandem Stock Appreciation
Rights either as a general Stock Appreciation Right or as a Limited Stock
Appreciation Right. Limited Stock Appreciation Rights may be exercised only
upon the occurrence of a Change in Control or such other event as 

 20
 

 

the Committee may, in its sole discretion, designate at the time of
grant or thereafter. Upon the exercise of Limited Stock Appreciation Rights,
except as otherwise provided in an Award agreement, the Participant shall
receive in cash or Common Stock, as determined by the Committee, an amount
equal to the amount (a) set forth in Section 7.2(e) with respect
to Tandem Stock Appreciation Rights, or (b) set forth in Section 7.4(e) with
respect to Non-Tandem Stock Appreciation Rights, as applicable.

ARTICLE VIII

RESTRICTED STOCK

8.1          Awards of Restricted Stock.
Shares of Restricted Stock may be issued either alone or in addition to other
Awards granted under the Plan. The Committee shall, in its sole discretion,
determine the Eligible Employees, Consultants and Non-Employee Directors, to
whom, and the time or times at which, grants of Restricted Stock shall be made,
the number of shares to be awarded, the price (if any) to be paid by the
Participant (subject to Section 8.2), the time or times within which such
Awards may be subject to forfeiture, the vesting schedule and rights to
acceleration thereof, and all other terms and conditions of the Awards. The
Committee may condition the grant or vesting of Restricted Stock upon the
attainment of specified performance targets (including, the Performance Goals
specified in Exhibit A attached hereto) or such other factors as the
Committee may determine, in its sole discretion, including to comply with the
requirements of Section 162(m) of the Code.

Unless otherwise
determined by the Committee at grant, each Award of Restricted Stock shall
provide that in the event the Participant engages in Detrimental Activity prior
to, or during the one-year period after, any vesting of Restricted Stock, the
Committee may direct that all unvested Restricted Stock shall be immediately
forfeited to the Company and that the Participant shall pay over to the Company
an amount equal to the Fair Market Value at the time of vesting of any
Restricted Stock which had vested in the period referred to above.

8.2          Awards and Certificates.
Eligible Employees, Consultants and Non-Employee Directors selected to receive
Restricted Stock shall not have any rights with respect to such Award, unless
and until such Participant has delivered a fully executed copy of the agreement
evidencing the Award to the Company and has otherwise complied with the
applicable terms and conditions of such Award. Further, such Award shall be
subject to the following conditions:

(a)                            Purchase
Price. The purchase price of Restricted Stock shall be fixed by the
Committee. Subject to Section 4.3, the purchase price for shares of
Restricted Stock may be zero to the extent permitted by applicable law, and, to
the extent not so permitted, such purchase price may not be less than par value.

(b)                           Acceptance.
Awards of Restricted Stock must be accepted within a period of 60 days (or such
other period as the Committee may specify) after the grant date, by executing a
Restricted Stock agreement and by paying whatever price (if any) the Committee
has designated thereunder.

(c)                            Legend.
Each Participant receiving Restricted Stock shall be issued a stock certificate
in respect of such shares of Restricted Stock, unless the 

 21
 

 

                                                Committee
elects to use another system, such as book entries by the transfer agent, as
evidencing ownership of shares of Restricted Stock. Such certificate shall be
registered in the name of such Participant, and shall, in addition to such
legends required by applicable securities laws, bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Award,
substantially in the following form:

“The anticipation, alienation, attachment, sale,
transfer, assignment, pledge, encumbrance or charge of the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the United Industrial Corporation (the “Company”) 2006 Long Term
Incentive Plan (the “Plan”) and an agreement entered into between the
registered owner and the Company dated                   .
Copies of such Plan and agreement are on file at the principal office of the
Company.”

(d)                           Custody.
If stock certificates are issued in respect of shares of Restricted Stock, the
Committee may require that any stock certificates evidencing such shares be held
in custody by the Company until the restrictions thereon shall have lapsed, and
that, as a condition of any grant of Restricted Stock, the Participant shall
have delivered a duly signed stock power, endorsed in blank, relating to the
Common Stock covered by such Award.

8.3          Restrictions and Conditions.
The shares of Restricted Stock awarded pursuant to this Plan shall be subject
to the following restrictions and conditions:

(a)                            Restriction
Period. (i)  The Participant shall not be permitted to Transfer shares
of Restricted Stock awarded under this Plan during the period or periods set by
the Committee (the “Restriction Period”) commencing on the date of such Award,
as set forth in the Restricted Stock Award agreement and such agreement shall
set forth a vesting schedule and any events which would accelerate vesting of
the shares of Restricted Stock. Within these limits, based on service,
attainment of performance goals pursuant to Section 8.3(a)(ii) below
and/or such other factors or criteria as the Committee may determine in its
sole discretion, the Committee may condition the grant or provide for the lapse
of such restrictions in installments in whole or in part, or may accelerate the
vesting of all or any part of any Restricted Stock Award and/or waive the
deferral limitations for all or any part of any Restricted Stock Award.

(ii)           Objective Performance Goals, Formulae or Standards.
If the grant of shares of Restricted Stock or the lapse of restrictions is
based on the attainment of Performance Goals, the Committee shall establish the
Performance Goals and the applicable vesting percentage of the Restricted Stock
Award applicable to each Participant or class of Participants in writing prior
to the beginning of the applicable fiscal year or at such later date as
otherwise determined by the Committee and while the outcome of the Performance
Goals are substantially uncertain. Such Performance 

 22
 

 

Goals may
incorporate provisions for disregarding (or adjusting for) changes in
accounting methods, corporate transactions (including, without limitation,
dispositions and acquisitions) and other similar type events or circumstances. With
regard to a Restricted Stock Award that is intended to comply with Section 162(m) of
the Code, to the extent any such provision would create impermissible
discretion under Section 162(m) of the Code or otherwise violate Section 162(m) of
the Code, such provision shall be of no force or effect. The applicable
Performance Goals shall be based on one or more of the performance criteria set
forth in Exhibit A hereto.

