Document:

exv10w1

 

Exhibit 10.1

METHODE ELECTRONICS, INC. 2007 STOCK PLAN

1. Preamble.

     Methode Electronics, Inc., a Delaware corporation (the “Company”), hereby establishes the
Methode Electronics, Inc. 2007 Stock Plan (the “Plan”) as a means whereby the Company may, through
awards of (i) incentive stock options (“ISOs”) within the meaning of Section 422 of the Code, (ii)
non-qualified stock options (“NSOs”), (iii) stock appreciation rights (“SARs”), (iv) restricted
stock (“Restricted Stock”); (v) restricted stock units (“Restricted Stock Units”) and (vi)
performance share units (“Performance Share Units”):

	 	(a)	 	provide selected officers, directors and key employees with additional
incentive to promote the success of the Company’s business;
	 
	 	(b)	 	encourage such persons to remain in the service of the Company; and
	 
	 	(c)	 	enable such persons to acquire proprietary interests in the Company.

     The provisions of this Plan do not apply to or affect any option, stock appreciation right,
restricted stock, restricted stock unit or performance share unit award hereafter granted under any
other stock plan of the Company, and all such option, stock appreciation right, restricted stock,
restricted stock unit or performance share unit awards shall be governed by and subject to the
applicable provisions of the plan under which they will be granted.

     2. Definitions and Rules of Construction.

          2.01 Definitions.

(a) “Affiliate” means any entity during any period that, in the opinion of the Committee, the Company has a
significant economic interest in the entity.

(b) “Award” means the grant of Options, SARs, Restricted Stock, Restricted Stock Units, and/or Performance
Share Units to a Participant.

(c) “Award Date” means the date upon which an Award is granted to a Participant under the Plan.

(d) “Board” or “Board of Directors” means the board of directors of the Company.

(e) “Cause” shall mean:

	 	(i)	 	Participant’s conviction of a felony;
	 
	 	(ii)	 	Participant’s commission of any act or acts of personal dishonesty intended to result in substantial
personal enrichment to Participant to the detriment of the Company;
	 
	 	(iii)	 	repeated violations of Participant’s responsibilities which are demonstrably willful and deliberate,
provided that such violations have continued more than ten days after the Board of Directors of the Company
has given written notice of such violations and of its intention to terminate Participant’s employment
because of such violations;
	 
	 	(iv)	 	any willful misconduct by the Participant which affects the business reputation of the Company;
	 
	 	(v)	 	breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure,
non-competition or other similar agreement between the Participant and the Company or any Affiliate or
Subsidiary; or

 

 

	 	(vi)	 	Participant’s violation of the Company’s code of conduct.

The Participant shall be considered to have been discharged for “Cause” if the Company determines, within
30 days after the Participant’s resignation, that discharge for Cause was warranted.

(f) “Change of Control” shall be deemed to have occurred on the first to occur of any of the following as a
result of one transaction or a series of transactions:

	 	(i)	 	the date any one person, or
more than one “person” acting
as a group, acquires (or has
acquired during the twelve (12)
month period ending on the date
of the most recent acquisition
by such person(s)) ownership of
Common Stock possessing thirty
percent (30%) or more of the
total voting power of the
Common Stock of the Company;
	 
	 	(ii)	 	the date a majority of the
members of the Company’s Board
of Directors is replaced during
any twelve (12) month period by
directors whose appointment or
election is not endorsed by a
majority of the Company’s Board
of Directors before the date of
the appointment or election; or
	 
	 	(iii)	 	the date any one person, or
more than one person acting as
a group, acquires ownership of
stock of the Company that,
together with stock held by
such person or group,
constitutes more than fifty
percent (50%) percent of the
Fair Market Value or total
voting power of the Common
Stock of the Company.

(g) “Code” means the Internal Revenue Code of 1986, as amended from time to time or any successor thereto.

(h) “Committee” means the Compensation Committee of the Board of Directors.

(i) “Common Stock” means common stock of the Company, par value $.50 per share.

(j) “Company” means Methode Electronics, Inc., a Delaware corporation, and any successor thereto.

(k) “Exchange Act” shall mean the Securities Exchange Act of 1934, as it exists now or from time to time
may hereafter be amended.

(l) “Fair Market Value” means as of any date, the closing price for the Common Stock on that date, or if no
sales occurred on that date, the next trading day on which actual sales occurred (as reported by the NASDAQ
Stock Market System or any securities exchange or automated quotation system of a registered securities
association on which the Common Stock is then traded or quoted).

(m) “Family Members” mean with respect to an individual, any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the individual’s household (other than a tenant or employee), a trust in which these persons have
more than 50% of the beneficial interest, a foundation in which these persons (or the individual) control
the management of assets, and any other entity in which these persons (or the individual) own more than 50%
of the voting interests.

(n) “ISO” means an incentive stock option within the meaning of Section 422 of the Code.

(o) “NSO” means a non-qualified stock option which is not intended to qualify as an incentive stock option
under Section 422 of the Code.

 

 

(p) “Option” means the right of a Participant, whether granted as an ISO or an NSO, to purchase a specified
number of shares of Common Stock, subject to the terms and conditions of the Plan.

(q) “Option Price” means the price per share of Common Stock at which an Option may be exercised.

(r) “Participant” means an individual to whom an Award has been granted under the Plan.

(s) “Performance Share Unit” means a unit awarded to a Participant pursuant to Section 11 of this Plan.

(t) “Plan” means the Methode Electronics, Inc. 2007 Stock Plan, as set forth herein and from time to time
amended.

(u) “Restricted Stock” means the Common Stock awarded to a Participant pursuant to Section 9 of this Plan.

(v) “Restricted Stock Unit” means a unit awarded to a Participant pursuant to Section 9 of this Plan
evidencing the right of a Participant to receive a fixed number of shares of Common Stock at some future
date.

(w) “SAR” means a stock appreciation right issued to a Participant pursuant to Section 10 of this Plan.

(x) “SEC” means the Securities and Exchange Commission.

(y) “Subsidiary” means any entity during any period of which the Company owns or controls more than 50% of:

	 	(i)	 	the outstanding capital stock, or
	 
	 	(ii)	 	the combined voting power of all classes of stock.

     2.02 Rules of Construction.

(a) Governing Law and Venue. The construction and operation
of this Plan are governed by the laws of the State of
Illinois without regard to any conflicts or choice of law
rules or principles that might otherwise refer construction
or interpretation of this Plan to the substantive law of
another jurisdiction, and any litigation arising out of
this Plan shall be brought in the Circuit Court of the
State of Illinois or the United States District Court for
the Eastern Division of the Northern District of Illinois.

(b) Undefined Terms. Unless the context requires another
meaning, any term not specifically defined in this Plan is
used in the sense given to it by the Code.

(c) Headings. All headings in this Plan are for reference
only and are not to be utilized in construing the Plan.

(d) Conformity with Section 422. Any ISOs issued under this
Plan are intended to qualify as incentive stock options
described in Section 422 of the Code, and all provisions of
the Plan relating to ISOs shall be construed in conformity
with this intention. Any NSOs issued under this Plan are
not intended to qualify as incentive stock options
described in Section 422 of the Code, and all provisions of
the Plan relating to NSOs shall be construed in conformity
with this intention.

