Document:

exhibit.htm

    Exhibit 10.1

     

    
 

    KEY
EXECUTIVE EMPLOYMENT

    AND
SEVERANCE AGREEMENT

     

    

     

    By
and Between

     

    

     

    INTEGRYS
ENERGY GROUP, INC.

     

    

    And

     

    _____________________________

     

    

    As
Amended and Restated Effective May 1, 2010

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	 	TABLE OF CONTENTS	 
	 	 	 
	Section	 	Page 
	 	 	 
	
                                          1.

                                        	
                                          Definitions

                                        	
                                          2

                                        
	
                                           

                                        	
                                          (a) 
      Act

                                        	
                                          2

                                        
	
                                           

                                        	
                                          (b) 
      Affiliate and Associate

                                        	
                                          2

                                        
	
                                           

                                        	
                                          (c) 
      Beneficial Owner

                                        	
                                          2

                                        
	
                                           

                                        	
                                          (d) 
      Cause

                                        	
                                          3

                                        
	
                                           

                                        	
                                          (e) 
      Change in Control of the Company

                                        	
                                          3

                                        
	
                                           

                                        	
                                          (f) 
      Code

                                        	
                                          4

                                        
	
                                           

                                        	
                                          (g) 
      Continuing Director

                                        	
                                          4

                                        
	
                                           

                                        	
                                          (h) 
      Covered Termination

                                        	
                                          4

                                        
	
                                           

                                        	
                                          (i) 
      Employment Period

                                        	
                                          4

                                        
	
                                           

                                        	
                                          (j) 
      Good Reason

                                        	
                                          5

                                        
	
                                           

                                        	
                                          (k) 
      Normal Retirement Date

                                        	
                                          5

                                        
	
                                           

                                        	
                                          (l) 
      Person

                                        	
                                          5

                                        
	
                                           

                                        	
                                          (m) 
      Separation from Service

                                        	
                                          5

                                        
	
                                           

                                        	
                                          (n) 
      Termination of Employment

                                        	
                                          6

                                        
	
                                           

                                        	
                                          (o) 
      Termination Date

                                        	
                                          6

                                        
	
                                          2.

                                        	
                                          Term of
      Agreement and Certain Terminations Prior to Change in Control of the
      Company

                                        	
                                          8

                                        
	
                                          3.

                                        	
                                          Employment
      Period

                                        	
                                          9

                                        
	
                                          4.

                                        	
                                          Duties

                                        	
                                          9

                                        
	
                                          5.

                                        	
                                          Compensation

                                        	
                                          10

                                        
	
                                          6.

                                        	
                                          Annual
      Compensation Adjustments

                                        	
                                          11

                                        
	
                                          7.

                                        	
                                          Termination
      For Cause or Without Good Reason

                                        	
                                          11

                                        
	
                                          8.

                                        	
                                          Termination
      Giving Rise to a Termination Payment

                                        	
                                          12

                                        
	
                                          9.

                                        	
                                          Payments Upon
      Termination

                                        	
                                          13

                                        
	
                                           

                                        	
                                          (a) 
      Accrued Benefits

                                        	
                                          13

                                        
	
                                           

                                        	
                                          (b) 
      Termination Payment

                                        	
                                          14

                                        
	
                                          10.

                                        	
                                          Death

                                        	
                                          17

                                        
	
                                          11.

                                        	
                                          Retirement

                                        	
                                          17

                                        
	
                                          12.

                                        	
                                          Termination
      for Disability

                                        	
                                          18

                                        
	
                                          13.

                                        	
                                          Termination
      Notice and Procedure

                                        	
                                          18

                                        
	
                                          14.

                                        	
                                          Further
      Obligations of the Executive

                                        	
                                          19

                                        
	
                                           

                                        	
                                          (a) 
      Competition

                                        	
                                          19

                                        
	
                                           

                                        	
                                          (b) 
      Confidentiality

                                        	
                                          19

                                        
	
                                           

                                        	
                                          (c) 
      Nonsolicitation.

                                        	
                                          19

                                        
	
                                           

                                        	
                                          (d)  No
      Disparagement.

                                        	
                                          20

                                        
	
                                          15.

                                        	
                                          Expenses and
      Interest

                                        	
                                          20

                                        
	
                                          16.

                                        	
                                          Payment
      Obligations Absolute

                                        	
                                          20

                                        
	
                                          17.

                                        	
                                          Successors

                                        	
                                          20

                                        
	
                                          18.

                                        	
                                          Severability

                                        	
                                          21

                                        
	
                                          19.

                                        	
                                          Amendment

                                        	
                                          21

                                        
	
                                          20.

                                        	
                                          Withholding

                                        	
                                          21

                                        
	
                                          21.

                                        	
                                          Certain Rules
      of Construction

                                        	
                                          22

                                        

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

    

    
      
      

    

    
      
      

    

    
      
        
        

      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    
      
      

    

    

    
      
         
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                      22.

                    	
                      Governing
      Law; Resolution of Disputes

                    	
                      22

                    
	
                      23.

                    	
                      Notice

                    	
                      22

                    
	
                      24.

                    	
                      No
      Waiver

                    	
                      22

                    
	
                      25.

                    	
                      Headings

                    	
                      22

                    
	
                      26.

                    	
                      Code Section
      409A Compliance

                    	
                      23

                    
	 
    	 
    	 
    

            

          

        

      

    

     

    
      
         
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    KEY EXECUTIVE EMPLOYMENT AND
SEVERANCE AGREEMENT

     

    

    THIS AGREEMENT,
made and entered into the _____ day of _______________, 2010, by and between
Integrys Energy Group, Inc., a Wisconsin corporation (hereinafter referred to as
the “Company”), and _________________
(hereinafter referred to as “Executive”).

     

    W I T N E S S E T
H

     

    WHEREAS, the
Executive and the Company are parties to a Key Executive Employment and
Severance Agreement that was originally effective as of May 2, 1997 and
that was most recently amended and restated effective January 1,
2009;

     

    WHEREAS, the
Executive is employed by the Company and/or a subsidiary of the Company (the
“Employer”) in a key executive capacity
and the Executive’s
services are valuable to the conduct of the business of the
Company;

     

    WHEREAS, the
Executive possesses intimate knowledge of the business and affairs of the
Company and has acquired certain confidential information and data with respect
to the Company;

     

    WHEREAS, the
Company desires to insure, insofar as possible, that it will continue to have
the benefit of the Executive’s services and to protect its
confidential information and goodwill;

     

    WHEREAS, the
Company recognizes that circumstances may arise in which a change in control of
the Company occurs, through acquisition or otherwise, thereby causing current
uncertainty about the Executive’s future employment with the
Employer without regard to the Executive’s competence or past
contributions, which uncertainty may result in the loss of valuable services of
the Executive to the detriment of the Company and its shareholders, even if such
a change in control never does in fact occur, and the Company and the Executive
wish to provide reasonable security to the Executive against changes in the
Executive’s relationship
with the Company in the event of certain changes in control;

     

    WHEREAS, the
Company and the Executive are desirous that any proposal for a change in control
or acquisition of the Company will be considered by the Executive objectively
and with reference only to the best interests of the Company and its
shareholders;

     

    WHEREAS, the
Executive will be in a better position to consider the Company’s best interests if the
Executive is afforded reasonable security, as provided in this Agreement,
against altered conditions of employment which could result from any such change
in control or acquisition; and

     

    WHEREAS, it is
desirable to again amend and restate the Key Executive Employment and Severance
Agreement between the Executive and the Company;

     

    NOW, THEREFORE, in
consideration of the foregoing, the Company’s willingness to continue to extend
a change in control agreement to the Executive (which the 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Company is not
required to do), the Executive’s willingness to continue in employment with the
Company (or the Employer), the Executive’s commitments under Section 14, and the
other mutual covenants and agreements hereinafter set forth, the parties hereto
mutually covenant and agree as follows, which shall supersede and replace all
Key Executive Employment and Severance Agreements presently or heretofore in
effect between the Executive and the Company:

     

    1. Definitions.

     

    (a) Act.  For
purposes of this Agreement, the term “Act” means the Securities Exchange
Act of 1934, as amended.

     

    (b) Affiliate and
Associate.  An
“Affiliate” of, or a person “affiliated” with, a specified person, is a
person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the person
specified and the term “Associate” used to indicate a
relationship with any person, means:

     

    (i) any corporation or
organization (other than the registrant or a majority-owned subsidiary of the
registrant) of which such person is an officer or partner or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of any class of
equity securities,

     

    (ii) any trust or other
estate in which such person has a substantial beneficial interest or as to which
such person serves as trustee or in a similar fiduciary capacity,
and

     

    (iii) any relative or
spouse of such person, or any relative of such spouse, who has the same home as
such person or who is a director or officer of the registrant or any of its
parents or subsidiaries.

     

    (c) Beneficial
Owner.  For
purposes of this Agreement, a Person shall be deemed to be the “Beneficial Owner” of any
securities:

     

    (i) which such Person
or any of such Person’s
Affiliates or Associates has the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, (A) securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person’s Affiliates or Associates
until such tendered securities are accepted for purchase or (B) securities
issuable upon exercise of any rights agreement that the Company may have in
effect at a time before the issuance of such securities;

     

    (ii) which such Person
or any of such Person’s
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of or has “beneficial ownership” of (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Act), including
pursuant to any agreement, arrangement or understanding; provided, however, that
a Person shall not be deemed the Beneficial Owner of, or to beneficially own,
any security under this subparagraph (ii) as a result of an agreement,
arrangement or 

     

    
      
        
        

      

      
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    understanding to
vote such security if the agreement, arrangement or
understanding:  (A) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations under
the Act and (B) is not also then reportable on a Schedule 13D under the Act (or
any comparable or successor report); or

     

    (iii) which are
beneficially owned, directly or indirectly, by any other Person with which such
Person or any of such Person’s Affiliates or Associates has
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in Subsection
1(c)(ii) above) or disposing of any voting securities of the
Company.

     

    (d) Cause.  “Cause” for termination by the Company
of the Executive’s
employment in connection with or following a Change in Control of the Company
shall, for purposes of this Agreement, be limited to any of the
following:

     

    (i) the engaging by the
Executive in intentional conduct not taken in good faith which has caused
demonstrable and serious financial injury to the Company, as evidenced by a
determination in a binding and final judgment, order or decree of a court or
administrative agency of competent jurisdiction, in effect after exhaustion or
lapse of all rights of appeal, in an action, suit or proceeding, whether civil,
criminal, administrative or investigative;

     

    (ii) conviction of a
felony (as evidenced by binding and final judgment, order or decree of a court
of competent jurisdiction, in effect after exhaustion of all rights of appeal)
which substantially impairs the Executive’s ability to perform the
Executive’s duties or responsibilities;

     

    (iii) continuing willful
and unreasonable refusal by the Executive to perform the Executive’s duties or responsibilities
(unless significantly changed without the Executive’s consent); or

     

    (iv) a material
violation of the Company’s Code of Conduct.