(b)                           Rights
as a Stockholder. Except as provided in this subsection (b) and
subsection (a) above and as otherwise determined by the Committee, the
Participant shall have, with respect to the shares of Restricted Stock, all of
the rights of a holder of shares of Common Stock of the Company including,
without limitation, the right to receive any dividends, the right to vote such
shares and, subject to and conditioned upon the full vesting of shares of
Restricted Stock, the right to tender such shares. The Committee may, in its
sole discretion, determine at the time of grant that the payment of dividends
shall be deferred until, and conditioned upon, the expiration of the applicable
Restriction Period.

(c)                            Lapse
of Restrictions. If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock, the certificates for such shares shall be
delivered to the Participant. All legends shall be removed from said
certificates at the time of delivery to the Participant, except as otherwise
required by applicable law or other limitations imposed by the Committee.

ARTICLE IX

PERFORMANCE SHARES

9.1          Award of Performance Shares.
Performance Shares may be awarded either alone or in addition to other Awards
granted under this Plan. The Committee shall, in its sole discretion, determine
the Eligible Employees, Consultants and Non-Employee Directors, to whom, and
the time or times at which, Performance Shares shall be awarded, the number of
Performance Shares to be awarded to any person, the Performance Period during
which, and the conditions under which, receipt of the Shares will be deferred,
and the other terms and conditions of the Award in addition to those set forth
in Section 9.2.

Unless otherwise
determined by the Committee at grant, each Award of Performance Shares shall
provide that in the event the Participant engages in Detrimental Activity prior
to, or during the one-year period after the later of the date of any vesting of
Performance Shares or the date of the Participant’s Termination, the Committee
may direct (at any time within one year thereafter) that all unvested
Performance Shares shall be immediately forfeited to the Company and that the
Participant shall pay over to the Company an amount equal to any gain the
Participant realized from any Performance Shares which had vested in the period
referred to above.

 23
 

 

Except as otherwise
provided herein, the Committee shall condition the right to payment of any
Performance Share upon the attainment of objective performance goals
established pursuant to Section 9.2(c) below.

9.2          Terms and Conditions.
Performance Shares awarded pursuant to this Article IX shall be subject to
the following terms and conditions:

(a)                            Earning
of Performance Share Award. At the expiration of the applicable Performance
Period, the Committee shall determine the extent to which the performance goals
established pursuant to Section 9.2(c) are achieved and the
percentage of each Performance Share Award that has been earned.

(b)                           Non-Transferability.
Subject to the applicable provisions of the Award agreement and this Plan,
Performance Shares may not be Transferred during the Performance Period.

(c)                            Objective
Performance Goals, Formulae or Standards. The Committee shall establish the
objective Performance Goals for the earning of Performance Shares based on a
Performance Period applicable to each Participant or class of Participants in
writing prior to the beginning of the applicable Performance Period or at such
later date as permitted under Section 162(m) of the Code and while
the outcome of the Performance Goals are substantially uncertain. Such
Performance Goals may incorporate, if and only to the extent permitted under Section 162(m) of
the Code, provisions for disregarding (or adjusting for) changes in accounting
methods, corporate transactions (including, without limitation, dispositions
and acquisitions) and other similar type events or circumstances. To the extent
any such provision would create impermissible discretion under Section 162(m) of
the Code or otherwise violate Section 162(m) of the Code, such
provision shall be of no force or effect. The applicable Performance Goals
shall be based on one or more of the performance criteria set forth in Exhibit A
hereto.

(d)                           Dividends.
Unless otherwise determined by the Committee at the time of grant, amounts
equal to any dividends declared during the Performance Period with respect to
the number of shares of Common Stock covered by a Performance Share will not be
paid to the Participant.

(e)                            Payment.
Following the Committee’s determination in accordance with subsection (a) above,
shares of Common Stock or, as determined by the Committee in its sole
discretion, the cash equivalent of such shares shall be delivered to the Eligible
Employee, Consultant or Non-Employee Director, or his legal representative, in
an amount equal to such individual’s earned Performance Share. Notwithstanding
the foregoing, the Committee may, in its sole discretion, award an amount less
than the earned Performance Share and/or subject the payment of all or part of
any Performance Share to additional vesting, forfeiture and deferral conditions
as it deems appropriate.

 24
 

 

(f)                              Accelerated
Vesting. Based on service, performance and/or such other factors or
criteria, if any, as the Committee may determine, the Committee may, in its
sole discretion, at or after grant, accelerate the vesting of all or any part
of any Performance Share Award and/or waive the deferral limitations for all or
any part of such Award.

ARTICLE X

OTHER STOCK-BASED AWARDS

10.1        Other Awards.
The Committee, in its sole discretion, 
is authorized to grant to Eligible Employees, Consultants and
Non-Employee Directors Other Stock-Based Awards that are payable in,
valued in whole or in part by reference to, or otherwise based on or related to
shares of Common Stock, including, but not limited to, shares of Common Stock
awarded purely as a bonus and not subject to any restrictions or conditions,
shares of Common Stock in payment of the amounts due under an incentive or
performance plan sponsored or maintained by the Company or an Affiliate,
performance units, dividend equivalent units, stock equivalent units,
restricted stock units and deferred stock units. To the extent permitted by
law, the Committee may, in its sole discretion, permit Eligible Employees
and/or Non-Employee Directors to defer all or a portion of their cash
compensation in the form of Other Stock-Based Awards granted under this Plan,
subject to the terms and conditions of any deferred compensation arrangement
established by the Company, which shall be intended to comply with Section 409A
of the Code. Other Stock-Based Awards may be granted either alone or in
addition to or in tandem with other Awards granted under the Plan.

Subject to the provisions
of this Plan, the Committee shall, in its sole discretion, have authority to
determine the Eligible Employees, Consultants and Non-Employee Directors, to
whom, and the time or times at which, such Awards shall be made, the number of
shares of Common Stock to be awarded pursuant to such Awards, and all other
conditions of the Awards. The Committee may also provide for the grant of
Common Stock under such Awards upon the completion of a specified performance
period.

