Document:

ex1031.htm

    

    Exhibit
10.3.1

    

    Stock
Option Grant

     

    Sun
Healthcare Group, Inc.

    2004
Equity Incentive Plan

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	
                                        Name
      of Optionee:

                                      	
                                        [______]

                                      
	 
      	 
      
	
                                        Shares
      Subject to Option:

                                      	
                                        [______] shares of common stock, par value
      $.01 (“Common Stock”),
      of Sun Healthcare Group, Inc. (the “Company”).

                                      
	 
      	 
      
	
                                        Type
      of Option:

                                      	
                                        Nonqualified
      Stock Option

                                      
	 
      	 
      
	
                                        Exercise
      Price Per Share:

                                      	
                                        [______]

                                      
	 
      	 
      
	
                                        Date
      of Grant:

                                      	
                                        [______]

                                      
	 
      	 
      
	
                                        Date
      Exercisable/Vesting:

                                      	
                                        This
      option may be exercised to the extent the shares of Common Stock subject
      to this option have vested at any time after the Date of
      Grant.  The option vests as follows if you are employed by the Company or
      its subsidiaries on the applicable
      vesting date: (1) 25% of the shares
      subject to this option vest on each of the first four anniversaries of the
      Date of Grant; (2) the unvested portion of this option will vest in
      full upon your termination of Service by the Company or its
      subsidiaries without Good Cause or your resignation from Service for Good
      Reason, or your death or Disability;
      and (3) this option vests in full upon the date of a Change in
      Control.  The terms “Service,”
      “Good Cause,” “Good Reason,” “Disability” and “Change in Control” are used
      as defined in the Plan.

                                      
	 
      	 
      
	
                                        Expiration
      Date:

                                      	
                                        [______],
      subject to earlier termination in accordance with the
      Terms.

                                      

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    By
signing your name below, you accept this option and acknowledge and agree that
this option is granted under and governed by the terms and conditions
(collectively, the “Terms”) of the Sun Healthcare Group, Inc. 2004 Equity
Incentive Plan (the “Plan”) and the Stock
Option Agreement, both of which are hereby made a part of this
document.

    

    
      
        
          
            
              	
                      Optionee:

                    	
                      Sun
      Healthcare Group, Inc.

                    
	 
      	 
      
	
                      Signature

                    	
                      By:  Richard
      Matros

                    
	 
      	
                      Title:  Chief
      Executive
Officer

                    

            

          

        

      

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Stock
Option Agreement

    

    

    Sun
Healthcare Group, Inc.

    2004
Equity Incentive Plan

    

    1.           GRANT
OF OPTION.

     

    (a)           Option.  On the
terms and conditions set forth in this Agreement and each Notice of Stock Option
Grant referencing this Agreement (the “Notice”), the Company grants to the
Optionee on the Date of Grant an option to purchase at the Exercise Price a
number of shares of Common Stock, all as set forth in the
Notice.  Each such Notice, together with this referenced Agreement,
shall be a separate option governed by the terms of this Agreement.

     

    (b)           Plan and Defined
Terms.  This option is granted under and subject to the terms
of the 2004 Equity Incentive Plan (the “Plan”), which is incorporated herein by
this reference.  Capitalized terms are defined in the
Plan.

     

    (c)           Scope of this
Agreement.  This Agreement shall apply both to this option (or
options) and to the shares of Common Stock acquired upon the exercise of
such     option(s).

     

    2.           RIGHT
TO EXERCISE.

     

                  Subject
to the conditions set forth in this Agreement, all or part of this option may be
exercised prior to its expiration at the time or times set forth in the
Notice.

     

    3.           TRANSFER
OR ASSIGNMENT OF OPTION.

     

    (a)           Generally.   This
option shall be exercisable during the Optionee’s lifetime, only by the
Optionee.  Except as otherwise provided in subsection (b) below, this
option and the rights and privileges conferred hereby shall not be sold, pledged
or otherwise transferred (whether by operation of law or otherwise) other than
by will or the laws of descent and distribution and shall not be subject to sale
under execution, attachment, levy or similar process.