     

    (e) Change in Control of the
Company.  For
purposes of this Agreement, a Change in Control of the Company shall be deemed
to have occurred if:

     

    (i) any Person (other
than any employee benefit plan of the Company or of any subsidiary of the
Company, any Person organized, appointed or established pursuant to the terms of
any such benefit plan or any trustee, administrator or fiduciary of such a plan)
is or becomes the Beneficial Owner of securities of the Company representing at
least thirty percent (30%) of the combined voting power of the Company’s then outstanding
securities;

     

    (ii) one-half or more of
the members of the Board of Directors of the Company are not Continuing
Directors;

     

    
      
        
        

      

      
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    (iii) there shall be
consummated any merger, consolidation, or reorganization of the Company with any
other corporation as a result of which less than fifty percent (50%) of the
outstanding voting securities of the surviving or resulting entity are owned by
the former shareholders of the Company other than a shareholder who is an
Affiliate or Associate of any party to such consolidation or
merger;

     

    (iv) there shall be
consummated any merger of the Company or share exchange involving the Company in
which the Company is not the continuing or surviving corporation other than a
merger of the Company in which each of the holders of the Company’s Common Stock immediately
prior to the merger have the same proportionate ownership of common stock of the
surviving corporation immediately  after the merger;

     

    (v) there shall be
consummated any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets of
the Company to a Person which is not a wholly owned subsidiary of the Company;
or

     

    (vi) the shareholders of
the Company approve any plan or proposal for the liquidation or dissolution of
the Company.

     

    (f) Code.  For
purposes of this Agreement, the term “Code” means the Internal Revenue
Code of 1986, including any amendments thereto or successor tax codes
thereof.

     

    (g) Continuing
Director.  For
purposes of this Agreement, the term “Continuing Director” means:

     

    (i) any member of the
Board of Directors of the Company who was a member of such Board on the date of
this Agreement;

     

    (ii) any successor of a
Continuing Director who is recommended to succeed a Continuing Director by a
majority of the Continuing Directors then on such Board; and

     

    (iii) additional
directors elected or recommended for membership by a majority of the Continuing
Directors then on such Board.

     

    (h) Covered
Termination.  Except
as provided in Section 2(c), for purposes of this Agreement, the term “Covered Termination” means any Termination of
Employment where the Termination Date is any date on or after the date on which
a Change in Control of the Company has occurred and prior to the end of the
Employment Period.

     

    (i) Employment
Period.  For
purposes of this Agreement, the term “Employment Period” means a period commencing on
the date of a Change in Control of the Company, and ending at 11:59 p.m. Central
Time on the earlier of the second anniversary of such date or the Executive’s Normal Retirement
Date.

     

    
      
        
        

      

      
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    (j) Good
Reason.  For
purposes of this Agreement, the Executive shall have a “Good Reason” for termination of employment
in connection with a Change in Control of the Company in the event
of:

     

    (i) any breach of this
Agreement by the Company, including specifically any breach by the Company of
its agreements contained in Sections 4, 5, or 6 hereof;

     

    (ii) the removal of the
Executive from, or any failure to reelect or reappoint the Executive to, any of
the positions held with the Company or the Employer on the date of the Change in
Control of the Company or any other positions with the Company or the Employer
to which the Executive shall thereafter be elected, appointed or assigned,
except in the event that such removal or failure to reelect or reappoint relates
to the termination by the Company of the Executive’s employment for Cause or by
reason of disability pursuant to Section 12 hereof;

     

    (iii) a good faith
determination by the Executive that there has been a significant adverse change,
without the Executive’s
written consent, in the Executive’s working conditions or status
with the Company or the Employer from such working conditions or status in
effect at any time during the one hundred eighty (180) day period immediately
prior to the Change in Control of the Company, including but not limited to a
significant change in the nature or scope of the Executive’s authority, powers, functions,
duties or responsibilities; or

     

    (iv) failure by the
Company to obtain the agreement referred to in Section 17(a) hereof as provided
therein.

     

    (k) Normal Retirement
Date.  For
purposes of this Agreement, the term “Normal Retirement Date” means the earlier
of:

     

    (i) “Normal Retirement Date” as defined in Part A of
the Integrys Energy Group Retirement Plan, or any successor plan, as in effect
on the date of the Change in Control of the Company (whether or not the
Executive is a participant in such plan); or

     

    (ii) such earlier
retirement date chosen by the Executive prior to the commencement of the
Employment Period.

     

    (l) Person.  For
purposes of this Agreement, the term “Person” shall mean any individual,
firm, partnership, corporation or other entity, including any successor (by
merger or otherwise) of such entity, or a group of any of the foregoing acting
in concert; provided that in the case of a merger, consolidation or
reorganization of the Company with any other corporation or a share exchange
involving the Company, the shareholders of the other corporation that is a party
to the merger, consolidation, reorganization or share exchange shall not be
considered to be acting in concert for purposes of applying Section
1(e)(i).

     

    (m) Separation from
Service.  For
purposes of this Agreement, the term “Separation from Service” means the date on
which the Executive has a Termination of Employment or if later, separates from
service (within the meaning of Code Section 409A) from the Company and each
other corporation, trade or business that, with the Company, constitutes a

     

    
      
        
        

      

      
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    controlled group of
corporations or group of trades or businesses under common control within the
meaning of Code Sections 414(b) or (c).  For this purpose, Code
Sections 414(b) and (c) shall be applied by substituting “at least 50 percent”
for “at least 80 percent” each place it appears.  Specifically, if
Executive continues to provide services to the Company or an affiliate in a
capacity other than as an employee, such shift in status is not automatically a
Separation from Service.

     

    (n) Termination of
Employment.  For
purposes of this Agreement, the Executive’s “Termination of Employment” shall
occur when the Company and Executive reasonably anticipate that no further
services will be performed by the Executive for the Company after a certain date
or that the level of bona fide services the Executive will perform after such
date as an employee of the Company will permanently decrease to no more than
twenty percent (20%) of the average level of bona fide services performed by the
Executive (whether as an employee or independent contractor) for the Company
over the immediately preceding thirty-six (36) month period (or such lesser
period of services).  For purposes of this definition, the term
Company includes each other corporation, trade or business that, with the
Company, constitutes a controlled group of corporations or group of trades or
businesses under common control within the meaning of Code Sections 414(b) or
(c).  For this purpose, Code Sections 414(b) and (c) shall be applied
by substituting “at least 50 percent” for “at least 80 percent” each place it
appears.  An Executive is not considered to have a Termination of
Employment if the Executive is absent from active employment due to military
leave, sick leave or other bona fide leave of absence if the period of such
leave does not exceed the greater of (i) six (6) months, or (ii) the period
during which the Executive’s right to reemployment by the Company or controlled
group member is provided either by statute or by contract; provided that if the
leave of absence is due to a medically determinable physical or mental
impairment that can be expected to result in death or last for a continuous
period of not less than six (6) months, where such impairment causes the
Executive to be unable to perform the duties of the Executive’s position of
employment or any substantially similar position of employment, the leave may be
extended for up to twenty-nine (29) months without causing a Termination of
Employment.  Further, for purposes of determining whether the
Executive has incurred a Termination of Employment, if the Executive is not
actively at work during the period that there exists a dispute pursuant to
Section 1(o)(v)(B) or (C), the Executive shall be considered to be on a bona
fide leave of absence for which the Executive’s right to reemployment is
guaranteed during the period that begins on the date on which the Executive last
performs active services and ends on the Termination Date that ultimately is
established pursuant to Section 1(o)(v)(B) or (C).

     

    (o) Termination
Date.  For
purposes of this Agreement, except as otherwise provided in Section 2(c),
Section 10(b) and Section 17(a) hereof, the term “Termination Date” means:

     

    (i) if the
Executive’s employment is
terminated by the Executive’s death, the date of
death;

     

    (ii) if the
Executive’s employment is
terminated by reason of voluntary early retirement, as agreed in writing by the
Company and the Executive, the date of such early retirement which is set forth
in such written agreement;

     

    
      
        
        

      

      
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    (iii) if the
Executive’s employment is
terminated for purposes of this Agreement by reason of disability pursuant to
Section 12 hereof, the earlier of thirty (30) days after the Notice of
Termination is given or one day prior to the end of the Employment
Period;

     

    (iv) if the
Executive’s employment is
terminated by the Executive voluntarily (other than for Good Reason), the date
the Notice of Termination is given; or

     

    (v) if the
Executive’s employment is
terminated by the Company (other than by reason of disability pursuant to
Section 12 hereof) or by the Executive for Good Reason, the earlier of thirty
(30) days after the Notice of Termination is given or one day prior to the end
of the Employment Period.  Notwithstanding the foregoing,

     

    (A) If termination is
for Cause pursuant to Section 1(d)(iii) of this Agreement and if the Executive
has cured the conduct constituting such Cause as described by the Company in its
Notice of Termination within such thirty day or shorter period, then the
Executive’s employment
hereunder shall continue as if the Company had not delivered its Notice of
Termination.

     

    (B) If the Company (or
the Employer) shall give a Notice of Termination for Cause or by reason of
disability and the Executive in good faith notifies the Company that a dispute
exists concerning the termination within the fifteen (15) day period following
receipt thereof, then the Executive may elect to continue employment during such
dispute, and the Termination Date shall be determined under this
paragraph.  If the Executive so elects and it is thereafter determined
that Cause or disability (as the case may be) did exist, the Termination Date
shall be the earlier of (1) the date on which the dispute is finally determined,
either (x) by mutual written agreement of the parties or (y) in accordance with
Section 22 hereof, (2) the date of the Executive’s death, or (3) one day prior
to the end of the Employment Period.  If the Executive so elects and
it is thereafter determined that Cause or disability (as the case may be) did
not exist, then the employment of the Executive hereunder shall continue after
such determination as if the Company (or the Employer) had not delivered its
Notice of Termination and there shall be no Termination Date arising out of such
Notice.  In either case, this Agreement continues, until the
Termination Date, if any, as if the Company (or the Employer) had not delivered
the Notice of Termination except that, if it is finally determined that the
Company (or the Employer) properly terminated the Executive for the reason
asserted in the Notice of Termination, the Executive shall in no case be
entitled to a Termination Payment (as hereinafter defined) arising out of events
occurring after the Company delivered its Notice of Termination.

     

    (C) If the Executive
shall in good faith give a Notice of Termination for Good Reason and the Company
(or the Employer) notifies the Executive that a dispute exists concerning the
termination within the fifteen (15) day period following receipt thereof, then
the Executive may elect to continue employment during such dispute and the
Termination Date shall be determined under this paragraph.  If the
Executive so elects and it is thereafter determined that Good Reason did exist,
the Termination Date shall be the earliest of (1) the date on which the dispute
is finally determined, either (x) 

     

    
      
        
        

      

      
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    by mutual written
agreement of the parties or (y) in accordance with Section 22 hereof, (2) the
date of the Executive’s
death or (3) one day prior to the end of the Employment Period.  If
the Executive so elects and it is thereafter determined that Good Reason did not
exist, then the employment of the Executive hereunder shall continue after such
determination as if the Executive had not delivered the Notice of Termination
asserting Good Reason and there shall be no Termination Date arising out of such
Notice.  In either case, this Agreement continues, until the
Termination Date, if any, as if the Executive had not delivered the Notice of
Termination except that, if it is finally determined that Good Reason did exist,
the Executive shall in no case be denied the benefits described in Sections 8(b)
and 9 hereof (including a Termination Payment) based on events occurring after
the Executive delivered the Notice of Termination.

     

    (D) Except as provided
in Paragraph (B) and (C) above, if the party receiving the Notice of Termination
notifies the other party that a dispute exists concerning the termination within
the appropriate period following receipt thereof and it is finally determined
that the reason asserted in such Notice of Termination did not exist, then (1)
if such Notice was delivered by the Executive, the Executive will be deemed to
have voluntarily terminated employment and the Termination Date shall be the
earlier of the date fifteen (15) days after the Notice of Termination is given
or one day prior to the end of the Employment Period and (2) if delivered by the
Company, the Company will be deemed to have terminated the Executive other than
by reason of death, disability or Cause.