The Committee may
condition the grant or vesting of Other Stock-Based Awards upon the attainment
of specified Performance Goals set forth on Exhibit A as the Committee may
determine, in its sole discretion; provided that to the extent that such Other
Stock-Based Awards are intended to comply with Section 162(m) of the
Code, the Committee shall establish the objective Performance Goals for the
vesting of such Other Stock-Based Awards based on a performance period
applicable to each Participant or class of Participants in writing prior to the
beginning of the applicable performance period or at such later date as
permitted under Section 162(m) of the Code and while the outcome of
the Performance Goals are substantially uncertain. Such Performance Goals may
incorporate, if and only to the extent permitted under Section 162(m) of
the Code, provisions for disregarding (or adjusting for) changes in accounting
methods, corporate transactions (including, without limitation, dispositions
and acquisitions) and other similar type events or circumstances. To the extent
any such provision would create impermissible discretion under Section 162(m) of
the Code or otherwise violate Section 162(m) of the Code, such
provision shall be of no force or effect. The applicable Performance Goals shall
be based on one or more of the performance criteria set forth in Exhibit A
hereto.

 25
 

 

10.2        Terms
and Conditions. Other Stock-Based Awards made pursuant to this Article X
shall be subject to the following terms and conditions:

(a)                            Non-Transferability.
Subject to the applicable provisions of the Award agreement and this Plan,
shares of Common Stock subject to Awards made under this Article X may not
be Transferred prior to the date on which the shares are issued, or, if later,
the date on which any applicable restriction, performance or deferral period
lapses.

(b)                           Dividends.
Unless otherwise determined by the Committee at the time of Award, subject to
the provisions of the Award agreement and this Plan, the recipient of an Award
under this Article X shall not be entitled to receive, currently or on a
deferred basis, dividends or dividend equivalents with respect to the number of
shares of Common Stock covered by the Award.

(c)                            Vesting.
Any Award under this Article X and any Common Stock covered by any such
Award shall vest or be forfeited to the extent so provided in the Award
agreement, as determined by the Committee, in its sole discretion.

(d)                           Price.
Common Stock issued on a bonus basis under this Article X may be issued
for no cash consideration; Common Stock purchased pursuant to a purchase right
awarded under this Article X shall be priced, as determined by the
Committee in its sole discretion.

(e)                            Payment.
Form of payment for the Other Stock-Based Award shall be specified in the
Award agreement.

ARTICLE XI

PERFORMANCE-BASED CASH
AWARDS

11.1        Performance-Based Cash Awards.
Performance-Based Cash Awards may be granted either alone or in addition to or
in tandem with Stock Options, Stock Appreciation Rights, or Restricted Stock. Subject
to the provisions of this Plan, the Committee shall, in its sole discretion,
have authority to determine the Eligible Employees and Consultants to whom, and
the time or times at which, such Awards shall be made, the dollar amount to be
awarded pursuant to such Awards, and all other conditions of the Awards. Notwithstanding
anything herein to the contrary, Non-Employee Directors are not eligible to
receive Performance-Based Cash Awards. The Committee may also provide for the
payment of dollar amount under such Awards upon the completion of a specified
Performance Period.

For each Participant, the Committee may specify a
targeted performance award. The individual target award may be expressed, at
the Committee’s discretion, as a fixed dollar amount, a percentage of base pay
or total pay (excluding payments made under the Plan), or an amount determined
pursuant to an objective formula or standard. Establishment of an individual
target award for a Participant for a calendar year shall not imply or require
that the same level individual target award (if any such award is established
by the Committee for the relevant 

 26
 

 

Participant) be set for
any subsequent calendar year. At the time the Performance Goals are
established, the Committee shall prescribe a formula to determine the
percentages (which may be greater than 100%) of the individual target award
which may be payable based upon the degree of attainment of the Performance
Goals during the calendar year. Notwithstanding anything else herein, the
Committee may, in its sole discretion, elect to pay a Participant an amount
that is less than the Participant’s individual target award (or attained
percentage thereof) regardless of the degree of attainment of the Performance
Goals; provided that, with respect to a performance period in which a Change in
Control occurs, the Performance Goals in respect of such performance period
shall be deemed fully satisfied as of the date of such Change in Control, and
Eligible Employees who are Participants at the time of such Change in Control
shall be deemed to have attained a pro rata portion of their individual target
awards, pro rated based on the portion of the performance period that has
elapsed from such Eligible Employee’s designation as a Participant in respect
of such performance period through the date of such Change in Control.

11.2        Terms and Conditions.
Performance-Based Awards made pursuant to this Article XI shall be subject
to the following terms and conditions:

(a)                            Vesting
of Performance-Based Cash Award. At the expiration of the applicable
Performance Period, the Committee shall determine and certify in writing the
extent to which the Performance Goals established pursuant to Section 11.2(c) are
achieved and the percentage of the Participant’s individual target award has
been vested and earned.

(b)                           Waiver
of Limitation. In the event of the Participant’s Retirement, Disability or
death, or in cases of special circumstances, the Committee may, in its sole
discretion, waive in whole or in part any or all of the limitations imposed
hereunder (if any) with respect to any or all of an Award under this Article XI.

(c)                            Objective
Performance Goals, Formulae or Standards.

(i)            The Committee shall
establish the objective Performance Goals and the individual target award (if any)
applicable to each Participant or class of Participants in writing prior to the
beginning of the applicable Performance Period or at such later date as
permitted under Section 162(m) of the Code and while the outcome of
the Performance Goals are substantially uncertain. Such Performance Goals may
incorporate, if and only to the extent permitted under Section 162(m) of
the Code, provisions for disregarding (or adjusting for) changes in accounting
methods, corporate transactions (including, without limitation, dispositions
and acquisitions) and other similar type events or circumstances. To the extent
any Performance-Based Award is intended to comply with the provisions of Section 162(m) of
the Code, if any provision would create impermissible discretion under Section 162(m) of
the Code or otherwise violate Section 162(m) of the Code, such
provision shall be of no force or effect. The applicable Performance Goals
shall be based on one or more of the performance criteria set forth in Exhibit A
hereto.

 27
 

 

(ii)           The measurements
used in Performance Goals set under the Plan shall be determined in accordance
with Generally Accepted Accounting Principles (“GAAP”), except, to the extent
that any objective Performance Goals are used, if any measurements require
deviation from GAAP, such deviation shall be at the discretion of the Committee
at the time the Performance Goals are set or at such later time to the extent
permitted under Section 162(m) of the Code.

(d)                           Payment.
Following the Committee’s determination and certification in accordance with
subsection (a) above, the Performance-Based Cash Award amount shall be
delivered to the Eligible Employee, Consultant or Non-Employee Director, or his
legal representative, in accordance with the terms and conditions of the Award
agreement.