(e) Conformity with Section 162(m). Any awards issued to
specified employees (as defined in Section 162(m) of the
Code) with any of the performance criteria listed in
Section 6 are intended to

 

 

qualify as performance-based
compensation under Section 162(m) of the Code to which the
applicable remuneration limits of Section 162(m)(1) do not
apply.

(f) Gender. Unless clearly inappropriate, all nouns of
whatever gender refer indifferently to persons of any
gender.

(g) Singular and Plural. Unless clearly inappropriate,
singular terms refer also to the plural and vice versa.

(h) Severability. If any provision of this Plan is
determined to be illegal or invalid for any reason, the
remaining provisions are to continue in full force and
effect and to be construed and enforced as if the illegal
or invalid provision did not exist, unless the continuance
of the Plan in such circumstances is not consistent with
its purposes.

     3. Stock Subject to the Plan.

     Subject to adjustment as provided in Section 15 hereof, the aggregate number of shares of
Common Stock for which Awards may be issued under this Plan may not exceed 1,250,000 shares.
Reserved shares may be either authorized but unissued shares or treasury shares, in the Board’s
discretion. If any Award shall terminate, expire, be cancelled or forfeited as to any number of
shares of Common Stock, new Awards may thereafter be awarded with respect to such shares.
Notwithstanding the foregoing, the total number of shares of Common Stock with respect to which
Awards may be granted to any Participant in any calendar year shall not exceed 200,000 shares
(subject to adjustment as provided in Section 15 hereof).

     4. Administration.

     The Committee shall administer the Plan. All determinations of the Committee are made by a
majority vote of its members. The Committee’s determinations are final and binding on all
Participants. In addition to any other powers set forth in this Plan, the Committee has the
following powers:

	 	(a)	 	to construe and interpret the Plan;
	 
	 	(b)	 	to establish, amend and rescind appropriate rules and regulations relating to the Plan;
	 
	 	(c)	 	subject to the terms of the Plan, to select the individuals who will receive Awards,
the times when they will receive them, the form of agreements which evidence such
Awards, the number of Options, Restricted Stock, Restricted Stock Units, Performance
Share Units and/or SARs to be subject to each Award, the Option Price, the vesting
schedule (including any performance targets to be achieved in connection with the
vesting of any Award), the expiration date applicable to each Award and other terms,
provisions and restrictions of the Awards (which need not be identical) and subject to
Section 20 hereof, to amend or modify any of the terms of outstanding Awards provided,
however, that except as permitted by Section 15.01, no outstanding Award may be
repriced, whether through cancellation of the Award and the grant of a new Award, or
the amendment of the Award, without the approval of the stockholders of the Company;
	 
	 	(d)	 	to contest on behalf of the Company or Participants, at the expense of the Company, any
ruling or decision on any matter relating to the Plan or to any Awards;
	 
	 	(e)	 	generally, to administer the Plan, and to take all such steps and make all such
determinations in connection with the Plan and the Awards granted thereunder as it may
deem necessary or advisable; and
	 
	 	(f)	 	to determine the form in which tax withholding under Section 18 of this Plan will be made (i.e., cash,
Common Stock or a combination thereof).

Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the
Committee may allocate all or any portion of its responsibilities and powers to any one or more of
its members and may delegate all

 

 

or any part of its responsibilities and powers to any person or
persons selected by it. Any such allocation or delegation may be revoked by the Committee at any
time.

     5. Eligible Participants.

     Present and future directors, officers and key employees of the Company or any Subsidiary
shall be eligible to participate in the Plan. The Committee from time to time shall select those
officers, directors and key employees of the Company and any Subsidiary of the Company who shall be
designated as Participants and shall designate in accordance with the terms of the Plan the number,
if any, of ISOs, NSOs, SARs, Restricted Stock Units, Performance Share Units and shares of
Restricted Stock or any combination thereof, to be awarded to each Participant.

     6. Performance Criteria (162(m) Awards).

     Subject to the terms of the Plan, the Committee, in its discretion, may make the grant or
vesting of an Award to a “specified employee” (as defined in Section 162(m) of the Code and the
regulations thereunder) subject to performance criteria (a “162(m) Award”). All 162(m) Awards
shall be granted by the Committee when composed of two or more outside directors, as prescribed by
Section 162(m) of the Code and the regulations thereunder. The Committee shall certify that the
performance goals and other material terms have been satisfied before payment of a 162(m) Award is
made. All 162(m) Awards shall be paid solely on account of the attainment of one or more
pre-established, objective performance goals, which goals shall be established on a timely basis,
in conformity with the timing requirements of Section 162(m) of the Code. Notwithstanding any
provision of the Plan to the contrary, the Committee shall not have discretion to waive or amend
such performance goals or to increase the amount payable pursuant to a 162(m) Award after the
performance goals have been established; provided, however, the Committee may, in its sole
discretion, reduce the amount that would otherwise be payable with respect to any 162(m) Award.
Permissible performance goals include any one of the following or combination thereof which may be
applicable on a Company-wide basis and/or with respect to operating units, divisions, subsidiaries,
acquired businesses, minority investments, partnerships or joint ventures:

	 	(a)	 	meeting specific targets for or growth in:

	 	(1)	 	stock price,
	 
	 	(2)	 	net sales (dollars or volume),
	 
	 	(3)	 	cash flow,
	 
	 	(4)	 	operating income,
	 
	 	(5)	 	net income,
	 
	 	(6)	 	earnings per share,
	 
	 	(7)	 	earnings before taxes,
	 
	 	(8)	 	earnings before interest and taxes, or
	 
	 	(9)	 	earnings before interest, taxes, depreciation and amortization (EBITDA);

	 	(b)	 	return on:

	 	(1)	 	net sales,
	 
	 	(2)	 	assets or net assets, or
	 
	 	(3)	 	invested capital;

	 	(c)	 	management of:

	 	(1)	 	working capital,
	 
	 	(2)	 	expenses, or
	 
	 	(3)	 	cash flow;

	 	(d)	 	meeting specific targets for or growth in:

	 	(1)	 	productivity,
	 
	 	(2)	 	specified product lines,
	 
	 	(3)	 	market share,
	 
	 	(4)	 	product development,
	 
	 	(5)	 	customer service or satisfaction,
	 
	 	(6)	 	employee satisfaction,
	 
	 	(7)	 	strategic innovation, or

 

 

	 	(8)	 	acquisitions;

	 	(e)	 	specific personal performance improvement objectives relative to:

	 	(1)	 	formal education,
	 
	 	(2)	 	executive training,
	 
	 	(3)	 	leadership training, or
	 
	 	(4)	 	succession planning.

(f)     any other criteria established by the Committee (but only if such other criteria
are approved by the stockholders).

     The material terms of the 162(m) Award shall be disclosed and approved by stockholders prior
to payment, in conformity with the requirements under Section 162(m) of the Code. Notwithstanding
anything to the contrary contained herein, no Participant may be granted more than 200,000 shares
(subject to adjustment as provided in Section 15 hereof) in any calendar year pursuant to a 162(m)
Award made under the Plan. Any 162(m) Award that fails to meet the requirements under this Section
6 or the requirements under Section 162(m) and its regulations shall not be nullified or voided.
Instead, payment of such a 162(m) Award shall be delayed until the applicable remuneration is
deductible or upon the specified employee’s termination of employment, whichever occurs first.