     

    2. Term of Agreement and
Certain Terminations Prior to Change in Control of the
Company.

     

    (a) Subject to
Subsections 2(b) and 2(c) hereof:

     

    (i) This Agreement
shall be for an initial term that commences on May 1, 2010 and continues through
December 31, 2010; and

     

    (ii) On December 31 of
each calendar year beginning with December 31, 2010 (each, a “Renewal Date”), if
the Executive is still employed by the Company or the Employer on such date, the
term of the Agreement shall be extended through December 31 of the following
calendar year unless the Company, on or before the November 1 that immediately
precedes the Renewal Date, has provided written notice to the Executive that the
term of the Agreement shall not be extended such that the Agreement will
terminate at the conclusion of the then-current term; provided, that if a Change
in Control of the Company shall have occurred either (A) while this Agreement is
in effect or (B) within the one hundred eighty (180) day period immediately
following expiration of this Agreement, then this Agreement shall remain in
effect (or shall be retroactively reinstated as if the Agreement had never
terminated), the term of the Agreement shall expire one day following the end of
the Employment Period, and any notice by the Company of its intent to not extend
the term of the Agreement shall be disregarded.

     

    (b) Subject to
Subsection 2(c) hereof, the Company (or the Employer) and the Executive shall
each retain the right to terminate the employment of the Executive at any time

     

    
      
        
        

      

      
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    prior to a Change
in Control of the Company.  Subject to Subsection 2(c) hereof, in the
event the Executive’s
employment is terminated by the Company (or the Employer) prior to a Change in
Control of the Company, this Agreement shall be terminated and cancelled and of
no further force and effect, and any and all rights and obligations of the
parties hereunder shall cease.  In the event the Executive’s employment is terminated by
the Executive prior to a Change in Control of the Company, except for
obligations of the Executive in Section 14 hereof which shall survive such
termination, this Agreement shall be terminated and cancelled and of no further
force and effect and any and all rights and obligations of the parties except
those in Section 14 shall cease.

     

    (c) Anything in this
Agreement to the contrary notwithstanding, if (i) a Change in Control of the
Company shall occur, and (ii) the Executive’s employment with the Company
or the Employer shall have been terminated by the Company or the Employer (other
than a termination due to the Executive’s death or as a result of the
Executive’s disability)
during the period of one hundred eighty (180) days prior to the date on which
the Change in Control of the Company shall occur, and (iii) this Agreement was
in effect immediately prior to the date on which the Executive’s employment with
the Company or the Employer shall have been terminated by the Company or the
Employer, then for all purposes of this Agreement such termination of employment
shall be deemed a “Covered
Termination” (and the
Executive’s Termination Date shall be the date of such termination of
employment) unless it shall be reasonably demonstrated by the Company that
either (i) similar agreements between the Company and other executives have been
terminated and were not in effect on the date of the Change in Control of the
Company, or (ii) it shall be reasonably demonstrated by the Company that such
termination of employment:

     

    (i) shall not have been
at the request of a third party who had taken steps reasonably calculated to
effect a Change in Control of the Company; or

     

    (ii) shall not otherwise
have arisen in connection with or in anticipation of a Change in Control of the
Company.

     

    3. Employment
Period.  If a
Change in Control of the Company occurs when the Executive is employed by the
Company or the Employer, the Company will, or will cause the Employer to,
continue thereafter to employ the Executive during the Employment Period, and
the Executive will remain in the employ of the Company or the Employer in
accordance with and subject to the terms and provisions of this
Agreement.  Any termination of the Executive’s employment during the
Employment Period, whether by the Company or the Employer, shall be deemed a
termination by the Company for purposes of this Agreement.

     

    4. Duties.  While
employed during the Employment Period, the Executive shall, in the same
capacities and positions held by the Executive at the time of the Change in
Control of the Company or in such other capacities and positions as may be
agreed to by the Company and the Executive in writing, devote the Executive’s best efforts and all of the
Executive’s business time,
attention and skill to the business and affairs of the Employer, as such
business and affairs now exist and as they may hereafter be
conducted.  The services which are to be performed by the Executive
hereunder are to be rendered within a seventy-five (75) mile radius of the
location at which the Executive was employed during the one hundred eighty (180)

     

    
      
        
        

      

      
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    day period prior to
the time of such Change in Control of the Company, or in such other place or
places as shall be mutually agreed upon in writing by the Executive and the
Company from time to time.  Without the Executive’s consent the Executive shall
not be required to be absent from the Executive’s primary work location to a
significantly greater extent than was required or expected in connection with
the Executive’s performance of duties during the one hundred eighty (180) day
period prior to the time of the Change in Control of the Company.

     

    5. Compensation.  While
employed during the Employment Period, the Executive shall be compensated as
follows:

     

    (a) The Executive shall
receive, at reasonable intervals (but not less often than monthly) and in
accordance with such standard policies as may be in effect immediately prior to
the Change in Control of the Company, an annual base salary in cash equivalent
at a rate not less than the Executive’s highest annual base salary
rate as in effect during the one hundred eighty (180) day period immediately
prior to the Change in Control of the Company, subject to any deferral election
then in effect and subject to adjustment as hereinafter provided.

     

    (b) The Executive shall
be included, to the extent eligible thereunder (which eligibility shall not be
conditioned on the Executive’s salary grade or on any other
requirement which excludes persons of comparable status to the Executive unless
such exclusion was in effect for such plan or an equivalent plan immediately
prior to the Change in Control of the Company), in any and all plans providing
benefits for the Employer’s salaried employees in
general, including but not limited to retirement, savings, group life insurance,
hospitalization, medical, dental, profit sharing and stock bonus
plans.

     

    (c) The Executive shall
annually be entitled to not less than the amount of paid vacation and not fewer
than the number of paid holidays to which the Executive was entitled annually at
any time during the one hundred eighty (180) day period immediately prior to the
Change in Control of the Company or such greater amount of paid vacation and
number of paid holidays as may be made available annually to other executives of
the Company (or the Employer) of comparable status and position to the
Executive.

     

    (d) The Executive shall
be included in all plans providing additional benefits to executives of the
Company of comparable status and position to the Executive, including but not
limited to deferred compensation, split-dollar life insurance, supplemental
retirement, pension restoration, stock option, stock appreciation, restricted
stock unit, performance stock, stock bonus and similar or comparable plans;
provided, that, in no event shall the aggregate level of benefits under such
plans be less than the aggregate level of benefits under plans of the Company of
the type referred to in this Section 5(d) in which the Executive was
participating at any time during the one hundred eighty (180) day period
immediately prior to the Change in Control of the Company; and provided,
further, that the Company’s obligation to include the
Executive in bonus or incentive compensation plans shall be determined by
Subsection 5(e) hereof.

     

    (e) To assure that the
Executive will have an opportunity to earn incentive compensation after a Change
in Control of the Company, the Executive shall be included in any annual or
long-term incentive or other incentive or bonus plan of the Company or the
Employer, 

     

    
      
        
        

      

      
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    which shall satisfy
the standards described below (such plan, the “Bonus Plan”) if the Executive was
participating in an incentive or bonus plan or plans of the Company or the
Employer in effect at any time during the one hundred eighty (180) day period
immediately prior to the Change in Control of the Company.  Bonuses or
incentive payments under any such Bonus Plan shall be payable with respect to
achieving such financial or other goals reasonably related to the business of
the Company or the Employer as the Company or the Employer shall establish (the
“Goals”), all of which Goals shall be
attainable with approximately the same degree of probability as the goals under
any incentive or bonus plan or plans of the Company or the Employer as in effect
at any time during the one hundred eighty (180) day period immediately prior to
the Change in Control of the Company and in view of the Company’s or the Employer’s existing and projected
financial and business circumstances applicable at the time.  The
percentage of the Executive’s annual base salary rate that the Executive is
eligible to earn as a target award (or, in the case of a Bonus Plan that
provides for equity awards, the value of the target award that the Executive is
eligible to earn) under any such Bonus Plan shall be no less than the percentage
of the annual base salary rate (or, in the case of an equity award, the value of
the target award) that similarly situated executives of the Company or the
Employer are eligible to earn under such Bonus Plan, and in the event the Goals
are not achieved such that the entire target award is not payable, any such
Bonus Plan shall provide for a payment of a Bonus Amount equal to a portion of
the target award reasonably related to that portion of the Goals which were
achieved.  For purposes of determining the value of the Executive’s
target award that the Executive is eligible to earn under any Bonus Plan that
provides for equity awards, valuation will be based on the financial accounting
expense (under FASB ASC Topic 718 - Stock Compensation, or any successor
thereto) of the bonus opportunity, assuming target levels of
performance.  Except as provided in Sections 8(a) and 14, payment of
the Bonus Amount (to the extent otherwise earned) shall not be affected by any
circumstance occurring subsequent to the end of the Employment Period, including
termination of the Executive’s employment.

     

    6. Annual Compensation
Adjustments.  While
the Executive is employed during the Employment Period, the Board of Directors
of the Company or the Employer (or an appropriate committee thereof) will
consider and appraise, at least annually, the contributions of the Executive to
the Company, and in accordance with the Company’s or the Employer’s practice prior to the Change
in Control of the Company, due consideration shall be given to the upward
adjustment of the Executive’s annual base salary rate, at
least annually:

     

    (i) commensurate with
increases generally given to other executives of the Company or the Employer of
comparable status and position to the Executive, and

     

    (ii) as the scope of the
Company’s or the
Employer’s operations or
the Executive’s duties
expand.

     

    7. Termination For Cause or
Without Good Reason.  If
there is a Covered Termination for Cause or due to the Executive’s voluntarily terminating
employment other than for Good Reason (any such terminations to be subject to
the procedures set forth in Section 13 hereof), then the Executive shall be
entitled to receive only Accrued Benefits pursuant to Section 9(a)
hereof.

     

    
      
        
        

      

      
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    8. Termination Giving Rise to a
Termination Payment.

     

    (a)           If
there is a Covered Termination by the Executive for Good Reason, or by the
Company (or the Employer) other than by reason of:

     

    (i) death,

     

    (ii) disability pursuant
to Section 12 hereof, or

     

    (iii) Cause (any such
terminations to be subject to the procedures set forth in Section 13
hereof),

     

    then the Executive
shall be entitled to receive, and the Company shall promptly pay, all Accrued
Benefits and, in lieu of further base salary for periods following the
Termination Date, as liquidated damages and additional severance pay, the
Termination Payment pursuant to Section 9(b) hereof.  Notwithstanding
anything in this Agreement to the contrary, (A) if the Executive breaches any of
the covenants set forth in Section 14 hereof, the Executive shall not be
entitled to any of the additional benefits pursuant to Section 8(b) that have
not yet been paid or the Termination Payment pursuant to Section 9(b) hereof
and, if the Termination Payment has already been paid to the Executive, the
Executive shall return the Termination Payment to the Company, and (B) the
Executive will be entitled to the additional benefits pursuant to Section 8(b)
and the Termination Payment pursuant to Section 9(b) only if the Executive,
within forty-five (45) days following such Executive’s Termination Date,
executes a release of claims in the form required by the Company and such
release of claims becomes effective and is not revoked by the Executive during
any applicable revocation period.

     

    (b) If there is a
Covered Termination and the Executive is entitled to Accrued Benefits and the
Termination Payment, then the Executive shall be entitled to the following
additional benefits:

     

    (i) The Executive shall
receive, at the expense of the Company, outplacement services, on an
individualized basis at a level of service commensurate with the Executive’s status with the Company
immediately prior to the Change in Control of the Company (or, if higher,
immediately prior to the termination of the Executive’s employment), provided by a
nationally recognized executive placement firm selected by the Company; provided
that the availability of outplacement services shall not extend beyond December
31 of the second calendar year following the calendar year in which occurs the
Executive’s Separation from Service; and provided further, that the cost to the
Company of such services shall not exceed fifteen percent (15%) of the
Executive’s annual base salary rate in effect immediately prior to the Change in
Control of the Company.