ARTICLE XII

TERMINATION

12.1        Termination.
The following rules apply with regard to the Termination of a Participant.

(a)                            Rules Applicable to Stock Option and Stock Appreciation Rights. Unless
otherwise determined by the Committee at grant (or, if no rights of the
Participant are reduced, thereafter):

(i)            Termination by Reason of Death, Disability or Retirement. If
a Participant’s Termination is by reason of death, Disability or the
Participant’s Retirement, all Stock Options or Stock Appreciation Rights that
are held by such Participant that are vested and exercisable at the time of the
Participant’s Termination may be exercised by the Participant (or, in the case
of death, by the legal representative of the Participant’s estate) at any time
within a one-year period from the date of such Termination, but in no event
beyond the expiration of the stated term of such Stock Options or Stock
Appreciation Rights; provided, however, if the Participant dies within such
exercise period, all unexercised Stock Options or Stock Appreciation Rights
held by such Participant shall thereafter be exercisable, to the extent to
which they were exercisable at the time of death, for a period of one year from
the date of such death, but in no event beyond the expiration of the stated
term of such Stock Options or Stock Appreciation Rights.

(ii)           Involuntary Termination Without Cause. If a Participant’s
Termination is by involuntary termination without Cause, all Stock Options or
Stock Appreciation Rights that are held by such Participant that are vested and
exercisable at the time of the Participant’s Termination may be exercised by
the Participant at any time within a period of 90 days from the date of such
Termination, but in no event beyond the expiration of the stated term of such
Stock Options or Stock Appreciation Rights.

 28
 

 

(iii)          Voluntary Termination. If a Participant’s Termination is
voluntary (other than a voluntary termination described in Section 12.2(a)(iv)(2) below,
or a Retirement), all Stock Options or Stock Appreciation Rights that are held
by such Participant that are vested and exercisable at the time of the
Participant’s Termination may be exercised by the Participant at any time
within a period of 30 days from the date of such Termination, but in no event
beyond the expiration of the stated terms of such Stock Options or Stock
Appreciation Rights.

(iv)          Termination
for Cause. If a Participant’s Termination: (1) is for Cause or (2) is
a voluntary Termination (as provided in sub-section (iii) above) or a
Retirement after the occurrence of an event that would be grounds for a
Termination for Cause, all Stock Options or Stock Appreciation Rights, whether
vested or not vested, that are held by such Participant shall thereupon
terminate and expire as of the date of such Termination.

(v)           Unvested
Stock Options and Stock Appreciation Rights. Stock Options or Stock
Appreciation Rights that are not vested as of the date of a Participant’s
Termination for any reason shall terminate and expire as of the date of such
Termination.

(b)                           Rules Applicable to Restricted Stock, Performance Shares, Other
Stock-Based Awards and Performance-Based Cash Awards. Unless
otherwise determined by the Committee at grant or thereafter, upon a
Participant’s Termination for any reason: 
(i) during the relevant Restriction Period, all Restricted Stock
still subject to restriction shall be forfeited; and (ii) any unvested
Performance Shares, Other Stock-Based Awards or Performance-Based Cash Awards
shall be forfeited

ARTICLE XIII

NON-EMPLOYEE DIRECTOR

STOCK OPTION GRANTS

13.1        Stock Options.
The terms of this Article XIII shall apply only to Stock Options granted
to Non-Employee Directors.

13.2        Grants. The
Committee shall, in its sole discretion, have the authority to grant Non-Qualified
Stock Options to each Non-Employee Director as follows:

(a)                            A
Non-Qualified Stock Option to purchase up to a maximum of 5,000 shares of
Common Stock, as of the date of the annual meeting of the shareholders of the
Company at which such Non-Employee Director is elected to serve as such,
including any annual meeting of the shareholders of the Company at which such
Non-Employee Director is re-elected to serve as such (but exclusive of the
annual meeting of shareholders of the Company that occurs on the Effective
Date, if such Non-Employee 

 29
 

 

                                                Director
has previously been awarded a stock option under a Prior Plan that is not yet
fully vested immediately following the Effective Date).

13.3        Terms of Options.
Stock Options granted under this Article XIII shall be subject to the
following terms and conditions, and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of the Plan,
as the Committee shall deem desirable:

(a)                            Exercise Price. The exercise
price per share of Common Stock subject to the Stock Option shall be determined
by the Committee at the time of grant; provided that the per share exercise
price of a Stock Option shall not be less than 100% of the Fair Market Value of
the Common Stock at the time of grant.

(b)                           Stock Option Term. The term of each Stock Option shall be 10
years.

(c)                            Exercisability. The Options granted pursuant to Section 13.2(a) shall
become fully vested and exercisable on the date of the next annual shareholders
meeting of the Company that occurs after the date of grant (a “Vesting Date”),
provided that the Non-Employee Director has not experienced a Termination of
Directorship prior to such Vesting Date. The Stock Option may thereafter be
exercised by the Non-Employee Director, in whole or in part, at any time or
from time to time prior to the expiration of the Stock Option as provided
herein and in accordance with the Plan, to the extent permitted by law. Upon
expiration of the Stock Option, the Stock Option shall be canceled and no
longer exercisable. The provisions of the Plan in respect of Detrimental
Activity shall not apply to Stock Options granted under this Article XIII.

(d)                           Method of Exercise. To the extent permitted by law, a Stock
Option may be exercised in whole or in part at any time and from time to time
during the Stock Option term by giving written notice of exercise to the
Company specifying the number of shares of Common Stock to be purchased. Such
notice shall be accompanied by payment in full of the purchase price as
follows:  (i) in cash or by check,
bank draft or money order payable to the order of the Company; (ii) solely
to the extent permitted by applicable law, if the Common Stock is traded on a
national securities exchange, The New York Stock Exchange or quoted on a
national quotation system sponsored by the National Association of Securities
Dealers, and the Committee authorizes, through a procedure whereby the
Non-Employee Director delivers irrevocable instructions to a broker reasonably acceptable
to the Committee to deliver promptly to the Company an amount equal to the
purchase price; or (iii) on such other terms and conditions as may be
acceptable to the Committee (including, without limitation, the relinquishment
of Stock Options or by payment in full or in part in the form of Common Stock
owned by the Non-Employee Director based on the Fair Market Value of the Common
Stock on the payment date as determined by the Committee, in its sole
discretion). No shares of 

 30
 

 

                                                Common
Stock shall be issued until payment therefor, as provided herein, has been made
or provided for.