     7. Terms and Conditions of Non-Qualified Stock Option Awards.

     Subject to the terms of the Plan, the Committee, in its discretion, may award an NSO to any
Participant. Each NSO shall be evidenced by an agreement, in such form as is approved by the
Committee, and except as otherwise provided by the Committee in such agreement, each NSO shall be
subject to the following express terms and conditions, and to such other terms and conditions, not
inconsistent with the Plan, as the Committee may deem appropriate:

          7.01 Option Period. Each NSO will expire as of the earliest of:

	 	(a)	 	the date on which it is forfeited under the provisions of Sections 13.01 and 13.03;
	 
	 	(b)	 	10 years from the Award Date;
	 
	 	(c)	 	in the case of a Participant who is an employee of the Company or a Subsidiary,
three months after the Participant’s termination of employment with the Company
and its Subsidiaries and Affiliates for any reason other than for Cause or death
or total and permanent disability;
	 
	 	(d)	 	in the case of a Participant who is a member of the board of directors of the
Company or a Subsidiary or Affiliate, but not an employee of the Company, a
Subsidiary or an Affiliate, three months after the Participant’s termination as a
member of the board for any reason other than for Cause or death or total and
permanent disability;
	 
	 	(e)	 	immediately upon the Participant’s termination of employment with the Company and
its Subsidiaries and Affiliates or service on a board of directors of the Company
or a Subsidiary or Affiliate for Cause;
	 
	 	(f)	 	12 months after the Participant’s death or total and permanent disability; or
	 
	 	(g)	 	any other date specified by the Committee when the NSO is granted.

The periods set forth above shall be tolled during any period for which employees of the Company are prohibited by the Company from engaging in
transactions in the Company’s securities.

          7.02 Option Price. At the time granted, the Committee shall determine the Option Price of any NSO, and in the absence of such determination, the
Option Price shall be 100% of the Fair Market Value of the Common Stock subject to the NSO on the Award Date.

 

 

          7.03 Vesting. Unless otherwise determined by the Committee and set forth in the agreement evidencing an Award, NSO Awards shall vest in accordance
with Sections 13.01 and 13.03.

          7.04 Other Option Provisions. The form of NSO authorized by the Plan may contain such other provisions as the Committee may from time to time
determine.

     8. Terms and Conditions of Incentive Stock Option Awards.

     Subject to the terms of the Plan, the Committee, in its discretion, may award an ISO to any
employee of the Company or a Subsidiary. Each ISO shall be evidenced by an agreement, in such form
as is approved by the Committee, and except as otherwise provided by the Committee, each ISO shall
be subject to the following express terms and conditions and to such other terms and conditions,
not inconsistent with the Plan, as the Committee may deem appropriate:

          8.01 Option Period. Each ISO will expire as of the earliest of:

	 	(a)	 	the date on which it is forfeited under the provisions of Section 13.01 and 13.03;
	 
	 	(b)	 	10 years from the Award Date, except as set forth in Section 8.02 below;
	 
	 	(c)	 	immediately upon the Participant’s termination of employment with the Company and
its Subsidiaries for Cause;
	 
	 	(d)	 	three months after the Participant’s termination of employment with the Company
and its Subsidiaries for any reason other than for Cause or death or total and
permanent disability;
	 
	 	(e)	 	12 months after the Participant’s death or total and permanent disability; or
	 
	 	(f)	 	any other date (within the limits of the Code) specified by the Committee when
the ISO is granted.

The periods set forth above shall be tolled during any period for which employees of the Company
are prohibited by the Company from engaging in transactions in the Company’s securities.
Notwithstanding the foregoing provisions granting discretion to the Committee to determine the
terms and conditions of ISOs, such terms and conditions shall meet the requirements set forth in
Section 422 of the Code or any successor thereto.

     8.02 Option Price and Expiration. The Option Price of any ISO shall be
determined by the Committee at the time an ISO is granted, and shall be no less
than 100% of the Fair Market Value of the Common Stock subject to the ISO on
the Award Date; provided, however, that if an ISO is granted to a Participant
who, immediately before the grant of the ISO, beneficially owns stock
representing more than 10% of the total combined voting power of all classes of
stock of the Company or its parent or subsidiary corporations, the Option Price
shall be at least 110% of the Fair Market Value of the Common Stock subject to
the ISO on the Award Date and in such cases, the exercise period specified in
the Option agreement shall not exceed five years from the Award Date.

     8.03 Vesting. Unless otherwise determined by the Committee and set forth in the
agreement evidencing an Award, ISO Awards shall vest in accordance with
Sections 13.01 and 13.03.

     8.04 Other Option Provisions. The form of ISO authorized by the Plan may
contain such other provisions as the Committee may, from time to time,
determine; provided, however, that such other provisions may not be
inconsistent with any requirements imposed on incentive stock options under
Code Section 422 and the regulations thereunder.

     8.05 $100,000 Limitation. To the extent required by Code Section 422, if the
aggregate Fair Market Value (determined as of the time of grant) of Common
Stock with respect to which ISOs are exercisable for the first time by a
Participant during any calendar year (under this Plan and all other plans of
the Company and its Subsidiaries) exceeds $100,000, the Options or portions
thereof which exceed such limit (according to the order in which they were
granted) shall be treated as NSOs.

     9. Terms and Conditions of Restricted Stock or Restricted Stock Unit Awards.

 

 

     Subject to the terms of the Plan, the Committee, in its discretion, may award Restricted Stock
or Restricted Stock Units to any Participant. Each Award of Restricted Stock or Restricted Stock
Units shall be evidenced by an agreement, in such form as is approved by the Committee, and all
shares of Common Stock awarded to Participants under the Plan as Restricted Stock and all
Restricted Stock Units shall be subject to the following express terms and conditions and to such
other terms and conditions, not inconsistent with the Plan, as the Committee shall deem
appropriate:

	 	(a)	 	Restricted Period. Except as permitted by Section 16 hereof, shares of
Restricted Stock awarded under this Section 9 may not be sold,
assigned, transferred, pledged or otherwise encumbered before they
vest, and Restricted Stock Units may not be sold, assigned,
transferred, pledged, or otherwise encumbered at any time.
	 
	 	(b)	 	Vesting. Unless otherwise determined by the Committee and set forth in
the agreement evidencing an Award, Awards of Restricted Stock and
Restricted Stock Units under this Section 9 shall vest in accordance
with Sections 13.02 and 13.03.
	 
	 	(c)	 	Certificate Legend for Restricted Stock Awards. Each certificate
issued in respect of shares of Restricted Stock awarded under this
Section 9 shall be registered in the name of the Participant and shall
bear the following (or a similar) legend until such shares have
vested:

“The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) relating to Restricted Stock contained in Section 9 of the
Methode Electronics, Inc. 2007 Stock Plan and an Agreement entered
into between the registered owner and Methode Electronics, Inc. Copies
of such Plan and Agreement are on file at the principal office of
Methode Electronics, Inc.”