     

    (ii) If the Executive
was participating in an annual incentive program for the year in which occurs
the Executive’s Termination of Employment, the Executive will be entitled to the
greater of (A) the annual incentive amount (if any) to which the Executive is
entitled to receive for the year in which the Executive’s Termination of
Employment occurs as determined pursuant to the terms of the annual incentive
plan, or (B) an amount equal to the product of (1) the annual incentive payment
to which the Executive would 

     

    
      
        
        

      

      
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    have been entitled
under such annual incentive program for the year in which the Executive’s
Termination of Employment occurs assuming continued employment and target level
of performance, and (2) a fraction, the numerator of which is the portion of the
annual incentive period that precedes the Executive’s Termination Date, and the
denominator of which is the complete annual performance
period.  Payment shall be made at the same time as payment is made
under the annual incentive plan, which shall occur no earlier than January 1 and
no later than March 15 following the end of the performance period.

     

    (iii) Until the earlier
of the end of the Employment Period or such time as the Executive has obtained
new employment and is covered by benefits which in the aggregate are at least
equal in value to the following benefits, the Executive shall continue to be
covered, at the expense of the Company, under either (i) the group
hospitalization, medical, dental and vision plans of the Company or a subsidiary
of the Company in which the Executive (and, if applicable, the Executive’s
family) was participating immediately prior to the Executive’s Covered
Termination, or (ii) such group hospitalization, medical, dental and vision
plans as they are subsequently modified for the Company’s (or the Employer’s)
salaried employees; provided that if the coverage that would otherwise be
provided to the Executive (and, if applicable, the Executive’s family) is
coverage under an insured product that is not available to the Executive
following the Executive’s Termination of Employment, the Company shall provide
coverage under an alternate plan that is available through the Company or a
subsidiary of the Company.  Following the end of the COBRA
continuation period, if such hospitalization, medical or dental coverage is
provided under a health plan that is subject to Section 105(h) of the Code,
benefits payable under such health plan shall comply with the requirements of
Treasury regulation section 1.409A-3(i)(1)(iv)(A) and (B) and, if necessary, the
Company shall amend such health plan to comply therewith.

     

    9. Payments Upon
Termination.

     

    (a) Accrued
Benefits.  For
purposes of this Agreement, the Executive’s “Accrued Benefits” shall include the following
amounts, payable as described herein:

     

    (i) all base salary for
the time period ending with the Termination Date;

     

    (ii) reimbursement for
any and all monies paid by the Executive in connection with the Executive’s employment for reasonable and
necessary expenses incurred by the Executive on behalf of the Company for the
time period ending with the Termination Date;

     

    (iii) any and all other
cash or other benefits earned through the Termination Date and deferred at the
election of the Executive or pursuant to any deferred compensation plan then in
effect;

     

    (iv) any bonus or
incentive compensation otherwise payable to the Executive with respect to the
year in which termination occurs, or for any prior year or incentive period to
the extent that such bonus or incentive compensation is otherwise payable to the

     

    
      
        
        

      

      
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    Executive but has
not been previously paid, under any bonus or incentive compensation plan or
plans in which the Executive is a participant; provided that the foregoing shall
not duplicate any payment to which the Executive is entitled under Section
8(b)(ii) with respect to the same period of service; and

     

    (v) all other payments
and benefits to which the Executive (or in the event of the Executive’s death, the Executive’s surviving spouse or other
beneficiary) may be entitled as compensatory fringe benefits or under the terms
of any benefit plan of the Company, other than severance payments under the
Company’s (or the
Employer’s) severance
policies or practices, in the form most favorable to the Executive which were in
effect at any time during the one hundred eighty (180) day period immediately
prior to the Change in Control of the Company or during the Employment
Period.

     

    (vi) Payment of Accrued
Benefits shall be made promptly in accordance with the Company’s prevailing practice with
respect to Subsections (i) and (ii) or, with respect to Subsections (iii), (iv)
and (v), pursuant to the terms of the benefit plan or practice establishing such
benefits.  Termination of the Executive’s employment does not affect
deferral or distribution elections that the Executive may have in place with
respect to the payment of any of the Accrued Benefits that are subject to Code
Section 409A, and payment of such amounts will be made pursuant to the terms of
the benefit plan or practice under which the deferral or distribution election
was made.

     

    (b) Termination
Payment.

     

    (i) Subject to the
limits set forth in Subsection 9(b)(ii) hereof, the Termination Payment shall be
an amount equal to (A) the Executive’s annual base salary rate, at
the highest rate in effect at any time during the one hundred eighty (180) day
period immediately prior to the Change in Control of the Company, as adjusted
upward, from time to time, pursuant to Section 6 hereof, plus (B) the amount of
the Executive’s target annual (but not long-term) cash annual incentive award
for the year in which occurs the Covered Termination or if higher, the
Executive’s target annual (but not long-term) cash annual incentive award for
the year in which occurs the Change in Control of the Company (the aggregate
amount set forth in (A) and (B) hereof shall hereafter be referred to as “Annual Cash Compensation”), times (C)
2.99.  Long-term incentive awards are not considered for this
purpose.  The Termination Payment shall be paid to the Executive in
cash equivalent on the last business day of the seventh month following the
month in which occurs the Executive’s Separation from Service.  Such
lump sum payment shall not be reduced by any present value or similar factor,
and the Executive shall not be required to mitigate the amount of the
Termination Payment by securing other employment or otherwise, nor will such
Termination Payment be reduced by reason of the Executive securing other
employment or for any other reason.  The Termination Payment shall be
in lieu of, and acceptance by the Executive of the Termination Payment shall
constitute the Executive’s
release of any rights of Executive to, any other severance payments under any
Company (or Employer) severance policy, practice or agreement.  The
Company shall bear up to $10,000 in the aggregate of fees and expenses of
consultants and/or legal or accounting advisors engaged by the Executive to
advise the 

     

    
      
        
        

      

      
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    Executive as to
matters relating to the computation of benefits due and payable under this
Subsection 9(b).

     

    (ii) (A)  Notwithstanding
any other provision of this Agreement, if any portion of the Termination Payment
or any other payment under this Agreement, or under any other agreement with or
plan of the Company or its affiliates (in its aggregate, “Total Payments”), would constitute an “excess parachute payment” that is subject to the tax
(the “Excise Tax”) imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision,
then the Total Payments to be made to the Executive shall be reduced such that
the value of the aggregate Total Payments that the Executive is entitled to
receive shall be One Dollar ($1) less than the maximum amount which the
Executive may receive without becoming subject to the tax imposed by Section
4999 of the Code (or any successor provision); provided that the foregoing
reduction in the amount of Total Payments shall not apply if the after-tax value
to the Executive of the Total Payments prior to reduction in accordance with
Subsection 9(b)(ii)(A) is greater than the after-tax value to the Executive if
Total Payments are reduced in accordance with Subsection
9(b)(ii)(A).

     

    (B) For purposes of
this Agreement, the terms “excess parachute payment” and “parachute payments” shall have the meanings
assigned to them in Section 280G of the Code (or any successor provision), and
such “parachute
payments” shall be valued
as provided therein.  The term “Base Period Income” means an amount equal to the
Executive’s “annualized includible
compensation for the base period” as defined in Section
280G(d)(1) of the Code (or any successor provision).  Present value
shall be calculated in accordance with Section 280G(d)(4) of the Code (or any
successor provision).  Within forty (40) days following the delivery
of the Notice of Termination or notice by the Company to the Executive of its
belief that there is a payment or benefit due the Executive which will result in
an excess parachute payment as defined in Section 280G of the Code (or any
successor provision), or in the case the Executive is deemed to have incurred a
Covered Termination pursuant to Section 2(c), within forty (40) days following
the date of the Change in Control of the Company, the Executive and the Company,
at the Company’s expense,
shall obtain the opinion (which need not be unqualified) of nationally
recognized tax counsel (“National Tax Counsel”) selected by the Company’s independent auditors and
acceptable to the Executive in the Executive’s sole discretion (which may be
regular outside counsel to the Company), which opinion sets forth:

     

    (1) the amount of the
Base Period Income,

     

    (2) the amount and
present value of Total Payments,

     

    (3) the amount and
present value of any excess parachute payments determined without regard to the
limitations of this Subsection 9(b)(ii),

     

    (4) the after-tax value
of the Total Payments if the reduction in Total Payments contemplated under
Subsection 9(b)(ii)(A) did not apply, and

     

    
      
        
        

      

      
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    (5) the after-tax value
of the Total Payments taking into account the reduction in Total Payments
contemplated under Subsection 9(b)(ii)(A).

     

    For purposes of
such opinion, the value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company’s independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code (or
any successor provisions), which determination shall be evidenced in a
certificate of such auditors addressed to the Company and the
Executive.  For purposes of determining the after-tax value of Total
Payments, the Executive shall be deemed to pay federal income taxes and
employment taxes at the highest marginal rate of federal income and employment
taxation in the calendar year in which the Termination Payment is to be made and
state and local income taxes at the highest marginal rates of taxation in the
state and locality of the Executive’s domicile for income tax
purposes on the date the Termination Payment is made, net of the maximum
reduction in federal income taxes that may be obtained from deduction of such
state and local taxes.  The opinion of National Tax Counsel shall be
dated as of the Termination Date and addressed to the Company and the Executive
and shall be binding upon the Company and the Executive.  If such
opinion determines that there would be an excess parachute payment and that the
after-tax value of the Total Payments taking into account the reduction
contemplated under Subsection 9(b)(ii)(A) is greater than the after-tax value of
the Total Payments if the reduction in Total Payments contemplated under
Subsection 9(b)(ii)(A) did not apply, then the Termination Payment hereunder or
any other payment or benefit determined by such counsel to be includible in
Total Payments shall be reduced or eliminated so that under the basis of
calculation set forth in such opinion there will be no excess parachute
payment.  Such reduction will be achieved by reducing or eliminating
payments or benefits in the manner that produces the highest economic value to
the Executive; provided that in the event it is determined that the foregoing
methodology for reduction would violate Code Section 409A, the reduction shall
be made pro rata among the benefits and/or payments (on the basis of the
relative present value of the parachute payments).  If such National
Tax Counsel so requests in connection with the opinion required by this
Subsection 9(b)(ii), the Executive and the Company shall obtain, at the
Company’s expense, and the
National Tax Counsel may rely on in providing the opinion, the advice of a firm
of recognized executive compensation consultants as to the reasonableness of any
item of compensation to be received by the Executive.  If the
provisions of Sections 280G and 4999 of the Code (or any successor provisions)
are repealed without succession, then this Section 9(b)(ii) shall be of no
further force or effect.

     

    (C) If, notwithstanding
the provisions of Subsection 9(b)(ii)(A), but subject to Subsection 9(b)(ii)(D),
it is ultimately determined by a court or pursuant to a final determination by
the Internal Revenue Service that any portion of Total Payments is subject to
the Excise Tax even though the reduction contemplated under Subsection
9(b)(ii)(A) was applied in order to avoid application of the Excise Tax, the
Company shall reimburse the Executive for the Excise Tax and any interest
charges or penalties incurred by the Executive in respect of the imposition of
such Excise Tax, and for any federal, state or local income tax or employment
tax or further Excise Tax incurred by the Executive with respect to any
reimbursement under this provision.  Such reimbursement shall be made
as soon as practicable after the date on which the Executive pays the tax

     

    
      
        
        

      

      
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    and provides notice
to the Company of the payment of tax, but no later than the end of the
Executive’s taxable year following the taxable year in which the taxes are
remitted.