(e)                            Non-Transferability
of Options. No Stock Option shall be Transferable by the Participant
otherwise than by will or by the laws of descent and distribution, and all Stock
Options shall be exercisable, during the Participant’s lifetime, only by the
Participant. Notwithstanding the foregoing, the Committee may determine, in its
sole discretion, at the time of grant or thereafter that a Non-Qualified Stock
Option that is otherwise not Transferable pursuant to this Section is
Transferable to a Family Member in whole or in part and in such circumstances,
and under such conditions, as determined by the Committee, in its sole
discretion. A Non-Qualified Stock Option that is Transferred to a Family Member
pursuant to the preceding sentence (i) may not be subsequently Transferred
otherwise than by will or by the laws of descent and distribution and (ii) remains
subject to the terms of this Plan and the applicable Award agreement. Any
shares of Common Stock acquired upon the exercise of a Non-Qualified Stock
Option by a permissible transferee of a Non-Qualified Stock Option or a
permissible transferee pursuant to a Transfer after the exercise of the
Non-Qualified Stock Option shall be subject to the terms of this Plan and the
applicable Award agreement.

(f)                              Form,
Modification, Extension and Renewal of Stock Options. Subject to the terms
and conditions and within the limitations of this Plan, Stock Options shall be
evidenced by such form of agreement or grant as is approved by the Committee,
and the Committee may, in its sole discretion (i) modify, extend or renew
outstanding Stock Options granted under this Article XIII (provided that
the rights of a Non-Employee Director are not reduced without the Non-Employee
Director’s consent and provided further than such action does not subject the
Stock Options to Section 409A of the Code), and (ii) accept the
surrender of outstanding Stock Options (up to the extent not theretofore
exercised) and authorize the granting of new Stock Options in substitution
therefor (to the extent not theretofore exercised). Notwithstanding the
foregoing, an outstanding Stock Option may not be modified to reduce the
exercise price thereof nor may a new Stock Option at a lower price be
substituted for a surrendered Stock Option (other than adjustments or
substitutions in accordance with Section 4.2), unless such action is
approved by the stockholders of the Company.

(g)                           Other
Terms and Conditions. Stock Options granted under this Article XIII
may contain such other provisions, which shall not be inconsistent with any of
the terms of this Plan, as the Committee shall, in its sole discretion, deem
appropriate.

13.4        Termination of Directorship.
The following rules apply with regard to Stock Options granted under this Article XIII
upon the Termination of Directorship:

 31
 

 

(a)           Termination of Directorship By Reason of Death,
Disability, Retirement or Otherwise. If a Non-Employee Director’s
Termination of Directorship is by reason of death, Disability, Retirement or
otherwise (other than for Cause), all Stock Options granted under this Article XIII
and held by such Non-Employee Director which are exercisable at the time of the
Termination of Directorship may be exercised by the Non-Employee Director (or,
in the case of death, by the legal representative of the Non-Employee Director’s
estate) at any time within a period of one year from the date of such
Termination of Directorship, but in no event beyond the expiration of the
stated term of such Stock Option.

(b)           Cancellation of Options. Except as
provided in (a) above, no Stock Options that were not exercisable as of
the date of Termination of Directorship shall thereafter become exercisable
upon a Termination of Directorship for any reason or no reason whatsoever, and
such Stock Options shall terminate and become null and void upon a Termination
of Directorship. If a Non-Employee Director’s Termination of Directorship is
for Cause, all Stock Options held by the Non-Employee Director shall thereupon
terminate and expire as of the date of termination.

13.5        Change in Control.
The Stock Options granted to Non-Employee Directors under this Article XIII
shall be subject to the provisions of Article XIV of the Plan in the event
of a Change in Control, except that the Stock Options granted to Non-Employee
Directors under this Article XIII shall become fully vested upon the
occurrence of a Change in Control.

13.6        Changes. The
Stock Options to Non-Employee Directors under this Article XIII shall be
subject to Section 4.2 of the Plan.

ARTICLE XIV

CHANGE IN CONTROL
PROVISIONS

14.1        Benefits. In
the event of a Change in Control of the Company, and except as otherwise
provided by the Committee in an Award agreement or in a written employment
agreement between the Company and a Participant, a Participant’s unvested Award
shall vest in full and a Participant’s Award shall be treated in accordance
with one of the following methods as determined by the Committee in its sole
discretion:

(a)                            Awards,
whether or not vested by their terms or pursuant to the preceding sentence,
shall be continued, assumed, have new rights substituted therefor or be treated
in accordance with Section 4.2(d) hereof, as determined by the
Committee in its sole discretion, and restrictions to which any shares of
Restricted Stock or any other Award granted prior to the Change in Control are
subject shall not lapse upon a Change in Control (other than with respect to
vesting pursuant to the preceding sentence) and the Restricted Stock or other
Award shall, where appropriate in the sole discretion of the Committee, receive
the same distribution as other Common Stock on such terms as determined by the
Committee; provided that, the Committee may, in its sole discretion, decide to
award additional Restricted Stock or other Award in lieu of any cash
distribution. 

 32
 

 

                                                Notwithstanding
anything to the contrary herein, for purposes of Incentive Stock Options, any
assumed or substituted Stock Option shall comply with the requirements of
Treasury Regulation §  1.424-1 (and any amendments thereto).

(b)                           The
Committee, in its sole discretion, may provide for the purchase of any Awards
by the Company or an Affiliate for an amount of cash equal to the excess of the
Change in Control Price (as defined below) of the shares of Common Stock
covered by such Awards, over the aggregate exercise price of such Awards. For
purposes of this Section 14.1, “Change in Control Price” shall mean the
highest price per share of Common Stock paid in any transaction related to a
Change in Control of the Company.

(c)                            The
Committee may, in its sole discretion, provide for the cancellation of any
Awards without payment, if the Change in Control Price is less than the Fair
Market Value of such Award on the date of grant.