	 	(d)	 	Restricted Stock Units. In the case of an Award of Restricted Stock
Units, no shares of Common Stock or other property shall be issued at
the time such Award is granted. Upon the lapse or waiver of
restrictions and the restricted period relating to Restricted Stock
Units (or at such other later time as may be determined by the
Committee), shares of Common Stock shall be issued to the holder of
the Restricted Stock Units and evidenced in such manner as the
Committee may deem appropriate.

     10. Terms and Conditions of Stock Appreciation Right Awards.

     The Committee may, in its discretion, grant an SAR to any Participant under the Plan. Each SAR
shall be evidenced by an agreement between the Company and the Participant, and may relate to and
be associated with all or any part of a specific ISO or NSO. An SAR shall entitle the Participant
to whom it is granted the right, so long as such SAR is exercisable and subject to such limitations
as the Committee shall have imposed, to surrender any then exercisable portion of his SAR and, if
applicable, the related ISO or NSO, in whole or in part, and receive from the Company in exchange,
without any payment of cash (except for applicable employee withholding taxes), that number of
shares of Common Stock having an aggregate Fair Market Value on the date of surrender equal to the
product of (i) the excess of the Fair Market Value of a share of Common Stock on the date of
surrender over the Fair Market Value of the Common Stock on the date the SARs were issued, or, if
the SARs are related to an ISO or an NSO, the per share Option Price under such ISO or NSO on the
Award Date, and (ii) the number of shares of Common Stock subject to such SAR, and, if applicable,
the related ISO or NSO or portion thereof which is surrendered.

     Except as otherwise determined by the Committee and set forth in the Agreement, an SAR granted
in conjunction with an ISO or NSO shall terminate on the same date as the related ISO or NSO and
shall be exercisable only if the Fair Market Value of a share of Common Stock exceeds the Option
Price for the related ISO or NSO, and then shall be exercisable to the extent, and only to the
extent, that the related ISO or NSO is exercisable. The Committee may at the time of granting any
SAR add such additional conditions and limitations to the SAR as it shall deem advisable,
including, but not limited to, limitations on the period or periods within which the SAR shall be
exercisable and the maximum amount of appreciation to be recognized with regard to such SAR. Any
ISO or NSO or portion thereof which is surrendered with an SAR shall no longer be exercisable. An
SAR that is not granted in conjunction with an ISO or NSO shall terminate on such date as is
specified by the Committee in the SAR

 

 

agreement and shall vest in accordance with Section 13.02 and
13.03. The Committee, in its sole discretion, may allow the Company to settle all or part of the
Company’s obligation arising out of the exercise of an SAR by the payment of cash equal to the
aggregate Fair Market Value of the shares of Common Stock which the Company would otherwise be
obligated to deliver, less the withholding required under Section 18 hereof.

     11. Terms and Conditions of Performance Share Unit Awards.

     Subject to the terms of the Plan, the Committee, in its discretion, may award Performance
Share Units to any Participant. Each Award of Performance Share Units shall be evidenced by an
agreement, in such form as is
approved by the Committee, and all shares of Common Stock awarded to Participants under the Plan as
Performance Share Units shall be subject to the following express terms and conditions and to such
other terms and conditions, not inconsistent with the Plan, as the Committee shall deem
appropriate:

	 	(a)	 	In the case of an Award of Performance Share Units, no shares of
Common Stock or other property shall be issued at the time such Award
is granted. Upon the achievement of specified performance goals, which
goals may include (but are not required to include) the criteria
outlined in Section 6 above, shares of Common Stock shall be issued to
the holder of the Performance Share Units and evidenced in such manner
as the Committee may deem appropriate.
	 
	 	(b)	 	The Committee may elect in its sole discretion, without further
approval of the stockholders, to pay to the grantee of any Performance
Share Unit Award, in lieu of delivering all or any part of the Common
Stock that would be otherwise delivered to the Participant, a cash
amount equal to the aggregate Fair Market Value of such Common Stock
that would otherwise be delivered, less all amounts as may be required
by law to be withheld in the manner contemplated by Section 18 hereof.

     12. Manner of Exercise of Options.

     To exercise an Option in whole or in part, a Participant (or, after his death, his executor or
administrator) must give written notice to the Committee on a form acceptable to the Committee,
stating the number of shares with respect to which he intends to exercise the Option. The Company
will issue the shares with respect to which the Option is exercised upon payment in full of the
Option Price. The Committee may permit the Option Price to be paid in cash or shares of Common
Stock held by the Participant having an aggregate Fair Market Value, as determined on the date of
delivery, equal to the Option Price. The Committee may also permit the Option Price to be paid by
any other method permitted by law, including by delivery to the Committee from the Participant of
an election directing the Company to withhold the number of shares of Common Stock from the Common
Stock otherwise due upon exercise of the Option having an aggregate Fair Market Value on that date
equal to the Option Price. If a Participant pays the Option Price with shares of Common Stock which
were received by the Participant upon exercise of an ISO, and such Common Stock has not been held
by the Participant for at least the greater of:

	 	(a)	 	two years from the date the ISO was granted; or
	 
	 	(b)	 	one year after the transfer of the shares of Common Stock to the Participant;

the use of the shares shall constitute a disqualifying disposition and the ISO underlying the
shares used to pay the Option Price shall no longer satisfy all of the requirements of Code Section
422.

 

 

13. Vesting.

     13.01 Options. A Participant may not exercise an
Option until it has become vested. The portion of an
Award of Options that is vested depends upon the
period that has elapsed since the Award Date.

The following schedule applies to any Award of Options
under this Plan unless the Committee establishes a
different vesting schedule on the Award Date as set
forth in the Agreement evidencing the Award:

	 	 	 	 	 
	Number of Months	 	Vested
	Since Award Date	 	Percentage
	fewer than 12 months

	 	 	0	%
	at least 12 months, but less than 24 months

	 	 	331/3	%
	at least 24 months, but less than 36 months

	 	 	662/3	%
	36 months or more

	 	 	100	%

     Notwithstanding the above schedule, except as provided below and unless otherwise determined
by the Committee and set forth in the agreement evidencing an Award, a Participant’s Awards shall
become fully vested if a Participant’s employment with the Company and its Subsidiaries and
Affiliates is terminated due to: (i) retirement on or after his sixty-fifth birthday; (ii)
retirement on or after his fifty-fifth birthday with consent of the Company; (iii) retirement at
any age on account of total and permanent disability as determined by the Company; or (iv) death.
Notwithstanding the foregoing, an Award to a member of the Board of Directors who is not an
employee of the Company or its Subsidiaries shall become fully vested if the Participant ceases to
be a member of the Board for any reason, other than removal from office by shareholders of the
Company for Cause at a special meeting of the shareholders called for that purpose. Vesting of an
Award subject to performance criteria shall be made on a pro rata basis, based on performance to
date and on the total number of days during the performance period before the termination in
relation to the entire performance period. Unless the Committee otherwise provides in the
applicable agreement evidencing an Award or the preceding sentence of this Section or Section 13.03
applies, if a Participant’s employment with or service to the Company, a Subsidiary or an Affiliate
terminates for any other reason, any Awards that are not yet vested are immediately and
automatically forfeited; provided, however, in such special circumstances as the Committee deems
appropriate, the Committee may take such action as it deems equitable in the circumstances or in
the best interests of the Company, including, without limitation, fully vesting an Award or waiving
or modifying any other limitation or requirement under the Award.