     

    (b)           Permitted
Transfers.  The Optionee shall be permitted to transfer this
option, in connection with his or her estate plan, to the Optionee’s spouse,
siblings, parents, children and grandchildren or trusts for the benefit of such
persons or partnerships, corporations, limited liability companies or other
entities owned solely by such persons, including trusts for such
persons.

     

    4.           EXERCISE
PROCEDURES.

     

    (a)           Notice of
Exercise.  The Optionee or the Optionee’s representative may
exercise this option by giving written notice to the Company specifying the
election to exercise this option, the number of shares of Common Stock for which
it is being exercised and the form of payment.  Exhibit A is an
example of a “Notice of Exercise”.  The Notice of Exercise shall be
signed by the person exercising this option.  In the event that this
option is being exercised by the Optionee’s representative, the notice shall be
accompanied by proof (satisfactory to the Company) of the representative’s right
to exercise this option.  The Optionee or the Optionee’s
representative shall deliver to the Company, at the time of giving the notice,
payment in a form permissible under 

    
      
        
        

      

      
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    Section 5
for the full amount of the Purchase Price.

     

    (b)           Issuance of Common
Stock.  After receiving a proper notice of exercise, the
Company shall cause to be issued a certificate or certificates for the shares of
Common Stock as to which this option has been exercised, registered in the name
of the person exercising this option (or in the names of such person and his or
her spouse as community property or as joint tenants with right of
survivorship).

     

    (c)           Withholding
Requirements.  The Company may withhold any tax (or other
governmental obligation) as a result of the exercise of this option, as a
condition to the exercise of this option, and the Optionee shall make
arrangements satisfactory to the Company to enable it to satisfy all such
withholding requirements.  The Optionee shall also make arrangements
satisfactory to the Company to enable it to satisfy any withholding requirements
that may arise in connection with the vesting or disposition of shares of Common
Stock purchased by exercising this option.

     

    5.           PAYMENT
FOR SHARES OF COMMON STOCK.

     

    (a)           Cash or Check.  All
or part of the Purchase Price may be paid in cash or by check.

     

    (b)           Alternative Methods of
Payment. At the sole discretion of the Committee, all or any part of the
Purchase Price and any applicable withholding requirements may be paid by one or
more of the following methods:

     

    (i)           Surrender of
Stock.  By surrendering, or attesting to the ownership of,
shares of Common Stock that are already owned by the Optionee free and clear of
any restriction or limitation, unless the Company specifically agrees to accept
such shares of Common Stock subject to such restriction or
limitation.  Such shares of Common Stock shall be surrendered to the
Company in good form for transfer and shall be valued at their Fair Market Value
on the date of the applicable exercise of this option.  The Optionee
shall not surrender, or attest to the ownership of, shares of Common Stock in
payment of the Purchase Price (or withholding) if such action would cause the
Company to recognize compensation expense (or additional compensation expense)
with respect to this option for financial reporting purposes that otherwise
would not have occurred.

     

    (ii)           Exercise/Sale.  By
the delivery (on a form prescribed by the Company) of an irrevocable direction
(A) to a securities broker approved by the Company to sell shares of Common
Stock and to deliver all or part of the sales proceeds to the Company, or (B) to
pledge shares of Common Stock to a securities broker or lender approved by the
Company as security for a loan, and to deliver all or part of the loan proceeds
to the Company.

     

    Should
the Committee exercise its discretion to permit the Optionee to exercise this
option in whole or in part in accordance with this subsection (b) above, it
shall have no obligation to permit such alternative exercise with respect to the
remainder of this option or with respect to any other option to purchase shares
of Common Stock held by the Optionee.