(d)                           Notwithstanding
anything else herein, the Committee may, in its sole discretion, provide for
accelerated vesting or lapse of restrictions, of an Award at the time of grant
or at any time thereafter.

14.2        Change in Control.
Unless otherwise determined by the Committee in the applicable Award agreement
or other written agreement approved by the Committee, a “Change in Control”
shall be deemed to occur following any transaction if: (a) any “person” as
such term is used in Sections 13(d) and 14(d) of the Exchange Act
(other than the Company, any trustee or other fiduciary holding securities
under any employee benefit plan of the Company, or any company owned, directly
or indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of Common Stock of the Company), becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of 35% or more of the combined voting power of the then
outstanding securities of the Company (or its successor corporation); provided,
however, that a merger or consolidation effected solely to implement a
recapitalization of the Company shall not constitute a Change in Control of the
Company; or (b) the stockholders of the Company approve a plan of complete
liquidation of the Company or the consummation of the sale or disposition by
the Company of all or substantially all of the Company’s assets other than (i) the
sale or disposition of all or substantially all of the assets of the Company to
a person or persons who beneficially own, directly or indirectly, at least 50%
or more of the combined voting power of the outstanding voting securities of
the Company at the time of the sale or (ii) pursuant to a spinoff type
transaction, directly or indirectly, of such assets to the stockholders of the
Company.

ARTICLE XV

TERMINATION OR AMENDMENT
OF PLAN

15.1        Termination or Amendment.
Notwithstanding any other provision of this Plan, the Board or the Committee
may at any time, and from time to time, amend, in whole or in part, any or all
of the provisions of this Plan (including any amendment deemed necessary to
ensure that the Company may comply with any regulatory requirement referred to
in Article XVII), or suspend or terminate it entirely, retroactively or
otherwise; provided, however, that, unless 

 33
 

 

otherwise required by law or specifically provided herein, the rights
of a Participant with respect to Awards granted prior to such amendment,
suspension or termination, may not be impaired without the consent of such
Participant and, provided further, without the approval of the stockholders of
the Company in accordance with the laws of the State of Delaware, to the extent
required by the applicable provisions of Rule 16b-3 or Section 162(m) of
the Code, pursuant to the requirements of the New York Stock Exchange Listed
Company Manual, or, to the extent applicable to Incentive Stock Options, Section 422
of the Code, no amendment may be made which would:

(a)                            increase
the aggregate number of shares of Common Stock that may be issued under this
Plan pursuant to Section 4.1 (except by operation of Section 4.2);

(b)                           increase
the maximum individual Participant limitations for a fiscal year under Section 4.1(b) (except
by operation of Section 4.2);

(c)                            change
the classification of Eligible Employees or Consultants eligible to receive
Awards under this Plan;

(d)                           decrease
the minimum option price of any Stock Option or Stock Appreciation Right;

(e)                            extend
the maximum option period under Section 6.3;

(f)                              alter
the Performance Goals for the Award of Restricted Stock, Performance Shares or
Other Stock-Based Awards subject to satisfaction of Performance Goals as set
forth in Exhibit A;

(g)                           award any Stock Option or Stock Appreciation Right in replacement of a canceled Stock
Option or Stock Appreciation Right with
a higher exercise price, except in accordance with Section 6.3(g); or

(h)                           require
stockholder approval in order for this Plan to continue to comply with the
applicable provisions of Section 162(m) of the Code or, to the extent
applicable to Incentive Stock Options, Section 422 of the Code. In no
event may this Plan be amended without the approval of the stockholders of the
Company in accordance with the applicable laws of the State of Delaware to
increase the aggregate number of shares of Common Stock that may be issued
under this Plan, decrease the minimum exercise price of any Stock Option or
Stock Appreciation Right, or to make any other amendment that would require stockholder
approval under the New York Stock Exchange Listed Company Manual, or the rules of
any other exchange or system on which the Company’s securities are listed or
traded at the request of the Company.

The Committee may amend the terms of any Award theretofore
granted, prospectively or retroactively, but, subject to Article IV above
or as otherwise specifically provided herein, no such amendment or other action
by the Committee shall impair the rights of any holder without the holder’s
consent.

 34
 

 

ARTICLE
XVI

UNFUNDED PLAN

16.1        Unfunded Status of Plan.
This Plan is an “unfunded” plan for incentive and deferred compensation. With
respect to any payments as to which a Participant has a fixed and vested
interest but that are not yet made to a Participant by the Company, nothing
contained herein shall give any such Participant any rights that are greater
than those of a general unsecured creditor of the Company.

ARTICLE XVII

GENERAL PROVISIONS

17.1        Legend.
The Committee may require each person receiving shares of Common Stock pursuant
to a Stock Option or other Award under the Plan to represent to and agree with
the Company in writing that the Participant is acquiring the shares without a
view to distribution thereof. In addition to any legend required by this Plan,
the certificates for such shares may include any legend that the Committee, in
its sole discretion, deems appropriate to reflect any restrictions on Transfer.

All certificates for
shares of Common Stock delivered under the Plan shall be subject to such stop
transfer orders and other restrictions as the Committee may, in its sole
discretion, deem advisable under the rules, regulations and other requirements
of the Securities and Exchange Commission, The New York Stock Exchange or any
national securities exchange system upon whose system the Common Stock is then
quoted, any applicable Federal or state securities law, and any applicable
corporate law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.

17.2        Other Plans.
Nothing contained in this Plan shall prevent the Board from adopting other or
additional compensation arrangements, subject to stockholder approval if such
approval is required; and such arrangements may be either generally applicable
or applicable only in specific cases.

17.3        No Right to
Employment/Directorship/Consultancy. Neither this
Plan nor the grant of any Option or other Award hereunder shall give any
Participant or other employee, Consultant or Non-Employee Director any right
with respect to continuance of employment, consultancy or directorship by the
Company or any Affiliate, nor shall they be a limitation in any way on the
right of the Company or any Affiliate by which an employee is employed or a
Consultant or Non-Employee Director is retained to terminate his or her
employment, consultancy or directorship at any time.