     A Participant’s employment shall not be considered to be terminated hereunder by reason of a
transfer of his employment from the Company to a Subsidiary or Affiliate, or vice versa, or a leave
of absence approved by the Participant’s employer. A Participant’s employment shall be considered
to be terminated hereunder if, as a result of a sale or other transaction, the Participant’s
employer ceases to be a Subsidiary or Affiliate (and the Participant’s employer is or becomes an
entity that is separate from the Company and its Subsidiaries and Affiliates).

     13.02 Restricted Stock, Restricted Stock Units and SARs. The Committee shall
establish the vesting schedule to apply to any Award of Restricted Stock,
Restricted Stock Units or SARs that is not associated with an ISO or NSO
granted under the Plan to a Participant, and in the absence of such a vesting
schedule set forth in the Agreement evidencing the Award, such Award shall vest
in accordance with Section 13.01.

     13.03 Effect of “Change of Control”. Notwithstanding Sections 13.01 and 13.02
above, except as provided below and unless otherwise determined by the
Committee and set forth in the agreement evidencing an Award, immediately
following a Change of Control, any Award issued to the Participant shall be
fully vested and payment of all Awards shall be accelerated. Payment of an
Award subject to performance criteria shall be made on a pro rata basis, based
on performance to date and on the total number of days during the performance
period before the Change of Control in relation to the entire performance
period.

     14. Deferrals.

     A Participant may elect to defer receipt of all or a portion of a Restricted Stock Unit, Stock
Appreciation Right, or Performance Share Unit Award, subject to the rules listed below:

 

 

	 	(a)	 	a deferral may be made for any amount of time, if the election is received by
the Committee no later than the calendar year prior to the date of the grant of the
applicable Award;
	 
	 	(b)	 	a deferral may be made no later than twelve months before the portion of the
Award vests, but payment must be deferred for at least five years from the original
payment date;
	 
	 	(c)	 	a Participant who first becomes eligible to participate in the Plan (or any
other plan subject to the aggregation rules under Section 409A of the Code) may make a
deferral for any amount of time, but such deferral must be made within the first 30
days in which the Participant becomes eligible to participate and the deferral may only
apply to compensation earned after the election is made;
	 
	 	(d)	 	a deferral may be made for any amount of time, but

	 	(1)	 	such election must be made within 30 days of the grant;
	 
	 	(2)	 	such election may only apply with respect to the portion of the
Award whose vesting is contingent on the Participant performing services for at
least an additional twelve months from the date of election; and
	 
	 	(3)	 	such election may not be not effective until 12 months from the
date it is made; or

	 	(e)	 	a deferral may be made for any amount of time up until six months before the
Award vests if the Award is for performance-based compensation (as determined under
Section 409A of the Code) measured over a period of at least twelve (12) months and
either

	 	(1)	 	the amount of the compensation cannot be reasonably ascertained
at the time of the election, or
	 
	 	(2)	 	the performance requirement is still not substantially certain
to be met at the time of the election.

Notwithstanding any other provision of this Plan, a deferred Award shall be accelerated and paid
out upon a Participant’s separation from service or death, except that a Participant who is a
“specified employee” under Section 409A of the Code shall have the payment of his deferred Award
delayed for an additional six months after his separation from service to the extent required to
comply with Section 409A of the Code.

     15. Adjustments to Reflect Changes in Capital Structure.

     15.01 Adjustments. If there is any change in the corporate structure or shares
of the Company, the Committee will make any appropriate adjustments, including,
but not limited to, such adjustments deemed necessary to prevent accretion, or
to protect against dilution, in the number and kind of shares of Common Stock
with respect to which Awards may be granted under this Plan (including the
maximum number of shares of Common Stock with respect to which Awards may be
granted under this Plan in the aggregate and individually to any Participant
during any calendar year as specified in Section 3) and, with respect to
outstanding Awards, in the number and kind of shares covered thereby and in the
applicable Option Price. For the purposes of this Section 15, a change in the
corporate structure or shares of the Company includes, without limitation, any
change resulting from a recapitalization, stock split, stock dividend,
consolidation, rights offering, separation, reorganization, or liquidation
(including a partial liquidation) and any transaction in which shares of Common
Stock are changed into or exchanged for a different number or kind of shares of
stock or other securities of the Company or another corporation.

     15.02 Cashouts. In the event of an extraordinary dividend or other
distribution, merger, reorganization, consolidation, combination, sale of
assets, split up, exchange, or spin off, or other extraordinary corporate
transaction, the Committee may, in such manner and to such extent (if any) as
it deems appropriate and equitable, make provision for a cash payment or for
the substitution or exchange of any or all outstanding Awards for the cash,
securities or property deliverable to the holder of any or all outstanding
Awards based upon the distribution or consideration payable to holders of
Common Stock upon or in respect of such event; provided,

 

 

however,
in each case,
that with respect to any ISO no such adjustment may be made that would cause
the Plan to violate Section 422 of the Code (or any successor provision).

     16. Nontransferability of Awards.

     16.01 ISOs. ISOs are not transferable, voluntarily or involuntarily, other than
by will or by the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code. During a Participant’s
lifetime, his ISOs may be exercised only by him.

     16.02 Awards Other Than ISOs. All Awards granted pursuant to this Plan other
than ISOs are transferable by will or by the laws of descent and distribution
or pursuant to a qualified domestic relations order as defined by the Code, or
in the Committee’s discretion after vesting. With the approval of the
Committee, a Participant may transfer an Award (other than an ISO) for no
consideration to or for the benefit of one or more Family Members of the
Participant subject to such limits as the Committee may establish, and the
transferee shall remain subject to all the terms and conditions applicable to
the Award prior to such transfer. The transfer of an Award pursuant to this
Section 16 shall include a transfer of the right set forth in Section 20 hereof
to consent to an amendment or revision of the Plan and, in the discretion of
the Committee, shall also include transfer of ancillary rights associated with
the Award. The provisions of this Section 16 shall not apply to any Common
Stock issued pursuant to an Award for which all restrictions have lapsed and is
fully vested.

     17. Rights as Stockholder.

     No Common Stock may be delivered upon the exercise of any Option until full payment has been
made. A Participant has no rights whatsoever as a stockholder with respect to any shares covered by
an Award until the date of the issuance of a stock certificate for the shares except as otherwise
determined by the Committee and set forth in the Agreement.

     18. Withholding Taxes.

     The Committee may, in its discretion and subject to such rules as it may adopt, permit or
require a Participant to pay all or a portion of the federal, state and local taxes, including FICA
and Medicare withholding tax, arising in connection with any Awards by (i) having the Company
withhold shares of Common Stock at the minimum rate legally required, (ii) tendering back shares of
Common Stock received in connection with such Award or (iii) delivering other previously acquired
shares of Common Stock having a Fair Market Value approximately equal to the amount to be withheld.

     19. No Right to Employment.

     Participation in the Plan will not give any Participant a right to be retained as an employee
or director of the Company, its Subsidiaries, or an Affiliate, or any right or claim to any benefit
under the Plan, unless the right or claim has specifically accrued under the Plan.