     

    6.           TERM
AND EXPIRATION.

     

    (a)           Basic Term.  Subject
to earlier termination in accordance with subsection (b) below, the exercise
period of this option shall expire on the expiration date set forth in the
Notice, or in the 

    
      
        
        

      

      
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    event of
the Optionee's death, the date that is one (1) year after the Optionee's Service
terminates because of his or her death, if later.

     

    (b)           Termination of
Service.  If the Optionee’s Service terminates for any reason,
then the exercise period for this option shall expire on the earliest of the
following occasions (or such later date as the Committee may
determine):

     

    (i)           The
expiration date determined pursuant to subsection (a) above;

     

    (ii)           The
date three (3) months after the termination of the Optionee’s Service for any
reason other than death, Disability or Good
Cause;

     

    (iii)           The
date six (6) months after the termination of the Optionee’s Service by reason of
Disability or retirement pursuant to any then current formal retirement policy
of the Company;

     

    (iv)           The
date twelve (12) months after the Optionee’s death; or

     

    (v)           The
date of termination of the Optionee’s Service if such termination is for Good Cause or if
Good Cause exists on such date.

     

    The
Optionee (or in the case of the Optionee’s death or disability, the Optionee’s
representative) may exercise all or part of this option at any time before its
expiration under the preceding sentence, but only to the extent that this option
had become exercisable for vested shares of Common Stock on or before the date
the Optionee’s Service terminates.  When the Optionee’s Service
terminates, this option shall expire immediately with respect to the number of
shares of Common Stock for which this option is not yet vested.

     

    (c)           Leaves of
Absence.  For any purpose under this Agreement, Service shall
be deemed to continue while the Optionee is on a bona fide leave of absence, if
such leave was approved by the Company in writing or if continued crediting of
Service for such purpose is expressly required by the terms of such leave or by
applicable law (as determined by the Company).

     

    7.           ADJUSTMENT
OF SHARES OF COMMON STOCK.

     

    (a)           Adjustment
Generally.  If there shall be any change in the Common Stock of
the Company, through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, reverse stock split, split up, spin-off,
combination of shares of Common Stock, exchange of shares of Common Stock,
dividend in kind or other like change in capital structure or distribution
(other than normal cash dividends) to stockholders of the Company, an adjustment
shall be made to this option so that this option shall thereafter be exercisable
for such securities, cash and/or other property as would have been received in
respect of the Common Stock subject to the option had such option been exercised
in full immediately prior to such change or distribution, and such an adjustment
shall be made successively each time any such change shall occur.

    

    (b)           Modification of
Option.  In the event of any change or distribution described
in subsection (a) above, in order to prevent dilution or enlargement of the
Optionee's rights hereunder, the Committee may adjust, in an equitable manner,
the number and kind of shares of Common Stock that may be issued under this
Agreement, the Exercise Price applicable to this option, and the Fair Market
Value of the Common Stock and other value determinations applicable to this
option.  Appropriate adjustments may also be made by the Committee in
the

    
      
        
        

      

      
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    terms of
this option to reflect such changes or distributions and to modify any other
terms of this option then outstanding, on an equitable basis, including
modifications of performance targets and changes in the length of performance
periods.

    

    8.           MISCELLANEOUS
PROVISIONS.

     

    (a)           Rights as a
Shareholder.  Neither the Optionee nor the Optionee’s
representative shall have any rights as a shareholder with respect to any shares
of Common Stock subject to this option until the Optionee or the Optionee’s
representative becomes entitled to receive such shares of Common Stock by (i)
filing a notice of exercise, and (ii) paying the Purchase Price as provided in
this Agreement.

     

    (b)           Tenure.  Nothing in
the Notice, Agreement or Plan shall confer upon the Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Company (or any Parent or
Subsidiary employing or retaining the Optionee) or of the Optionee, which rights
are hereby expressly reserved by each, to terminate his or her Service at any
time and for any reason, with or without
Good Cause.