17.4        Withholding of Taxes.
The Company shall have the right to deduct from any payment to be made pursuant
to this Plan, or to otherwise require, prior to the issuance or delivery of any
shares of Common Stock or the payment of any cash hereunder, payment by the
Participant of, any Federal, state or local taxes required by law to be
withheld. Upon the vesting of Restricted Stock (or other Award that is taxable
upon vesting), or upon making an election under Section 83(b) of the
Code, a Participant shall pay all required withholding to the Company. Any
statutorily required withholding obligation with regard to any Participant may
be 

 35
 

 

satisfied, subject to the advance consent of the Committee, by reducing
the number of shares of Common Stock otherwise deliverable or by delivering
shares of Common Stock already owned. Any fraction of a share of Common Stock
required to satisfy such tax obligations shall be disregarded and the amount
due shall be paid instead in cash by the Participant.

17.5        No Assignment of Benefits.
No Award or other benefit payable under this Plan shall, except as otherwise
specifically provided by law or permitted by the Committee, be Transferable in
any manner, and any attempt to Transfer any such benefit shall be void, and any
such benefit shall not in any manner be liable for or subject to the debts,
contracts, liabilities, engagements or torts of any person who shall be
entitled to such benefit, nor shall it be subject to attachment or legal
process for or against such person.

17.6        Listing and Other Conditions.

(a)                            Unless
otherwise determined by the Committee, as long as the Common Stock is listed on
a national securities exchange or system sponsored by a national securities
association, the issue of any shares of Common Stock pursuant to an Award shall
be conditioned upon such shares being listed on such exchange or system. The
Company shall have no obligation to issue such shares unless and until such
shares are so listed, and the right to exercise any Option or other Award with
respect to such shares shall be suspended until such listing has been effected.

(b)                           If at any
time counsel to the Company shall be of the opinion that any sale or delivery
of shares of Common Stock pursuant to an Option or other Award is or may in the
circumstances be unlawful or result in the imposition of excise taxes on the
Company under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act or otherwise, with
respect to shares of Common Stock or Awards, and the right to exercise any
Option or other Award shall be suspended until, in the opinion of said counsel,
such sale or delivery shall be lawful or will not result in the imposition of
excise taxes on the Company.

(c)                            Upon
termination of any period of suspension under this Section 17.6, any Award
affected by such suspension which shall not then have expired or terminated
shall be reinstated as to all shares available before such suspension and as to
shares which would otherwise have become available during the period of such
suspension, but no such suspension shall extend the term of any Award.

(d)                           A
Participant shall be required to supply the Company with any certificates,
representations and information that the Company requests and otherwise
cooperate with the Company in obtaining any listing, registration,
qualification, exemption, consent or approval the Company deems necessary or
appropriate.

 36
 

 

17.7        Governing
Law. This Plan and actions taken in connection herewith shall be
governed and construed in accordance with the laws of the State of Delaware
(regardless of the law that might otherwise govern under applicable Delaware
principles of conflict of laws).

17.8        Construction.
Wherever any words are used in this Plan in the masculine gender they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply, and wherever any words are used herein in the
singular form they shall be construed as though they were also used in the
plural form in all cases where they would so apply.

17.9        Other Benefits.
No Award granted or paid out under this Plan shall be deemed compensation for
purposes of computing benefits under any retirement plan of the Company or its
Affiliates nor affect any benefits under any other benefit plan now or
subsequently in effect under which the availability or amount of benefits is
related to the level of compensation.

17.10  
   Costs.
The Company shall bear all expenses associated with administering this Plan,
including expenses of issuing Common Stock pursuant to any Awards hereunder.

17.11  
   No Right to Same Benefits.
The provisions of Awards need not be the same with respect to each Participant,
and such Awards to individual Participants need not be the same in subsequent
years.

17.12  
   Death/Disability. The
Committee may in its sole discretion require the transferee of a Participant to
supply it with written notice of the Participant’s death or Disability and to
supply it with a copy of the will (in the case of the Participant’s death) or
such other evidence as the Committee deems necessary to establish the validity
of the transfer of an Award. The Committee may, in its discretion, also require
the agreement of the transferee to be bound by all of the terms and conditions
of the Plan.

17.13  
   Section 16(b) of
the Exchange Act. All elections and transactions
under this Plan by persons subject to Section 16 of the Exchange Act
involving shares of Common Stock are intended to comply with any applicable exemptive
condition under Rule 16b-3. The Committee may, in its sole
discretion, establish and adopt written administrative guidelines, designed to
facilitate compliance with Section 16(b) of the Exchange Act, as it
may deem necessary or proper for the administration and operation of this Plan
and the transaction of business thereunder.

17.14  
   Section 409A of the Code.
The Plan is intended to comply with the applicable requirements of Section 409A
of the Code and shall be limited, construed and interpreted in accordance with
such intent. To the extent that any Award is subject to Section 409A of
the Code, it shall be paid in a manner that will comply with Section 409A
of the Code, including proposed, temporary or final regulations or any other
guidance issued by the Secretary of the Treasury and the Internal Revenue
Service with respect thereto. Notwithstanding anything herein to the contrary,
any provision in the Plan that is inconsistent with Section 409A of the
Code shall be deemed to be amended to comply with Section 409A of the Code
and to the extent such provision cannot be amended to comply therewith, such
provision shall be null and void.

 37
 

 

17.15      Successor
and Assigns. The Plan shall be binding on all successors and
permitted assigns of a Participant, including, without limitation, the estate
of such Participant and the executor, administrator or trustee of such estate.

17.16  
   Severability of Provisions.
If any provision of the Plan shall be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provisions hereof,
and the Plan shall be construed and enforced as if such provisions had not been
included.

17.17  
   Payments to Minors, Etc. Any
benefit payable to or for the benefit of a minor, an incompetent person or
other person incapable of receipt thereof shall be deemed paid when paid to
such person’s guardian or to the party providing or reasonably appearing to
provide for the care of such person, and such payment shall fully discharge the
Committee, the Board, the Company, its Affiliates and their employees, agents
and representatives with respect thereto.

17.18  
   Headings and Captions.
The headings and captions herein are provided for reference and convenience
only, shall not be considered part of the Plan, and shall not be employed in
the construction of the Plan.

ARTICLE XVIII

EFFECTIVE DATE OF PLAN

The Plan shall become
effective upon the date it is approved by the stockholders of the Company in
accordance with the requirements of the laws of the State of Delaware.