     20. Amendment of the Plan.

     The Board of Directors may from time to time amend or revise the terms of this Plan in whole
or in part, subject to the following limitations:

	 	(a)	 	No amendment may, in the absence of written consent to the change by
the affected Participant (or, if the Participant is not then living,
the affected beneficiary), adversely affect the rights of any
Participant or beneficiary under any Award granted under the Plan
prior to the date such amendment is adopted by the Board; provided,
however, no such consent shall be required if the Committee determines
in its sole and absolute discretion that the amendment or revision (i)
is required or advisable in order for the Company, the Plan or the
Award to satisfy applicable law, to meet the requirements of any
accounting standard or to avoid any adverse accounting treatment, or
(ii) in connection with any transaction or event described in Section
15, is in the best interests of the Company or its stockholders. The
Committee may, but need not, take the tax consequences to affected
Participants into consideration in acting under the preceding
sentence.

 

 

	 	(b)	 	no amendment may increase the limitations on the number of shares set
forth in Section 3, unless any such amendment is approved by the
Company’s stockholders; and
	 
	 	(c)	 	no amendment may be made to the provisions of Section 4(c) relating to
repricing unless such amendment is approved by the Company’s
stockholders;

provided; however, that adjustments pursuant to Section 15.01 shall not be subject to the foregoing
limitations of this Section 20.

     21. Conditions Upon Issuance of Shares.

     An Option shall not be exercisable and a share of Common Stock shall not be issued pursuant to
the exercise of an Option, and Restricted Stock, Restricted Stock Units, and Performance Share
Units shall not be awarded until and unless the Award of Restricted Stock, Restricted Stock Units
or Performance Share Units, exercise of such Option and the issuance and delivery of such share
pursuant thereto shall comply with all relevant provisions of law, including, without limitation,
the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange or national securities association upon
which the shares of Common Stock may then be listed or quoted, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

     22. Dividends.

     Unless otherwise specified in the agreement evidencing an Award, all Restricted Stock and
Restricted Stock Unit Awards shall be entitled to dividends, even if not vested or the restrictions
applicable thereto have not yet lapsed. For all other Awards (except if specified otherwise in the
agreement evidencing the Award), no dividends shall be paid unless and until Common Stock is issued
under the Award, the Award is fully vested, and all restrictions upon the Award have lapsed or been
waived. If this Section 22 or the agreement evidencing an Award allows for the payment of
dividends, all noncash dividends and distributions shall be subject to the same vesting and other
restrictions applicable to the underlying Award.

     23. Substitution or Assumption of Awards by the Company.

     The Company, from time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company or otherwise, by
either (a) granting an Award under the Plan in substitution of such other company’s award, or (b)
assuming such award as if it had been granted under the Plan if the terms of such assumed award
could be applied to an Award granted under the Plan. Such substitution or assumption shall be
permissible if the holder of the substituted or assumed award would have been eligible to be
granted an Award under the Plan if the other company had applied the rules of the Plan to such
grant. In the event the Company assumes an award granted by another company, the terms and
conditions of such award shall remain unchanged (except that the exercise price and the number and
nature of shares issuable upon exercise of any such option will be adjusted appropriately pursuant
to Section 424(a) of the Code). In the event the Company elects to grant a new Award rather than
assuming an existing option, such new Award may be granted with a similarly adjusted exercise
price.

     24. Effective Date and Termination of Plan.

          24.01 Effective Date. This Plan is effective as of the date of its approval by
the stockholders of the Company. Awards may be made under this Plan prior to
stockholder approval, but such Awards shall be conditioned on the approval of
this Plan by stockholders of the Company.

          24.02 Termination of the Plan. The Plan will terminate 10 years after the date
it is approved by the Board of Directors; provided, however, that the Board of
Directors may terminate the Plan at any time prior thereto with respect to any
shares that are not then subject to Awards. Termination of the Plan will not
affect the rights and obligations of any Participant with respect to Awards
granted before termination.exv10w2

 

Exhibit 10.2

METHODE ELECTRONICS, INC. 2007 CASH INCENTIVE PLAN

     1. Preamble.

     Methode Electronics, Inc., a Delaware corporation (the “Company”), hereby establishes the
Methode Electronics, Inc. 2007 Cash Incentive Plan (the “Plan”) as an incentive for selected
officers and key employees of the Company to improve corporate performance by providing each
participating officer and other selected key employees with an opportunity to receive a cash
incentive payment based upon the accomplishment of certain performance criteria.

     2. Definitions and Rules of Construction.

     2.01 Definitions.

     (a) “Affiliate” means any entity during any period that, in the opinion of the Committee, the Company has a significant economic interest in the entity.

     (b) “Award” means the grant of a cash incentive award hereunder.

     (c) “Award Date” means the date upon which an Award is granted to a Participant under the Plan.

     (d) “Board” or “Board of Directors” means the board of directors of the Company.

     (e) “Cause” shall mean:

	 	(i)	 	Participant’s conviction of a felony;
	 
	 	(ii)	 	Participant’s commission of any act or acts of personal dishonesty intended to result in substantial personal enrichment to Participant to the detriment of the Company;
	 
	 	(iii)	 	repeated violations of Participant’s responsibilities which are demonstrably willful and deliberate, provided that such violations have continued more than ten days after the Board of
Directors of the Company has given written notice of such violations and of its intention to terminate Participant’s employment because of such violations;
	 
	 	(iv)	 	any willful misconduct by the Participant which affects the business reputation of the Company;
	 
	 	(v)	 	breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or other similar agreement between the Participant and the Company or any
Affiliate or Subsidiary; or
	 
	 	(vi)	 	Participant’s violation of the Company’s code of conduct.

The Participant shall be considered to have been discharged for “Cause” if the Company determines, within 30 days after the Participant’s resignation, that discharge for Cause was warranted.

     (f) “Change of Control” shall be deemed to have occurred on the first to occur of any of the following as a result of one transaction or a series of transactions:

	 	(i)	 	the date any one person, or more than
one “person” acting as a group,
acquires (or has acquired during the
twelve (12) month period ending on the
date of the most recent acquisition by
such person(s)) ownership of stock of
the Company possessing thirty percent
(30%) or more of the total voting power
of the stock of the Company;

 

 

	 	(ii)	 	the date a majority of the members of
the Company’s Board of Directors is
replaced during any twelve (12) month
period by directors whose appointment
or election is not endorsed by a
majority of the Company’s Board of
Directors before the date of the
appointment or election; or
	 
	 	(iii)	 	the date any one person, or more than
one person acting as a group, acquires
ownership of stock of the Company that,
together with stock held by such person
or group, constitutes more than fifty
percent (50%) percent of the fair
market value or total voting power of
the stock of the Company.

     (g) “Code” means the Internal Revenue Code of 1986, as amended from time to time or any successor thereto.

     (h) “Committee” means the Compensation Committee of the Board of Directors.

     (i) “Company” means Methode Electronics, Inc., a Delaware corporation, and any successor thereto.

     (j) “Family Members” mean with respect to an individual, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the
individual’s household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these
persons (or the individual) control the management of assets, and any other entity in which these persons (or the individual) own more than 50% of the voting
interests.

     (k) “Participant” means an individual to whom an Award has been granted under the Plan.