     

    (c)           Notification.  Any
notification required by the terms of this Agreement shall be given in writing
and shall be deemed effective upon personal delivery or upon deposit with the
United States Postal Service, by registered or certified mail, with postage and
fees prepaid.  A notice shall be addressed to the Company at its
principal executive office and to the Optionee at the address that he or she
most recently provided to the Company.

     

    (d)           Entire
Agreement.  The Notice, this Agreement and the Plan (and, if
applicable, any employment or severance agreement between the parties)
constitute the entire contract between the parties hereto with regard to the
subject matter hereof.  They supersede any other agreements,
representations or understandings (whether oral or written and whether express
or implied) which relate to the subject matter hereof.

     

    (e)           Waiver.  No waiver
of any breach or condition of this Agreement shall be deemed to be a waiver of
any other or subsequent breach or condition whether of like or different
nature.

     

    (f)           Successors and
Assigns.  The provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Company and its successors and assigns and
upon the Optionee, the Optionee’s assigns and the legal representatives, heirs
and legatees of the Optionee’s estate, whether or not any such person shall have
become a party to this Agreement and have agreed in writing to be join herein
and be bound by the terms hereof.

     

    (g)           Choice of Law.  This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Delaware as such laws are applied to contracts entered into and
performed in such State.

    
      
        
        

      

      
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    EXHIBIT
A

    

    Sample
Notice of Exercise

    

    

    Sun
Healthcare Group, Inc.

    18831 Von
Karman

    Suite
400

    Irvine,
CA 92612-1537

    Attn:  Corporate
Secretary

    

    

    

    I hereby
exercise my stock option granted under the Sun Healthcare Group, Inc. 2004
Equity Incentive Plan (the “Plan”) and notify you of my desire to purchase the
shares of Common Stock that have been offered pursuant to the Plan and related
Option Agreement as described below.

    

    I shall
pay for the shares of Common Stock by delivery of a check payable to Sun
Healthcare Group, Inc. (the “Company”) in the amount described below in full
payment for such shares of Common Stock plus all amounts required to be withheld
by the Company under state, federal or local law as a result of such exercise or
shall provide such documentation as is satisfactory to the Company demonstrating
that I am exempt from any withholding requirement.

    

    This
notice of exercise is delivered this ___ day of ___________________ (month)
____(year).

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        	
                                                                No.
      shares of

                                                                Common
      Stock 

                                                                to
      be Acquired

                                                              	
                                                                Type
      of Option

                                                              	
                                                                Exercise
      Price

                                                              	
                                                                Total

                                                              
	 
      	
                                                                Nonqualified

                                                                Stock
      Option

                                                              	 
      	 
      
	
                                                                Estimated
      

                                                                Withholding

                                                              	 
      	 
      	 
      
	 
      	 
      	
                                                                Amount
      Paid

                                                              	 
      

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          	
                                                  Very
      truly yours,

                                                
	 
      
	 
      
	
                                                  ______________________

                                                
	
                                                  Signature
      of Optionee

                                                
	 
      
	 
      
	
                                                  Optionee’s
      Name and Mailing Address

                                                
	
                                                  ______________________

                                                
	
                                                  ______________________

                                                
	
                                                  ______________________

                                                
	 
      
	
                                                  Optionee’s
      Social Security Number

                                                
	 
      
	
                                                  _____________________ex1032.htm

    Exhibit
10.3.2

    

    Stock
Unit Grant

    

    Sun
Healthcare Group, Inc.

    2004
Equity Incentive Plan

    

    

    
      
        
          
            
              
                
                  	
                          Name
      of Grantee:

                        	
                          [______]

                        
	 
      	 
      
	
                          Number
      of Stock Units:

                        	
                          [______]

                        
	 
      	 
      
	
                          Date
      of Grant:

                        	
                          [______]

                        
	
                          Vesting:

                        	
                          The
      units shall become vested as follows if you are employed by Sun Healthcare
      Group, Inc. or its subsidiaries on the applicable vesting
      date:  (i) 25% of the units shall vest on each of the following
      anniversaries of the Date of Grant: 13 months, 24 months, 36 months, and
      48 months, subject in each case to the Terms; and (ii) the units shall
      become vested in full upon the date of your
      death or Disability (as defined in the Plan) or a Change in Control
      (as defined in the Plan).
      