     

    (D) If legislation is
enacted or if regulations or rulings are promulgated that would require the
Company’s shareholders to
approve this Agreement, prior to a Change in Control of the Company, due solely
to the provision contained in Subsection 9(b)(ii)(C), then

     

    (1) from and after such
time as shareholder approval would be required, until shareholder approval is
obtained as required by such legislation, Subsection 9(b)(ii)(C) shall be of no
force and effect;

     

    (2) the Company and the
Executive shall use their best efforts to consider and agree in writing upon an
amendment to this Subsection 9(b)(ii) such that, as amended, this Subsection
would provide the Executive with the benefits intended to be afforded to the
Executive by Subsection 9(b)(ii)(C) without requiring shareholder approval;
and

     

    (3) at the reasonable
request of the Executive, the Company shall seek shareholder approval of this
Agreement at the next annual meeting of shareholders of the
Company.

     

    10. Death.  (a)  Except
as provided in Section 10(b) hereof, in the event of a Covered Termination due
to the Executive’s death,
the Executive’s estate,
heirs and beneficiaries shall receive all the Executive’s Accrued Benefits through the
Termination Date.

     

    (b) In the event the
Executive dies after a Notice of Termination is given:

     

    (i) by the Company;
or

     

    (ii) by the Executive
for Good Reason,

     

    the Executive’s estate, heirs and
beneficiaries shall be entitled, to the extent not previously paid, to the
benefits described in Section 10(a) hereof and, subject to the provisions of
this Agreement, to such Termination Payment as the Executive would have been
entitled to had the Executive lived; provided that the distribution will be made
as soon as practicable (and within ninety (90) days following) the Executive’s
death and the requirement that payment be deferred until the last business day
of the seventh month following the month in which occurs the Executive’s
Separation from Service will not apply.  For purposes of this
Subsection 10(b), the Termination Date shall be the earlier of thirty (30) days
following the giving of the Notice of Termination, subject to extension pursuant
to Section 1(o) hereof, or one day prior to the end of the Employment
Period.

     

    11. Retirement.  If,
during the Employment Period, the Executive and the Company shall execute an
agreement providing for the early retirement of the Executive from the Company,
or the Executive shall otherwise give notice that he is voluntarily choosing to
retire early from the Company, the Executive shall receive Accrued Benefits
through the Termination Date; provided, that if the Executive’s employment is terminated by
the Executive for Good Reason or by the Company other than by reason of death,
disability or Cause and the 

     

    
      
        
        

      

      
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    Executive also, in
connection with such termination, elects voluntary early retirement, the
Executive shall also be entitled to receive a Termination Payment pursuant to
Section 8(a) hereof.

     

    12. Termination for
Disability.  If,
during the Employment Period, as a result of the Executive’s disability due to physical or
mental illness or injury (regardless of whether such illness or injury is
job-related), the Executive shall have been absent from the Executive’s duties hereunder on a
full-time basis for a period of six (6) consecutive months and, within thirty
(30) days after the Company notifies the Executive in writing that it intends to
terminate the Executive’s
employment (which notice shall not constitute the Notice of Termination
contemplated below), the Executive shall not have returned to the performance of
the Executive’s duties
hereunder on a full-time basis, the Company may terminate the Executive’s employment for purposes of
this Agreement pursuant to a Notice of Termination given in accordance with
Section 13 hereof.  If the Executive’s employment is terminated on
account of the Executive’s
disability in accordance with this Section, the Executive shall receive Accrued
Benefits in accordance with Section 9(a) hereof and shall remain eligible for
all benefits provided by any long term disability programs of the Company in
effect at the time of such termination.

     

    13. Termination Notice and
Procedure.  Any
Covered Termination by the Company or the Executive (other than a termination of
the Executive’s employment
that is a Covered Termination by virtue of Section 2(c) hereof) shall be
communicated by written Notice of Termination to the Executive, if such Notice
is given by the Company, and to the Company, if such Notice is given by the
Executive, all in accordance with the following procedures and those set forth
in Section 23 hereof:

     

    (a) If such termination
is for disability, Cause or Good Reason, the Notice of Termination shall
indicate in reasonable detail the facts and circumstances alleged to provide a
basis for such termination.

     

    (b) Any Notice of
Termination by the Company shall have been approved, prior to the giving thereof
to the Executive, by a resolution duly adopted by a majority of the directors of
the Company (or any successor corporation) then in office.

     

    (c) If the Notice is
given by the Executive for Good Reason, the Executive may cease performing the
Executive’s duties hereunder on or after the date fifteen (15) days after the
delivery of Notice of Termination and shall in any event cease employment on the
Termination Date.  If the Notice is given by the Company, then the
Executive may cease performing the Executive’s duties hereunder on the date of
receipt of the Notice of Termination, subject to the Executive’s rights
hereunder.

     

    (d) The Executive shall
have thirty (30) days, or such longer period as the Company may determine to be
appropriate, to cure any conduct or act, if curable, alleged to provide grounds
for termination of the Executive’s employment for Cause under
this Agreement pursuant to Subsection 1(d)(iii) hereof.

     

    
      
        
        

      

      
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    (e) The recipient of
any Notice of Termination shall personally deliver or mail in accordance with
Section 23 hereof written notice of any dispute relating to such Notice of
Termination to the party giving such Notice within fifteen (15) days after
receipt thereof; provided, however, that if the Executive’s conduct or act alleged to
provide grounds for termination by the Company for Cause is curable, then such
period shall be thirty (30) days.  After the expiration of such
period, the contents of the Notice of Termination shall become final and not
subject to dispute.

     

    14. Further Obligations of the
Executive.

     

    (a) Competition.  The
Executive agrees that, in the event of any Covered Termination where the
Executive is entitled to Accrued Benefits and the Termination Payment, the
Executive will not, for a period expiring one year after the Termination Date,
without the prior written approval of the Company’s Board of Directors,
participate in the management of, be employed by or own any business enterprise
at a location within the United States that engages in substantial competition
with the Company or its subsidiaries, where the operating revenues of the
Company from activities in competition with such entity amount to ten percent
(10%) or more of the total operating net revenues of the Company for its most
recently completed fiscal year; provided, however, that nothing in this Section
14(a) shall prohibit the Executive from owning stock or other securities of a
competitor amounting to less than five percent (5%) of the outstanding capital
stock of such competitor.

     

    (b) Confidentiality.  During
and following the Executive’s employment by the Company or
the Employer, the Executive agrees that the Executive will hold in confidence
and not directly or indirectly disclose or use or copy or make lists of any
confidential information or proprietary data of the Company (including that of
the Employer), except to the extent authorized in writing by the Board of
Directors of the Company or required by any court or administrative agency,
other than to an employee of the Company or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by the
Executive of duties as an executive of the Company.  Confidential
information shall not include any information known generally to the public or
any information of a type not otherwise considered confidential by persons
engaged in the same business or a business similar to that of the
Company.  All records, files, documents and materials, or copies
thereof, relating to the business of the Company (or the Employer) which the
Executive shall prepare, or use, or come into contact with, shall be and remain
the sole property of the Company (or the Employer) and shall be promptly
returned to the Company upon termination of employment with the Company (or the
Employer).

     

    (c) Nonsolicitation.  During
the Executive’s employment and for a period of one year following the
Executive’s Termination Date, the Executive agrees that the Executive will not
directly or indirectly without the express written approval of the Board of
Directors of the Company, solicit any customer of the Company or a subsidiary of
the Company, or any person or entity who is reasonably expected to become a
customer, or any employee of the Company or a subsidiary of the Company, for any
commercial pursuit that is or will be in substantial competition with the
Company or a subsidiary of the Company.  Similarly, during the
Executive’s employment and for a period of one year following the Executive’s
Termination Date, the Executive shall not directly or indirectly solicit or
induce, or attempt to induce, any 

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

       

    

    employees of the
Company or a subsidiary of the Company to leave the employ of the Company or a
subsidiary of the Company, or to do anything for which the Executive is
restricted by doing directly, nor shall the Executive, directly or indirectly,
offer or aid others to offer employment to or interfere or attempt to interfere
with any employees of the Company or a subsidiary of the Company.

     

    (d) No
Disparagement.  During
and following the Executive’s employment with the Company or the Employer, the
Executive agrees that the Executive will not, in any public forum, or in any
communication with the press or in any other media (including electronic) or
with any customer or prospective customer of the Company or a subsidiary of the
Company, criticize or otherwise make any statement which disparages or is
derogatory of the Company or the subsidiaries of the Company or any of their
respective officers, employees or directors.

     

    15. Expenses and
Interest.  If,
after a Change in Control of the Company, (i) a dispute arises with respect to
the enforcement of the Executive’s rights under this Agreement
or (ii) any legal or arbitration proceeding shall be brought to enforce or
interpret any provision contained herein or to recover damages for breach
hereof, in either case so long as the Executive is not acting in bad faith, the
Executive shall recover from the Company any reasonable attorneys’ fees and necessary costs and
disbursements incurred as a result of such dispute, legal or arbitration
proceeding (“Expenses”), and prejudgment interest on
any money judgment or arbitration award obtained by the Executive calculated at
the rate of interest announced by US Bank Milwaukee, National Association,
Milwaukee, Wisconsin, or any successor thereto, from time to time as its prime
or base lending rate from the date that payments to the Executive should have
been made under this Agreement.  Within ten (10) days after the
Executive’s written
request therefore (but in no event later than the end of the calendar year
following the calendar year in which such Expense is incurred), the Company
shall reimburse the Executive, or such other person or entity as the Executive
may designate in writing to the Company, the Executive’s reasonable
Expenses.

     

    16. Payment Obligations
Absolute.  The
Company’s obligation
during and after the Employment Period to pay the Executive the amounts and to
make the benefit and other arrangements provided herein shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or anyone else.  Except as
provided in Section 15 of this Agreement, all amounts payable by the Company
hereunder shall be paid without notice or demand.  Each and every
payment made hereunder by the Company shall be final, and the Company will not
seek to recover all or any part of such payment from the Executive, or from
whomsoever may be entitled thereto, for any reason whatsoever.

     

    17. Successors.  (a) If
the Company sells, assigns or transfers all or substantially all of its business
and assets to any Person or if the Company merges into or consolidates or
otherwise combines (where the Company does not survive such combination) with
any Person (any such event, a “Sale of Business”), then the Company shall
assign all of its right, title and interest in this Agreement as of the date of
such event to such Person, and the Company shall cause such Person, by written
agreement in form and substance reasonably satisfactory to the Executive, to
expressly assume and agree to perform from and after the date of 

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    such assignment all
of the terms, conditions and provisions imposed by this Agreement upon the
Company.  Failure of the Company to obtain such agreement prior to the
effective date of such Sale of Business shall be a breach of this Agreement
constituting “Good
Reason” hereunder, except
that for purposes of implementing the foregoing the date upon which such Sale of
Business becomes effective shall be deemed the Termination Date.  In
case of such assignment by the Company and of assumption and agreement by such
Person, as used in this Agreement, “Company” shall thereafter mean such
Person which executes and delivers the agreement provided for in this Section 17
or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law, and this Agreement shall inure to the benefit of,
and be enforceable by, such Person.  The Executive shall, in the
Executive’s discretion, be entitled to proceed against any or all of such
Persons, any Person which theretofore was such a successor to the Company (as
defined in the first paragraph of this Agreement) and the Company (as so
defined) in any action to enforce any rights of the Executive
hereunder.  Except as provided in this Subsection, this Agreement
shall not be assignable by the Company.  This Agreement shall not be
terminated by the voluntary or involuntary dissolution of the
Company.