     (l) “Plan” means the Methode Electronics, Inc. 2007 Cash Incentive Plan, as set forth herein and from time to time amended.

     (m) “Subsidiary” means any entity during any period of which the Company owns or controls more than 50% of (i) the outstanding capital stock, or (ii) the combined
voting power of all classes of stock.

     2.02 Rules of Construction.

     (a) Governing Law and Venue. The construction and operation of this Plan are governed by the laws of the State of Illinois without
regard to any conflicts or choice of law rules or principles that might otherwise refer construction or interpretation of this Plan
to the substantive law of another jurisdiction, and any litigation arising out of this Plan shall be brought in the Circuit Court
of the State of Illinois or the United States District Court for the Eastern Division of the Northern District of Illinois.

     (b) Undefined Terms. Unless the context requires another meaning, any term not specifically defined in this Plan is used in the
sense given to it by the Code.

     (c) Headings. All headings in this Plan are for reference only and are not to be utilized in construing the Plan.

     (d) Conformity with Section 162(m). Any awards issued to specified employees (as defined in Section 162(m) of the Code) with any of
the performance criteria listed in Section 5 are intended to qualify as performance-based compensation under Section 162(m) of the
Code to which the applicable remuneration limits of Section 162(m)(1) do not apply.

     (e) Gender. Unless clearly inappropriate, all nouns of whatever gender refer indifferently to persons of any gender.

     (f) Singular and Plural. Unless clearly inappropriate, singular terms refer also to the plural and vice versa.

     (g) Severability. If any provision of this Plan is determined to be illegal or invalid for any reason, the remaining provisions are
to continue in full force and effect and to be construed and enforced as if the illegal or invalid provision did not exist, unless
the continuance of the Plan in such circumstances is not consistent with its purposes.

 

 

     3. Administration.

     The Committee shall administer the Plan. All determinations of the Committee are made by a
majority vote of its members. The Committee’s determinations are final and binding on all
Participants. In addition to any other powers set forth in this Plan, the Committee has the
following powers:

	 	(a)	 	to construe and interpret the Plan;
	 
	 	(b)	 	to establish, amend and rescind appropriate rules and regulations relating to the Plan;
	 
	 	(c)	 	subject to the terms of the Plan, to select the individuals who will receive Awards,
the times when they will receive them, the form of agreements which evidence such
Awards, the amount of such Award, the performance targets to be achieved to receive
payment of the Award, the expiration date applicable to each Award and other terms,
provisions and restrictions of the Awards (which need not be identical) and subject to
Section 13 hereof, to amend or modify any of the terms of outstanding Awards;
	 
	 	(d)	 	to contest on behalf of the Company or Participants, at the expense of the Company,
any ruling or decision on any matter relating to the Plan or to any Awards; and
	 
	 	(e)	 	generally, to administer the Plan, and to take all such steps and make all such
determinations in connection with the Plan and the Awards granted thereunder as it may
deem necessary or advisable.

Except to the extent prohibited by applicable law, the Committee may allocate all or any portion of
its responsibilities and powers to any one or more of its members and may delegate all or any part
of its responsibilities and powers to any person or persons selected by it. Any such allocation or
delegation may be revoked by the Committee at any time.

     4. Eligible Participants.

     Present and future officers and key employees of the Company or any Subsidiary shall be
eligible to participate in the Plan. The Committee from time to time shall select those officers
and key employees of the Company and any Subsidiary of the Company who shall be designated as
Participants and shall designate in accordance with the terms of the Plan the amount of any Award
to be awarded to each Participant.

     5. Performance Criteria (162(m) Awards).

     Subject to the terms of the Plan, the Committee, in its discretion, may make the grant or
vesting of an Award to a “specified employee” (as defined in Section 162(m) of the Code and the
regulations thereunder) subject to performance criteria (a “162(m) Award”). All 162(m) Awards
shall be granted by the Committee when composed of two or more outside directors, as prescribed by
Section 162(m) of the Code and the regulations thereunder. The Committee shall certify that the
performance goals and other material terms have been satisfied before payment of a 162(m) Award is
made. All 162(m) Awards shall be paid solely on account of the attainment of one or more
pre-established, objective performance goals, which goals shall be established on a timely basis,
in conformity with the timing requirements of Section 162(m) of the Code. Notwithstanding any
provision of the Plan to the contrary, the Committee shall not have discretion to waive or amend
such performance goals or to increase the amount payable pursuant to a 162(m) Award after the
performance goals have been established; provided, however, the Committee may, in its sole
discretion, reduce the amount that would otherwise be payable with respect to any 162(m) Award.
Permissible performance goals include any one of the following or combination thereof which may be
applicable on a Company-wide basis and/or with respect to operating units, divisions, subsidiaries,
acquired businesses, minority investments, partnerships or joint ventures:

	 	(a)	 	meeting specific targets for or growth in:

	 	(2)	 	stock price,
	 
	 	(3)	 	net sales (dollars or volume),
	 
	 	(4)	 	cash flow,
	 
	 	(5)	 	operating income,

 

 

	 	(6)	 	net income,
	 
	 	(7)	 	earnings per share,
	 
	 	(8)	 	earnings before taxes,
	 
	 	(9)	 	earnings before interest and taxes, or
	 
	 	(10)	 	earnings before interest, taxes, depreciation and amortization (EBITDA);

	 	(b)	 	return on:

	 	(1)	 	net sales,
	 
	 	(2)	 	assets or net assets, or
	 
	 	(3)	 	invested capital;

	 	(c)	 	management of:

	 	(1)	 	working capital,
	 
	 	(2)	 	expenses, or
	 
	 	(3)	 	cash flow;

	 	(d)	 	meeting specific targets for or growth in:

	 	(1)	 	productivity,
	 
	 	(2)	 	specified product lines,
	 
	 	(3)	 	market share,
	 
	 	(4)	 	product development,
	 
	 	(5)	 	customer service or satisfaction,
	 
	 	(6)	 	employee satisfaction,
	 
	 	(7)	 	strategic innovation, or
	 
	 	(8)	 	acquisitions;

	 	(e)	 	specific personal performance improvement objectives relative to:

	 	(1)	 	formal education,
	 
	 	(2)	 	executive training,
	 
	 	(3)	 	leadership training; or
	 
	 	(4)	 	succession planning.

	 	(f)	 	any other criteria established by the Committee (but only if such other
criteria are approved by the stockholders).

     The material terms of the 162(m) Award shall be disclosed and approved by stockholders prior
to payment, in conformity with the requirements under Section 162(m) of the Code. Subject to such
deferral and/or other conditions as may be permitted or required by the Committee, cash amounts
earned under an award will be paid or distributed as soon as practicable following the Committee’s
determination and certification of such amounts. Notwithstanding anything to the contrary
contained herein, no Participant may earn more than two (2) times his or her annual base salary in
any calendar year (as listed on the Summary Compensation Table in the Company’s annual proxy
statement) pursuant to an Award made under the Plan, except that Tandem Cash Awards shall be
subject to a different limitation. A Tandem Cash Award is an Award made under this Plan which
Award is made at the same time as a restricted stock award. Tandem Cash Awards shall have a
maximum value of 50% of the aggregate fair market value as of the vesting date of the tandem
restricted stock award. Both a Tandem Cash Award and a Cash Award subject to the dollar limitation
listed above may be made in the same calendar year. Any 162(m) Award that fails to meet the
requirements under this Section 5 or the requirements under Section 162(m) and its regulations
shall not be nullified or voided. Instead, payment of such a 162(m) Award shall be delayed until
the applicable remuneration is deductible or upon the specified employee’s termination of
employment, whichever occurs first.