                        

                

              

            

          

        

      

    

     

    By
signing your name below, you accept this stock unit award and acknowledge and
agree that the units are granted under and governed by the terms and conditions
(collectively, the “Terms”) of the Sun Healthcare Group, Inc. 2004 Equity
Incentive Plan (the “Plan”) and the Stock
Unit Agreement, both of which are hereby made a part of this
document.

    

    
      	
              “GRANTEE”

               

               

              _________________________________

              Signature

               

               

            	
              SUN
      HEALTHCARE GROUP, INC.,

              a
      Delaware corporation

               

              _________________________________

              By:  Richard
      Matros

              Its:  Chief
      Executive Officer

            

    

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Stock
Unit Agreement

    

    

    Sun
Healthcare Group, Inc.

    2004
Equity Incentive Plan

    

     

    1. Stock
Units.  As used herein, a “Stock Unit” is a non-voting
unit of measurement which is deemed for bookkeeping purposes to be equivalent in
value to one outstanding share of Common Stock of the
Corporation.  The Stock Units shall be used solely as a device for the
determination of any payment to eventually be made to the Grantee if and when
such Stock Units vest pursuant to Section 2.

     

    
      The Stock
Units create no fiduciary duty to the Grantee and shall create only a
contractual obligation on the part of the Corporation to make payments, subject
to vesting and the other terms and conditions hereof, as provided in Sections 4
and 6 below.  The Stock Units shall not be treated as property or as a
trust fund of any kind.  No assets have been secured or set aside by
the Corporation with respect to the Award and, if amounts become payable to the
Grantee pursuant to this Award Agreement, the Grantee’s rights with respect to
such amounts shall be no greater than the rights of any general unsecured
creditor of the Corporation.

    

     

    2. Vesting.  As
set forth on the cover page of this Award Agreement, the Award shall vest in
percentage installments, subject to earlier termination or acceleration and
subject to adjustment as provided herein and in the Plan.

     

    3. Continuance
of Employment.  The vesting schedule requires continued
employment or service through each applicable vesting date as a condition to the
vesting of the applicable installment of the Award and the rights and benefits
under this Award Agreement.  Employment or service for only a portion
of the vesting period, even if a substantial portion, will not entitle the
Grantee to any proportionate vesting or avoid or mitigate a termination of
rights and benefits upon or following a termination of employment or services as
provided in Section 7 below or under the Plan.

     

    Nothing
contained in this Award Agreement or the Plan constitutes an employment or
service commitment by the Corporation or any Subsidiary, affects the Grantee’s
status as an employee at will who is subject to termination without cause,
confers upon the Grantee any right to remain employed by or in service to the
Corporation or any Subsidiary, interferes in any way with the right of the
Corporation or any Subsidiary at any time to terminate such employment or
services, or affects the right of the Corporation or any Subsidiary to increase
or decrease the Grantee’s other compensation or benefits.  Nothing in
this paragraph, however, is intended to adversely affect any independent
contractual right of the Grantee under any written employment agreement with the
Corporation.

     

    4. Dividend
and Voting Rights.

     

    (a)           Limitations
on Rights Associated with Units.  The Grantee shall
have no rights as a stockholder of the Corporation, no dividend rights (except
as expressly provided in Section 4(b) hereof with respect to Dividend
Equivalents) and no voting rights with respect to the Stock Units or any shares
of Common Stock issuable in respect of such Stock Units, until shares of Common
Stock are actually issued to and held of record by the Grantee.  No
adjustments will be

    
      
        
        

      

      
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      made for
dividends or other rights of a holder for which the record date is prior to the
date of issuance of the stock certificate evidencing the
shares.