     

    (b) This Agreement and
all rights of the Executive shall inure to the benefit of and be enforceable by
the Executive’s personal
or legal representatives, executors, administrators, heirs and
beneficiaries.  All amounts payable to the Executive under Sections 7,
8, 9, 10, 11, 12 and 15 hereof if the Executive had lived shall be paid, in the
event of the Executive’s
death, to the Executive’s
estate, heirs and representatives; provided, however, that the foregoing shall
not be construed to modify any terms of any benefit plan of the Company, as such
terms are in effect on the date of the Change in Control of the Company, that
expressly govern benefits under such plan in the event of the Executive’s death.

     

    18. Severability.  The
provisions of this Agreement shall be regarded as divisible, and if any of said
provisions or any part hereof are declared invalid or unenforceable by a court
of competent jurisdiction, the validity and enforceability of the remainder of
such provisions or parts hereof and the applicability thereof shall not be
affected thereby.

     

    19. Amendment.  This
Agreement may be amended at any time by a written instrument executed by the
Company and the Executive.  In addition, the Company may amend the
Agreement effective on the first day of the any calendar year by delivering
written notice (and a copy of the amendment) to the Executive no later than the
November 1 that immediately precedes the January 1 effective date of the
amendment; provided, that if a Change in Control of the Company shall have
occurred either (A) prior to the effective date of the amendment or (B) within
the one hundred eighty (180) day period immediately following the effective date
of the amendment, then the amendment shall be disregarded.

     

    20. Withholding.  The
Company shall be entitled to withhold from amounts to be paid to the Executive
hereunder any federal, state or local withholding or other taxes or charges
which it is from time to time required to withhold; provided, that the amount so
withheld shall not exceed the minimum amount required to be withheld by
law.  In addition, if prior to the date of payment of the Termination
Payment hereunder, the Federal Insurance Contributions Act (FICA) tax imposed
under Sections 3101, 3121(a) and 3121(v)(2), where applicable, becomes due, the
Company may provide for an immediate payment of the amount needed to pay the
Executive’s portion of such tax (plus an amount equal to the taxes that will be
due on such 

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    amount) and the
Executive’s Termination Payment shall be reduced accordingly.  The
Company shall be entitled to rely on an opinion of nationally recognized tax
counsel if any question as to the amount or requirement of any such withholding
shall arise.

     

    21. Certain Rules of
Construction.  No
party shall be considered as being responsible for the drafting of this
Agreement for the purpose of applying any rule construing ambiguities against
the drafter or otherwise.  No draft of this Agreement shall be taken
into account in construing this Agreement.  Any provision of this
Agreement which requires an agreement in writing shall be deemed to require that
the writing in question be signed by the Executive and an authorized
representative of the Company.

     

    22. Governing Law; Resolution of
Disputes.  This
Agreement and the rights and obligations hereunder shall be governed by and
construed in accordance with the laws of the State of Wisconsin without regard
to conflict of law principles.  Any dispute arising out of this
Agreement shall, at the Executive’s election, be determined by
arbitration under the rules of the American Arbitration Association then in
effect (in which case both parties shall be bound by the arbitration award) or
by litigation.  Whether the dispute is to be settled by arbitration or
litigation, the venue for the arbitration or litigation shall be Green Bay,
Wisconsin or, at the Executive’s election, if the Executive is
not residing or working in the Green Bay, Wisconsin metropolitan area, in the
judicial district encompassing the city in which the Executive resides;
provided, that, if the Executive is not then residing in the United States, the
election of the Executive with respect to such venue shall be either Green Bay,
Wisconsin or in the judicial district encompassing that city in the United
States among the thirty (30) cities having the largest population (as determined
by the most recent United States Census data available at the Termination Date)
which is closest to the Executive’s residence.  The
parties consent to personal jurisdiction in each trial court in the selected
venue having subject matter jurisdiction notwithstanding their residence or
situs, and each party irrevocably consents to service of process in the manner
provided hereunder for the giving of notices.

     

    23. Notice.  Notices
given pursuant to this Agreement shall be in writing and, except as otherwise
provided by Section 13(c) hereof, shall be deemed given when actually received
by the Executive or actually received by the Company’s Secretary or any officer of
the Company other than the Executive.  If mailed, such notices shall
be mailed by United States registered or certified mail, return receipt
requested, addressee only, postage prepaid, if to the Company, to Integrys
Energy Group, Inc., Attention:  Secretary (or President, if the
Executive is the Secretary), 700 North Adams Street, P.O. Box 19001, Green Bay,
Wisconsin 54307, or if to the Executive, at the address set forth below the
Executive’s signature to
this Agreement, or to such other address as the party to be notified shall have
theretofore given to the other party in writing.

     

    24. No Waiver.  No
waiver by either party at any time of any breach by the other party of, or
compliance with, any condition or provision of this Agreement to be performed by
the other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or any prior or subsequent time.

     

    25. Headings.  The
headings herein contained are for reference only and shall not affect the
meaning or interpretation of any provision of this Agreement.

     

    
      
        
        

      

      
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    26. Code Section 409A
Compliance.  The
Company and the Executive agree that to the extent Code Section 409A applies to
this Agreement, the Agreement shall be interpreted and administered in
accordance with the requirements of Code Section 409A so that there will not be
a plan failure under Code Section 409A(a)(1), and all amounts payable hereunder
shall be distributed only in compliance with the requirements of Code Section
409A, including by way of example and without limitation, Code Section
409A(2)(A)(i), which prohibits the distribution of certain compensation subject
to Code Section 409A to a “specified employee” of a publicly traded company, in
the case of a distribution that occurs by reason of the employee’s separation of
service other than death, from occurring any earlier than six (6) months after
the date of such separation of service.  The Executive acknowledges
that to avoid an additional tax on payments that may be payable or benefits that
may be provided under this Agreement and that constitute deferred compensation
that is not exempt from Section 409A of the Code, the Executive must make a
reasonable, good faith effort to collect any payment or benefit to which the
Executive believes the Executive is entitled hereunder no later than ninety (90)
days after the latest date upon which the payment could have been made or
benefit provided under this Agreement, and if not paid or provided, must take
further enforcement measures within one hundred eighty (180) days after such
latest date.

     

    IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year
first above written.

     

    INTEGRYS
ENERGY GROUP, INC.

    

    

    By:                                                                      

    

    Title:                                                                      

    

    

    Attest:                                                                      

    

    Title:                                                                      

    

    

    

    EXECUTIVE:

    

    By:                                                                      

    

    Title:                                                                      

    

    

    EXECUTIVE
ADDRESS:

     

                                                                                  

     

                                                                                   

     

     

    
      
         

      

      
        23kl05003_ex10-3.htm

 

 

Exhibit 10.3

 

 

BALTIC TRADING LIMITED

2010 EQUITY INCENTIVE PLAN

(as adopted effective March 3, 2010)

 

ARTICLE I

General

 

	
1.1  

	
Purpose

 

The Baltic Trading Limited 2010 Equity Incentive Plan (the “Plan”) is designed to provide certain key persons, on whose initiative and efforts the successful conduct of the business of Baltic Trading Limited (the “Company”) depends, with incentives to: (a) enter into and remain in the service of the Company (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance and (d) enhance the long-term performance of the Company.

 

	
1.2  

	
Administration

 

(a)   Administration by Board of Directors.  The Plan shall be administered by the Company’s Board of Directors (the “Administrator”).  The Administrator shall have the authority (i) to exercise all of the powers granted to it under the Plan, (ii) to construe, interpret and implement the Plan and any Award Agreements executed pursuant to Section 2.1 in its sole discretion with all such determination being final, binding and conclusive, (iii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules governing its own operations, (iv) to make all determinations necessary or advisable in administering the Plan, and (v) to correct any defect, supply any omission and reconcile any inconsistency in the Plan.

 

(b)   Administrator Action.  Actions of the Administrator shall be taken by the vote of a majority of its members.  Any action may be taken by a written instrument signed by a majority of the Administrator members, and action so taken shall be fully as effective as if it had been taken by a vote at a meeting. 

 

(c)   Delegation.  Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Administrator 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 to any person or persons selected by it, and may revoke any such allocation or delegation at any time.  Specifically, the Board of Directors may delegate to one or more officers of the Company the authority to designate the individuals (other than such officer(s)), who will receive awards under the Plan and the size of each such grant, to the fullest extent permitted by applicable law, provided that the Committee shall itself grant awards to those individuals who could reasonably be considered to be subject to the insider trading provisions of Section 16 of the Securities Exchange Act of 1934 (the “1934 Act”).

 

(d)   Deemed Delegation to Committee.  To the extent permitted by law, the Board of Directors shall be deemed to have delegated its all of its responsibilities and powers under the Plan, other than the authority to amend or terminate the Plan, to the Compensation Committee of the Board of Directors or such other committee or subcommittee as the Board of Directors may designate or as shall be formed by the abstention or recusal of a non-Qualified Member (as defined below) of such committee (the “Committee”).  The members of the Committee shall be appointed by, and serve at the pleasure of, the Board of Directors.  While it is intended that at all times that the Committee acts in connection with the Plan, the Committee shall consist solely of Qualified Members, the number of whom shall not be less than two, the fact that the Committee is not so comprised will not invalidate any grant hereunder that otherwise satisfies the terms of the Plan.  For purposes of the foregoing, a “Qualified Member” is a “non-employee director” within the meaning of Rule 16b-3 (“Rule 16b-3”) promulgated under the 1934 Act.  In any circumstance that the Board of Directors elects to act as the Administrator or to delegate its responsibilities and powers to another person or persons other than the Committee, the deemed delegation shall not apply.

 

 

 

  

  

  

 

 

	
1.3  

	
Persons Eligible for Awards

 

The persons eligible to receive awards under the Plan are those officers, directors, and executive, managerial, administrative and professional employees of and consultants to (i) the Company, its subsidiaries and joint ventures or (ii) Genco Shipping & Trading Limited (“Genco”), its subsidiaries and joint ventures, (collectively, “key persons”) as the Administrator in its sole discretion shall select, taking into account the duties of the respective employees, their present and potential contributions to the success of the Company, and such other factors as the Administrator shall deem relevant in connection with accomplishing the purpose of the Plan.  The Administrator may from time to time, in its sole discretion, determine that any key person shall be ineligible to receive awards under the Plan.  Key persons of Genco only are eligible to be granted awards as such at such time as Genco continues to own at least 10% of the aggregate number of outstanding shares of Common Stock and Class B Stock of the Company.

 

	
1.4  

	
Types of Awards Under Plan

 

Awards may be made under the Plan in the form of (a) incentive stock options, (b) non-qualified stock options, (c) stock appreciation rights, (d) dividend equivalent rights, (e) restricted stock, (f) unrestricted stock, (g) restricted stock units, and (h) performance shares, all as more fully set forth in Article II.  The term “award” means any of the foregoing.  No incentive stock option may be granted to a person who is not an employee of the Company or a parent or subsidiary (within the meaning of section 424 of the Code) of the Company on the date of grant.  Notwithstanding any provision of the Plan, to the extent any Award would be subject to Section 409A of the Internal Revenue Code of 1986 (the “Code”), no such Award may be granted if it would fail to comply with the requirements set forth in Section 409A of the Code.

 

	
1.5  

	
Shares Available for Awards

 

(a)   Subject to adjustment as provided in Section 3.7(a), awards may at any time be granted under the Plan with respect to an aggregate of 2,000,000 shares of common stock of the Company (“Common Stock”). 

 

(b)   Shares issued pursuant to the Plan shall be authorized but unissued Common Stock.  The Administrator may direct that any stock certificate evidencing shares issued pursuant to the Plan shall bear a legend setting forth such restrictions on transferability as may apply to such shares.