     6. Terms and Conditions of Cash Incentive Awards.

     The Committee may, in its discretion, grant an Award to any Participant under the Plan. Each
Award shall be evidenced by an agreement between the Company and the Participant. Such Award shall
specify a performance period and performance criteria that must be satisfied in order for a payment
to be made. Such performance criteria

 

 

may (but need not) include the goals itemized in Section 5 above. The Award agreement shall
specify the amount to be paid (or formula for determining the payment amount), the payment schedule
for such Award, the expiration of such Award, and such other information necessary or desirable for
the proper administration of such Award. Unless such Award is properly deferred under Section 9,
all Awards shall be paid to the Participant within 2 1/2 months after the end of the Company’s or the
Participant’s taxable year in which the Participant became entitled to the Award payment.

     7. Acceleration of Payment.

     Notwithstanding the above schedule, unless otherwise determined by the Committee and set forth
in the agreement evidencing an Award, payment of a Participant’s Awards shall accelerate if a
Participant’s employment with the Company and its Subsidiaries and Affiliates or service on the
board of directors of the Company, a Subsidiary or an Affiliate is terminated due to: (i)
retirement on or after his sixty-fifth birthday; (ii) retirement on or after his fifty-fifth
birthday with consent of the Company; (iii) retirement at any age on account of total and permanent
disability as determined by the Company; or (iv) death. If payment is accelerated, payment of the
Award shall be made on a pro rata basis, based on performance to date and on the total number of
days the Participant was employed during the performance period in relation to the scheduled number
of days between the Award Date and the scheduled payment date.

     A Participant’s employment shall not be considered to be terminated hereunder by reason of a
transfer of his employment from the Company to a Subsidiary or Affiliate, or vice versa, or a leave
of absence approved by the Participant’s employer. A Participant’s employment shall be considered
to be terminated hereunder if, as a result of a sale or other transaction, the Participant’s
employer ceases to be a Subsidiary or Affiliate (and the Participant’s employer is or becomes an
entity that is separate from the Company and its Subsidiaries and Affiliates).

     8. Effect of Change of Control.

     Unless otherwise determined by the Committee and set forth in the agreement evidencing an
Award, immediately following a Change of Control, payment of any outstanding Award shall be
accelerated. Payment of an Award subject to performance criteria shall be made on a pro rata
basis, based on performance to date and on the total number of days during the performance period
before the Change of Control in relation to the entire performance period.

     9. Deferrals.

     A Participant may elect to defer receipt of all or a portion of an Award payment, subject to
the rules listed below:

	 	(a)	 	a deferral may be made for any amount of time, if the election is received by
the Committee no later than the calendar year prior to the date of the grant of the
applicable Award;
	 
	 	(b)	 	a deferral may be made no later than twelve months before the portion of the
Award vests, but payment must be deferred for at least five years from the original
payment date;
	 
	 	(c)	 	a Participant who first becomes eligible to participate in the Plan (or any
other plan subject to the aggregation rules under Section 409A of the Code) may make a
deferral for any amount of time, but such deferral must be made within the first 30
days in which the Participant becomes eligible to participate and the deferral may only
apply to compensation earned after the election is made;
	 
	 	(d)	 	a deferral may be made for any amount of time, but

	 	(1)	 	such election must be made within 30 days of the grant;
	 
	 	(2)	 	such election may only apply with respect to the portion of the
Award whose vesting is contingent on the Participant performing services for at
least an additional twelve months from the date of election; and

 

 

	 	(3)	 	such election may not be not effective until 12 months from the
date it is made; or

	 	(e)	 	a deferral may be made for any amount of time up until six months before the
Award vests if the Award is for performance-based compensation (as determined under
Section 409A of the Code) measured over a period of at least twelve (12) months and
either

	 	(1)	 	the amount of the compensation cannot be reasonably ascertained
at the time of the election, or
	 
	 	(2)	 	the performance requirement is still not substantially certain
to be met at the time of the election.

Notwithstanding any other provision of this Plan, a deferred Award shall be accelerated and paid
out upon a Participant’s separation from service or death, except that a Participant who is a
“specified employee” under Section 409A of the Code shall have the payment of his deferred Award
delayed for an additional six months after his separation from service to the extent required to
comply with Section 409A of the Code.

     10. Nontransferability of Awards.

     All Awards granted pursuant to this Plan are transferable by will or by the laws of descent
and distribution or pursuant to a qualified domestic relations order as defined by the Code, or in
the Committee’s discretion after vesting. With the approval of the Committee, a Participant may
transfer an Award for no consideration to or for the benefit of one or more Family Members of the
Participant subject to such limits as the Committee may establish, and the transferee shall remain
subject to all the terms and conditions applicable to the Award prior to such transfer. The
transfer of an Award pursuant to this Section 10 shall include a transfer of the right set forth in
Section 13 hereof to consent to an amendment or revision of the Plan and, in the discretion of the
Committee, shall also include transfer of ancillary rights associated with the Award.

     11. Withholding Taxes.

     The Committee may, in its discretion and subject to such rules as it may adopt, permit or
require a Participant to pay all or a portion of the federal, state and local taxes, including FICA
and Medicare withholding tax, arising in connection with any Awards.

     12. No Right to Employment.

     Participation in the Plan will not give any Participant a right to be retained as an employee
or director of the Company, its Subsidiaries, or an Affiliate, or any right or claim to any benefit
under the Plan, unless the right or claim has specifically accrued under the Plan.

     13. Amendment of the Plan.

     The Board of Directors may from time to time amend or revise the terms of this Plan in whole
or in part, subject to the following limitations. No amendment may, in the absence of written
consent to the change by the affected Participant (or, if the Participant is not then living, the
affected beneficiary), adversely affect the rights of any Participant or beneficiary under any
Award granted under the Plan prior to the date such amendment is adopted by the Board; provided,
however, no such consent shall be required if the Committee determines in its sole and absolute
discretion that the amendment or revision is required or advisable in order for the Company, the
Plan or the Award to satisfy applicable law, to meet the requirements of any accounting standard or
to avoid any adverse accounting treatment, or (ii) is otherwise in the best interests of the
Company or its stockholders. The Committee may, but need not, take the tax consequences to affected
Participants into consideration in acting under the preceding sentence.

     14. Effective Date and Termination of Plan.

     (a) Effective Date. This Plan is effective as of the date of its approval by
the stockholders of the Company. Awards may be made under this Plan prior to
stockholder approval, but such Awards shall be conditioned on the approval of
this Plan by stockholders of the Company.

 

 

     (b) Termination of the Plan. The Plan will terminate 10 years after the date it
is approved by the Board of Directors; provided, however, that the Board of
Directors may terminate the Plan at any time prior thereto. Termination of the
Plan will not affect the rights and obligations of any Participant with respect
to Awards granted before termination.

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