    

     

    (b)           Dividend
Equivalent Distributions.  No later than
sixty (60) days following each date that the Corporation pays an ordinary cash
dividend on its outstanding Common Stock (if any ordinary cash dividends are
paid), for which the related record date occurs after the Award Date and prior
to the fourth anniversary of the Award Date, the Corporation shall make a cash
payment to the Participant equal to, subject to the tax withholding provisions
of Section 9 hereof and Section 17 of the Plan, the amount of the ordinary cash
dividend paid by the Corporation on a single share of Common Stock multiplied by
the number of Stock Units subject to this Award Agreement outstanding and unpaid
as of such record date (“Dividend
Equivalents”).

     

    5. Restrictions
on Transfer.  Prior to the time the Stock Units are vested and
paid, neither the Stock Units comprising the Award nor any interest therein or
amount payable in respect thereof may be sold, assigned, transferred, pledged or
otherwise disposed of, alienated or encumbered, either voluntarily or
involuntarily, other than by will or the laws of descent and
distribution.

     

    6. Timing
and Manner of Payment of Stock Units.  Stock Units subject to
this Award Agreement shall be paid in an equivalent number of shares of Common
Stock promptly after the vesting of such Stock Units (and in all events not later than the first March 15
following the year in which such Stock Units became vested) in accordance
with the terms hereof; provided, however, that the Committee may provide for all
or a portion of such vested Stock Units to be paid in cash.  Such
payment shall be subject to the tax withholding provisions of Section 9 hereof
and Section 17 of the Plan and subject to adjustment as provided in Section 12
of the Plan and shall be in complete satisfaction of such vested Stock
Units.  The Grantee or any other person entitled under the Plan to
receive a payment of shares of Common Stock shall deliver to the Corporation any
representations or other documents or assurances required pursuant to Section 18
of the Plan.

     

    Notwithstanding
the foregoing paragraph, the Grantee may elect (a
“Distribution Election”) on the Award Date or at such other time as may be
provided by the Committee (and in all cases at a time that complies with the
initial deferral election requirements of Section 409A of the Code) and
in accordance with rules prescribed the Committee, not to receive payment upon
the vesting of such Stock Unit and instead have the Corporation continue to
maintain such Stock Unit on its books of account.  Distribution Elections may only be made by delivering a
written election to the Corporation on a deferral election form provided by the
Corporation. Subject to approval by the
Committee, the distribution of such
deferred Stock Units shall be payable as
elected by the Grantee on the deferral election form.  

     

    7. Effect of
Termination of Employment or Services.  The Grantee’s
Stock Units shall be forfeited to the extent such units have not become vested
upon the first date the Grantee is no longer employed by or providing services
to the Corporation or one of its Subsidiaries, regardless of the reason for the
termination of such employment or services, whether with or without cause,
voluntarily or involuntarily; provided, however,
that if the Grantee’s termination of employment or service is the result of the
Grantee’s death or Disability, any then-outstanding and otherwise unvested Stock
Units subject to this Award shall thereupon fully vest.  If the
Grantee is employed by a Subsidiary and that entity ceases to be a Subsidiary,
such event shall be deemed to be a termination of employment of the Grantee for
purposes of this Award Agreement, unless the Grantee otherwise continues to be
employed by the Corporation or another of its Subsidiaries following such
event.  If the Grantee is not an employee or director of the

    
      
        
        

      

      
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      Corporation
or a Subsidiary, the Committee shall be the sole judge for purposes of this
Award Agreement whether the Grantee continues to render services to the
Corporation or a Subsidiary and the date, if any, upon which such services shall
be deemed to have terminated.

    

     

    8. Adjustments
Upon Specified Events.  Upon the occurrence of certain events
relating to the Corporation’s stock contemplated by Section 12 of the Plan, the
Committee will make adjustments if appropriate in the number of Stock Units
contemplated hereby and the number and kind of securities that may be issued in
respect of the Award.