 

(c)   Certain Shares to Become Available Again.  The following shares of Common Stock shall again become available for awards under the Plan: any shares that are subject to an award under the Plan and that remain unissued upon the cancellation or termination of such award for any reason whatsoever; any shares of restricted stock forfeited pursuant to Section 2.7(e), provided that any dividends paid on such shares are also forfeited pursuant to such Section 2.7(e); and any shares in respect of which a stock appreciation right or performance share award is settled for cash.

 

(d)   Individual Limit.  Except for the limits set forth in this Section 1.5(d) and 2.2(i), no provision of this Plan shall be deemed to limit the number or value of shares with respect to which the Administrator may make awards to any eligible person.  Subject to adjustment as provided in Section 3.7(a), awards may not be granted to any one employee of the Company during any one calendar year with respect to more than 800,000 shares of Common Stock.  Stock options and stock appreciation rights granted and subsequently canceled or deemed to be canceled in a calendar year count against this limit even after their cancellation.  The provisions of this Section 1.5(d) shall not apply in any circumstance with respect to which the Administrator in its sole discretion determines that compliance with Section 162(m) of the Code is not necessary.

 

	
1.6  

	
Definitions of Certain Terms

 

(a)   The term “applicable company” shall mean any of the Company, Genco, their subsidiaries or joint ventures, as indicated by the context.

 

(b)   The term “cause” in connection with a termination of employment for cause shall mean:

 

 

 

  

2

  

 

 

(i)   to the extent that there is an employment, severance or other agreement governing the relationship between the grantee and the applicable company, which agreement contains a definition of “cause,” cause shall consist of those acts or omissions that would constitute “cause” under such agreement; and otherwise,

 

(ii)   the grantee’s termination of employment by the applicable company or an affiliate on account of any one or more of the following:

 

(A)   any failure by the grantee substantially to perform the grantee’s duties;

 

(B)   any excessive unauthorized absenteeism by the grantee;

 

(C)   any refusal by the grantee to obey the lawful orders of the Board of Directors or any other person or Administrator to whom the grantee reports;

 

(D)   any act or omission by the grantee that is or may be injurious to the applicable company, monetarily or otherwise;

 

(E)   any act by the grantee that is inconsistent with the best interests of the applicable company;

 

(F)   the grantee’s material violation of any of the applicable company’s policies, including, without limitation, those policies relating to discrimination or sexual harassment;

 

(G)   the grantee’s unauthorized (a) removal from the premises of the applicable company or an affiliate of any document (in any medium or form) relating to the applicable company or an affiliate or the customers or clients of the applicable company or an affiliate or (b) disclosure to any person or entity of any of the applicable company’s, or its affiliates’ confidential or proprietary information;

 

(H)   the grantee’s commission of any felony, or any other crime involving moral turpitude; and

 

(I)   the grantee’s commission of any act involving dishonesty or fraud.

 

Any rights the Company may have hereunder in respect of the events giving rise to cause shall be in addition to the rights an applicable company may have under any other agreement with a grantee or at law or in equity.  Any determination of whether a grantee’s employment or board membership is (or is deemed to have been) terminated for cause shall be made by the Administrator in its sole discretion, which determination shall be final, binding and conclusive on all parties.  If, subsequent to a grantee’s voluntary termination of employment or involuntary termination of employment without cause, it is discovered that the grantee’s employment could have been terminated for cause, the Administrator may deem such grantee’s employment or board membership to have been terminated for cause.  A grantee’s termination of employment or board membership for cause shall be effective as of the date of the occurrence of the event giving rise to cause, regardless of when the determination of cause is made.

(c)   The term “Code” means the Internal Revenue Code of 1986, as amended.

 

(d)   The term “employment” shall be deemed to mean an employee’s employment with, or a consultant’s or advisor’s provision of services to, any applicable company and each board member’s service as a board member of any applicable company.

 

(e)   The “Fair Market Value” of a share of Common Stock on any day shall be the closing price on the New York Stock Exchange as reported for such day in The Wall Street Journal or, if no such price is reported for

 

 

 

  

3

  

 

 

such day, the average of the high bid and low asked price of Common Stock as reported for such day.  If no quotation is made for the applicable day, the Fair Market Value of a share of Common Stock on such day shall be determined in the manner set forth in the preceding sentence using quotations for the next preceding day for which there were quotations, provided that such quotations shall have been made within the ten (10) business days preceding the applicable day.  Notwithstanding the foregoing, if deemed necessary or appropriate by the Administrator in its sole discretion, the Fair Market Value of a share of Common Stock on any day shall be determined by the Administrator.  In no event shall the Fair Market Value of any share of Common Stock be less than its par value.

 

(f)   The term “incentive stock option” means an option that is intended to qualify for special federal income tax treatment pursuant to sections 421 and 422 of the Code as now constituted or subsequently amended, or pursuant to a successor provision of the Code, and which is so designated in the applicable Award Agreement.  Any option that is not an incentive stock option is referred to herein as a “non-qualified stock option.”  Any option that is not specifically designated as an incentive stock option shall be a non-qualified stock option.

 

(g)   A grantee shall be deemed to have terminated employment upon (i) the date the grantee ceases to be employed by, or to provide consulting or advisory services for, an applicable company or any entity that assumes the grantee’s option; or (ii) the date the grantee ceases to be a member of the Board of Directors of an applicable company; provided, however, that in the case of a grantee (x) who is, at the time of reference, both an employee or consultant or advisor and a board member, or (y) who ceases to be engaged as an employee, consultant, advisor or board member and immediately is engaged in another of such relationships with an applicable company, the grantee shall be deemed to have terminated employment upon the later of the dates determined pursuant to clauses (i) and (ii) of this Section 1.6(g).  For purposes of clause (i) of this Section 1.6(g), a grantee who continues his or her employment, consulting or advisory relationship with:  (A) an applicable company that is a direct or indirect subsidiary of the Company or Genco subsequent to its sale by the Company or Genco, (B) an applicable company that is a joint venture of the Company or Genco or any of their respective subsidiaries subsequent to the sale by the Company or Genco or any of their respective subsidiaries of its interests in such joint venture or (C) Genco or its subsidiaries or joint ventures other than the Company or subsidiaries or joint ventures of the Company after Genco ceases to own at least 10% of the outstanding shares of Common Stock and Class B Stock of the Company, shall have a termination of employment upon the date of such sale or the date Genco ceases to own such percentage of shares unless such grantee has some other employment with an applicable company that is not terminated as described in this paragraph.  The Administrator may in its sole discretion determine whether any leave of absence constitutes a termination of employment for purposes of the Plan and the impact, if any, of any such leave of absence on options theretofore made under the Plan.

 

ARTICLE II

Awards Under The Plan

 

	
2.1  

	
Agreements Evidencing Awards

 

Each award granted under the Plan (except an award of unrestricted stock) shall be evidenced by a written agreement (“Award Agreement”) which shall contain such provisions as the Administrator may, in its sole discretion, deem necessary or desirable.  By executing an Award Agreement pursuant to the Plan, a grantee thereby agrees that the award shall be subject to all of the terms and provisions of the Plan and the applicable Award Agreement.

	
2.2  

	
Grant of Stock Options, Stock Appreciation Rights, Restricted Stock Units and Dividend Equivalent Rights

 

(a)   Stock Option Grants.  The Administrator may grant incentive stock options and non-qualified stock options (“options”) to purchase shares of Common Stock from the Company, to such key persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Administrator shall determine, in its sole discretion, subject to the provisions of the Plan.

 

 

  

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(b)   Stock Appreciation Right Grants; Types of Stock Appreciation Rights.  The Administrator may grant stock appreciation rights to such key persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Administrator shall determine, in its sole discretion, subject to the provisions of the Plan.  Stock appreciation rights may be granted in connection with all or any part of, or independently of, any option granted under the Plan.  A stock appreciation right granted in connection with an option may be granted at or after the time of grant of such option.

 

(c)   Nature of Stock Appreciation Rights.  The grantee of a stock appreciation right shall have the right, subject to the terms of the Plan and the applicable Award Agreement, to receive from the Company an amount equal to (i) the excess of the Fair Market Value of a share of Common Stock on the date of exercise of the stock appreciation right over the Fair Market Value of a share of Common Stock on the date of grant (or over the option exercise price if the stock appreciation right is granted in connection with an option), multiplied by (ii) the number of shares with respect to which the stock appreciation right is exercised.  Payment upon exercise of a stock appreciation right shall be in cash or in shares of Common Stock (valued at their Fair Market Value on the date of exercise of the stock appreciation right) or both, all as the Administrator shall determine in its sole discretion.  Upon the exercise of a stock appreciation right granted in connection with an option, the number of shares subject to the option shall be reduced by the number of shares with respect to which the stock appreciation right is exercised.  Upon the exercise of an option in connection with which a stock appreciation right has been granted, the number of shares subject to the stock appreciation right shall be reduced by the number of shares with respect to which the option is exercised.

 

(d)   Option Exercise Price.  Each Award Agreement with respect to an option shall set forth the amount (the “option exercise price”) payable by the grantee to the Company upon exercise of the option evidenced thereby.  The option exercise price per share shall be determined by the Administrator in its sole discretion; provided, however, that the option exercise price of an incentive stock option shall be at least 100% of the Fair Market Value of a share of Common Stock on the date the option is granted, and provided further that in no event shall the option exercise price be less than the par value of a share of Common Stock.

 

(e)   Exercise Period.  Each Award Agreement with respect to an option or stock appreciation right shall set forth the periods during which the award evidenced thereby shall be exercisable, whether in whole or in part.  Such periods shall be determined by the Administrator in its sole discretion; provided, however, that no option or a stock appreciation right shall be exercisable more than 10 years after the date of grant.  (See Section 2.3 for additional provisions relating to the exercise of options and stock appreciation rights.)  The terms of a stock appreciation right may provide that it shall be automatically exercised for a cash payment upon the happening of a specified event that is outside the control of the grantee, and that it shall not be otherwise exercisable. 

 

(f)   Reload Options.  The Administrator may, in its sole discretion, include in any Award Agreement with respect to an option (the “original option”) a provision that an additional option (the “reload option”) shall be granted to any grantee who, pursuant to Section 2.3(e)(ii), delivers shares of Common Stock in partial or full payment of the exercise price of the original option.  The reload option shall be for a number of shares of Common Stock equal to the number thus delivered, shall have an exercise price equal to the Fair Market Value of a share of Common Stock on the date of exercise of the original option, and shall have an expiration date no later than the expiration date of the original option.  In the event that a Award Agreement provides for the grant of a reload option, such Agreement shall also provide that the exercise price of the original option be no less than the Fair Market Value of a share of Common Stock on its date of grant, and that any shares that are delivered pursuant to Section 2.3 (e) (ii) in payment of such exercise price shall have been held for at least six months.

 

(g)   Dividend Equivalent Rights.  The Administrator may, in its sole discretion, include in any Award Agreement with respect to an option, stock appreciation right or performance shares, a dividend equivalent right entitling the grantee to receive amounts equal to the ordinary dividends that would be paid, during the time such award is outstanding and unexercised, on the shares of Common Stock covered by such award if such shares were then outstanding.  In the event such a provision is included in a Award Agreement, the Administrator shall determine in its sole discretion whether such payments shall be made in cash or in shares of Common Stock, whether they shall be conditioned upon the exercise of the award to which they relate, the time or times at which they shall be made, and such other vesting and forfeiture provisions and other terms and conditions as the Administrator shall deem appropriate.

 

 

 

  

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(h)   Incentive Stock Option Limitation: Exercisability.  To the extent that the aggregate Fair Market Value (determined as of the time the option is granted) of the stock with respect to which incentive stock options are first exercisable by any employee during any calendar year shall exceed $100,000, or such higher amount as may be permitted from time to time under section 422 of the Code, such options shall be treated as non-qualified stock options.