ARTICLE XIX

TERM OF PLAN

No Award shall be granted
pursuant to the Plan on or after the tenth anniversary of the earlier of the
date the Plan is adopted or the date of stockholder approval, but Awards
granted prior to such tenth anniversary may extend beyond that date; provided
that no Award (other than a stock option) that is intended to be “performance-based”
under Section 162(m) of the Code shall be granted on or after the
fifth anniversary of the stockholder approval of the Plan unless the Performance
Goals set forth on Exhibit A are reapproved (or other designated
performance goals are approved) by the stockholders no later than the first
stockholder meeting that occurs in the fifth year following the year in which
stockholders approve the Performance Goals set forth on Exhibit A.

ARTICLE XX

NAME OF PLAN

This Plan shall be known
as “The United Industrial Corporation 2006 Long Term Incentive Plan.”

 

 38

 

 

EXHIBIT A

PERFORMANCE GOALS

To the extent
permitted under Code Section 162(m), performance goals established for
purposes of the grant or vesting of Awards of Restricted Stock, Other
Stock-Based Awards, Performance Shares and/or Performance-Based Cash Awards,
each intended to be “performance-based” under Section 162(m) of the
Code, shall be based on the attainment of certain target levels of, or a
specified increase or decrease (as applicable) in one or more of the following
performance goals (“Performance Goals”):

(a)       earnings
per share;

(b)       operating
income;

(c)       net
income;

(d)       cash
flow;

(e)       gross
profit;

(f)        gross
profit return on investment;

(g)       gross
margin return on investment;

(h)       gross
margin;

(i)        working
capital;

(j)        earnings
before interest and taxes;

(k)       earnings
before interest, tax, depreciation and amortization;

(l)        return
on equity;

(m)      return
on assets;

(n)       return
on capital;

(o)       return
on invested capital;

(p)       net
revenues;

(q)       gross
revenues;

(r)        revenue
growth;

(s)       total
shareholder return;

 i
 

 

(t)        economic
value added;

(u)       specified
objectives with regard to limiting the level of increase in all or a portion of
the Company’s bank debt or other long-term or short-term public or private debt
or other similar financial obligations of the Company, which may be calculated
net of cash balances and/or other offsets and adjustments as may be established
by the Committee in its sole discretion;

(v)       the
fair market value of the shares of the Company’s Common Stock;

(w)      the
growth in the value of an investment in the Company’s Common Stock assuming the
reinvestment of dividends; or

(x)        reduction
in expenses.

To the extent
permitted by Section 162(m) of the Code, the Committee may, in its
sole discretion, also exclude, or adjust to reflect, the impact of an event or
occurrence which the Committee determines should be appropriately excluded or
adjusted, including:

(i)           restructurings, discontinued
operations, extraordinary items or events, and other unusual or non-recurring
charges as described in Accounting Principles Board Opinion No. 30 and/or
management’s discussion and analysis of financial condition and results of
operations appearing or incorporated by reference in the Company’s Form 10-K
for the applicable year;

(ii)          an event either not directly related
to the operations of the Company or not within the reasonable control of the
Company’s management; or

(iii)         a change in tax law or accounting
standards required by generally accepted accounting principles.

Performance goals may also be based upon individual Participant
performance goals, as determined by the Committee, in its sole discretion.

In addition, such
Performance Goals may be based upon the attainment of specified levels of Company
(or subsidiary, division, other operational unit or administrative department
of the Company) performance under one or more of the measures described above
relative to the performance of other corporations. To the extent permitted
under Section 162(m) of the Code, but only to the extent permitted
under Section 162(m) of the Code (including, without limitation,
compliance with any requirements for stockholder approval), the Committee may:

(a)       designate additional business criteria on
which the performance goals may be based; or

(b)       adjust, modify or amend the
aforementioned business criteria.

 

 ii

 

 

TABLE OF CONTENTS

 

 

	
  

  	
   

  	
   

  
	
  ARTICLE I PURPOSE

  	
   

  	
  1

  
	
  ARTICLE II
  DEFINITIONS

  	
   

  	
  1

  
	
  ARTICLE III
  ADMINISTRATION

  	
   

  	
  7

  
	
  ARTICLE IV
  SHARE LIMITATION

  	
   

  	
  10

  
	
  ARTICLE V
  ELIGIBILITY AND GENERAL REQUIREMENTS FOR AWARDS

  	
   

  	
  14

  
	
  ARTICLE VI
  STOCK OPTIONS

  	
   

  	
  15

  
	
  ARTICLE VII

  	
   

  	
  18

  
	
  STOCK APPRECIATION
  RIGHTS

  	
   

  	
  18

  
	
  ARTICLE VIII
  RESTRICTED STOCK

  	
   

  	
  21

  
	
  ARTICLE IX
  PERFORMANCE SHARES

  	
   

  	
  23

  
	
  ARTICLE X
  OTHER STOCK-BASED AWARDS

  	
   

  	
  25

  
	
  ARTICLE XI
  PERFORMANCE-BASED CASH AWARDS

  	
   

  	
  26

  
	
  ARTICLE XII

  	
   

  	
  28

  
	
  TERMINATION

  	
   

  	
  28

  
	
  ARTICLE XIII

  	
   

  	
  29

  
	
  NON-EMPLOYEE DIRECTOR
  STOCK OPTION GRANTS

  	
   

  	
  29

  
	
  ARTICLE XIV

  	
   

  	
  32

  
	
  CHANGE IN CONTROL
  PROVISIONS

  	
   

  	
  32

  
	
  ARTICLE XV
  TERMINATION OR AMENDMENT OF PLAN

  	
   

  	
  33

  
	
  ARTICLE XVI
  UNFUNDED PLAN

  	
   

  	
  35

  
	
  ARTICLE XVII
  GENERAL PROVISIONS

  	
   

  	
  35

  
	
  ARTICLE XVIII EFFECTIVE
  DATE OF PLAN

  	
   

  	
  38

  
	
  ARTICLE XIX
  TERM OF PLAN

  	
   

  	
  38

  
	
  ARTICLE XX
  NAME OF PLAN

  	
   

  	
  38

  
	
  EXHIBIT A PERFORMANCE
  GOALS

  	
   

  	
   

  

 

 iii

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