     

    9. Tax
Withholding.  The Corporation shall reasonably determine the
amount of any federal, state, local or other income, employment, or other taxes
which the Corporation or any of its affiliates may reasonably be obligated to
withhold with respect to the grant, vesting, or other event with respect to the
Stock Units.  The Corporation may, in its sole discretion, withhold a
sufficient number of shares of Common Stock in connection with the vesting of
the Stock Units at the then Fair Market Value of the Common Stock (determined
either as of the date of such withholding or as of the immediately preceding
trading day, as determined by the Corporation in its discretion) to satisfy the
amount of any such withholding obligations that arise with respect to the
vesting of such Stock Units.  The Corporation may take such action(s)
without notice to the Grantee and shall remit to the Grantee the balance of any
proceeds from withholding such shares in excess of the amount reasonably
determined to be necessary to satisfy such withholding
obligations.  The Grantee shall have no discretion as to the
satisfaction of tax withholding obligations in such manner.  If,
however, any withholding event occurs with respect to the Stock Units other than
the vesting of such units, or if the Corporation for any reason does not satisfy
the withholding obligations with respect to the vesting of the Stock Units as
provided above in this Section 9, the Corporation shall be entitled to require a
cash payment by or on behalf of the Grantee and/or to deduct from other
compensation payable to the Grantee the amount of any such withholding
obligations.

     

    10. Notices.  Any
notice to be given under the terms of this Award Agreement shall be in writing
and addressed to the Corporation at its principal office to the attention of the
Secretary, and to the Grantee at the Grantee’s last address reflected on the
Corporation’s records, or at such other address as either party may hereafter
designate in writing to the other.  Any such notice shall be given
only when received, but if the Grantee is no longer an employee of the
Corporation or one of its Subsidiaries, shall be deemed to have been duly given
by the Corporation when enclosed in a properly sealed envelope addressed as
aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government.

     

    11. Plan.  The
Award and all rights of the Grantee under this Award Agreement are subject to,
and the Grantee agrees to be bound by, all of the terms and conditions of the
provisions of the Plan, incorporated herein by this reference.  In the
event of a conflict or inconsistency between the terms and conditions of this
Award Agreement and of the Plan, the terms and conditions of the Plan shall
govern.  The Grantee agrees to be bound by the terms of the Plan and
of this Award Agreement.  The Grantee acknowledges reading and
understanding the Plan, the Prospectus for the Plan, and this Award
Agreement.  Unless otherwise expressly provided in other sections of
this Award Agreement, provisions of the Plan that confer discretionary authority
on the Corporation’s Board of Directors (the “Board”) or the Committee do
not (and shall not be deemed to) create any rights in the Grantee unless such
rights are expressly set forth herein or are otherwise in the sole discretion of
the Board or the Committee so conferred by appropriate action of the Board or
the Committee under the Plan after the date
hereof.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    12. Entire
Agreement.  This Award Agreement and the Plan together
constitute the entire agreement and supersede all prior understandings and
agreements, written or oral, of the parties hereto with respect to the subject
matter hereof.  The Plan and this Award Agreement may be amended
pursuant to Section 22 of the Plan.  Such amendment must be in writing
and signed by the Corporation.  The Corporation may, however,
unilaterally waive any provision hereof in writing to the extent such waiver
does not adversely affect the interests of the Grantee hereunder, but no such
waiver shall operate as or be construed to be a subsequent waiver of the same
provision or a waiver of any other provision hereof.

     

    13. Counterparts.  This
Award Agreement may be executed simultaneously in any number of counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.

     

    14. Section
Headings.  The section headings of this Award Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.

     

    15. Governing
Law.  This Award Agreement and the rights of the parties
hereunder with respect to the Award shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware without regard to
conflict of law principles thereunder.

     

    16. Construction.  It is
intended that the terms of the Award will not result in the imposition of any
tax liability pursuant to Section 409A of the Code.  This Agreement
shall be construed and interpreted consistent with that
intent.

     

    5

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