 

(i)   Incentive Stock Option Limitation: 10% Owners.  Notwithstanding the provisions of paragraphs (d) and (e) of this Section 2.2, an incentive stock option may not be granted under the Plan to an individual who, at the time the option is granted, owns stock possessing more than 10% of the total combined voting power of all classes of stock of his employer corporation or of its parent or subsidiary corporations (as such ownership may be determined for purposes of section 422(b) (6) of the Code) unless (i) at the time such incentive stock option is granted the option exercise price is at least 110% of the Fair Market Value of the shares subject thereto and (ii) the incentive stock option by its terms is not exercisable after the expiration of 5 years from the date it is granted.

 

	
2.3  

	
Exercise of Options and Stock Appreciation Rights

 

Subject to the other provisions of this Article II, each option and stock appreciation right granted under the Plan shall be exercisable as follows:

 

(a)   Timing and Extent of Exercise.  Options and stock appreciation rights shall be exercisable at such times and under such conditions as set forth in the corresponding Award Agreement, but in no event shall any such award be exercisable subsequent to the tenth anniversary of the date on which such award was granted.  Unless the applicable Award Agreement otherwise provides, an option or stock appreciation right may be exercised from time to time as to all or part of the shares or units as to which such award is then exercisable.  A stock appreciation right granted in connection with an option may be exercised at any time when, and to the same extent that, the related option may be exercised.

 

(b)   Notice of Exercise.  An option or stock appreciation right shall be exercised by the filing of a written notice with the Company or the Company’s designated exchange agent (the “exchange agent”), on such form and in such manner as the Administrator shall in its sole discretion prescribe.

 

(c)   Payment of Exercise Price.  Any written notice of exercise of an option shall be accompanied by payment for the shares being purchased.  Such payment shall be made: (i) by certified or official bank check (or the equivalent thereof acceptable to the Company or its exchange agent) for the full option exercise price; or (ii) with the consent of the Administrator, by delivery of shares of Common Stock having a Fair Market Value (determined as of the exercise date) equal to all or part of the option exercise price and a certified or official bank check (or the equivalent thereof acceptable to the Company or its exchange agent) for any remaining portion of the full option exercise price; or (iii) at the sole discretion of the Administrator and to the extent permitted by law, by such other provision, consistent with the terms of the Plan, as the Administrator may from time to time prescribe (whether directly or indirectly through the exchange agent).

 

(d)   Delivery of Certificates Upon Exercise.  Subject to the provision of sections 2.3(e) and 3.2, promptly after receiving payment of the full option exercise price, or after receiving notice of the exercise of a stock appreciation right for which payment will be made partly or entirely in shares, the Company or its exchange agent shall deliver to the grantee or to such other person as may then have the right to exercise the award, a certificate or certificates for the shares of Common Stock for which the award has been exercised.  If the method of payment employed upon option exercise so requires, and if applicable law permits, an optionee may direct the Company, or its exchange agent as the case may be, to deliver the stock certificate(s) to the optionee’s stockbroker.

 

(e)   Investment Purpose and Legal Requirements.  Notwithstanding the foregoing, at the time of the exercise of any option, the Company may, if it shall deem it necessary or advisable for any reason, require the optionee (i) to represent in writing to the Company that it is the optionee’s then intention to acquire the Shares with respect to which the option is to be exercised for investment and not with a view to the distribution thereof, or (ii) to postpone the date of exercise until such time as the Company has available for delivery to the optionee a prospectus meeting the requirements of all applicable securities laws; and no shares shall be issued or transferred upon the exercise of any option unless and until all legal requirements applicable to the issuance or transfer of such Shares

 

 

 

  

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have been complied with to the satisfaction of the Company.  The Company shall have the right to condition any issuance of shares to any optionee hereunder on such optionee’s undertaking in writing to comply with such restrictions on the subsequent transfer of such shares as the Company shall deem necessary or advisable as a result of any applicable law, regulation or official interpretation thereof, and certificates representing such shares may contain a legend to reflect any such restrictions.

 

(f)   No Stockholder Rights.  No grantee of an option or stock appreciation right (or other person having the right to exercise such award) shall have any of the rights of a stockholder of the Company with respect to shares subject to such award until the issuance of a stock certificate to such person for such shares.  Except as otherwise provided in Section 1.5(c), no adjustment shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which the record date is prior to the date such stock certificate is issued.

 

	
2.4  

	
Compensation in Lieu of Exercise of an Option

 

Upon written application of the grantee of an option, the Administrator may in its sole discretion determine to substitute, for the exercise of such option, compensation to the grantee not in excess of the difference between the option exercise price and the Fair Market Value of the shares covered by such written application on the date of such application.  Such compensation may be in cash, in shares of Common Stock, or both, and the payment thereof may be subject to conditions, all as the Administrator shall determine in its sole discretion.  In the event compensation is substituted pursuant to this Section 2.4 for the exercise, in whole or in part, of an option, the number of shares subject to the option shall be reduced by the number of shares for which such compensation is substituted.

 

	
2.5  

	
Termination of Employment; Death Subsequent to a Termination of Employment

 

(a)   General Rule.  Except to the extent otherwise provided in paragraphs (b), (c), (d) or (e) of this Section 2.5 or in Section 3.8(b)(iii) or by the Administrator in the Award Agreement or otherwise, a grantee who incurs a termination of employment may exercise any outstanding option or stock appreciation right on the following terms and conditions: (i) exercise may be made only to the extent that the grantee was entitled to exercise the award on the termination of employment date; and (ii) exercise must occur within three months after termination of employment but in no event after the original expiration date of the award.

 

(b)   Dismissal for Cause; Resignation.  If a grantee’s employment is terminated for cause or a grantee resigns without the Company’s prior consent, as applicable, all options and stock appreciation rights not theretofore exercised shall terminate upon the grantee’s termination of employment.

 

(c)   Retirement.  If a grantee terminates employment as the result of his retirement, then any outstanding option or stock appreciation right shall be exercisable pursuant to its terms.  For this purpose “retirement” shall mean a grantee’s termination of employment, under circumstances other than for cause, on or after: (x) his 65th birthday, (y) the date on which he has attained age 60 and completed at least five years of service with the Company, as applicable, (using any method of calculation the Administrator deems appropriate) or (z) if approved by the Administrator, on or after he has completed at least 20 years of service.

 

(d)   Disability.  If a grantee’s employment terminates by reason of a disability (as defined below), then any outstanding option or stock appreciation right shall be exercisable pursuant to its terms.  For this purpose “disability” shall mean any physical or mental condition that would qualify a grantee for a disability benefit under the long-term disability plan maintained by the Company, and if there is no such plan, a physical or mental condition that prevents the grantee from performing the essential functions of the grantee’s position (with or without reasonable accommodation) for a period of six consecutive months.  The existence of a disability shall be determined by the Administrator in its sole discretion.

 

 

 

  

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(e)   Death.

 

(i)   Termination of Employment as a Result of Grantee’s Death.  If a grantee’s employment terminates due to his death, then any outstanding option or stock appreciation right shall be exercisable pursuant to its terms.

 

(ii)   Restrictions on Exercise Following Death.  Any such exercise of an award following a grantee’s death shall be made only by the grantee’s executor or administrator or other duly appointed representative reasonably acceptable to the Administrator, unless the grantee’s will specifically disposes of such award, in which case such exercise shall be made only by the recipient of such specific disposition.  If a grantee’s personal representative or the recipient of a specific disposition under the grantee’s will shall be entitled to exercise any award pursuant to the preceding sentence, such representative or recipient shall be bound by all the terms and conditions of the Plan and the applicable Award Agreement which would have applied to the grantee including, without limitation, the provisions of Sections 3.2 and 3.5 hereof.

 

(f)   Special Rules for Incentive Stock Options.  An option may not be treated as an incentive stock option to the extent that it remains exercisable for more than three months following a grantee’s termination of employment for any reason other than death or disability, or for more than one year following a grantee’s termination of employment as the result of his becoming disabled.

 

	
2.6  

	
Transferability of Options and Stock Appreciation Rights

 

Except as otherwise provided in an applicable Award Agreement evidencing an option or stock appreciation right, during the lifetime of a grantee, each option or stock appreciation right granted to a grantee shall be exercisable only by the grantee and no option or stock appreciation right shall be assignable or transferable otherwise than by will or by the laws of descent and distribution.  The Administrator may, in any applicable Award Agreement evidencing an option (other than an incentive stock option to the extent inconsistent with the requirements of section 422 of the Code applicable to incentive stock options) or a stock appreciation right, permit a grantee to transfer all or some of the options or stock appreciation rights, as applicable, to (A) the grantee’s spouse, children or grandchildren (“Immediate Family Members”), (B) a trust or trusts for the exclusive benefit of such Immediate Family Members, or (C) other parties approved by the Administrator in its sole discretion.  Following any such transfer, any transferred options and stock appreciation rights shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer.

 

	
2.7  

	
Grant of Restricted Stock

 

(a)   Restricted Stock Grants.  The Administrator may grant restricted shares of Common Stock to such key persons, in such amounts, and subject to such vesting and forfeiture provisions and other terms and conditions as the Administrator shall determine in its sole discretion, subject to the provisions of the Plan.  Restricted stock awards may be made independently of or in connection with any other award under the Plan.  A grantee of a restricted stock award shall have no rights with respect to such award unless such grantee accepts the award within such period as the Administrator shall specify by accepting delivery of an Award Agreement in such form as the Administrator shall determine and, in the event the restricted shares are newly issued by the Company, makes payment to the Company or its exchange agent as required by the Administrator and in accordance with the Marshall Islands Business Corporations Act.

 

(b)   Issuance of Stock Certificate(s).  Promptly after a grantee accepts a restricted stock award, the Company or its exchange agent shall issue to the grantee a stock certificate or stock certificates for the shares of Common Stock covered by the award or shall establish an account evidencing ownership of the stock in uncertificated form.  Upon the issuance of such stock certificate(s), or establishment of such account, the grantee shall have the rights of a stockholder with respect to the restricted stock, subject to: (i) the nontransferability restrictions and forfeiture provision described in paragraphs (d) and (e) of this Section 2.7; (ii) in the Administrator’s sole discretion, a requirement that any dividends paid on such shares shall be held in escrow until all such shares have vested; and (iii) any other restrictions and conditions contained in the applicable Award Agreement.

 

 

 

  

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(c)   Custody of Stock Certificate(s).  Unless the Administrator shall otherwise determine in its sole discretion, any stock certificates issued evidencing shares of restricted stock shall remain in the possession of the Company until such shares are free of any restrictions specified in the applicable Award Agreement.  The Administrator may direct that such stock certificate(s) bear a legend setting forth the applicable restrictions on transferability.

 

(d)   Vesting/Nontransferability.  Until they vest, shares of restricted stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as otherwise specifically provided in this Plan or the applicable Award Agreement.  The Administrator at the time of grant shall specify the date or dates (which may depend upon or be related to the attainment of performance goals and other conditions) on which the restricted shares shall vest.

 

(e)   Consequence of Termination of Employment.  Unless the Administrator, in its sole discretion, determines otherwise, a grantee’s termination of employment for any reason (including death) shall cause the immediate forfeiture of all shares of restricted stock that have not yet vested as of the date of such termination of employment.  All dividends paid on such shares also shall be forfeited, whether by termination of any escrow arrangement under which such dividends are held, by the grantee’s repayment of dividends he received directly, or otherwise, unless the Administrator determines otherwise in its sole discretion.

 

2.8   Grant of Restricted Stock Units

 

(a)   Restricted Stock Unit Grants. The Administrator may grant restricted stock units to such key persons, in such amounts, and subject to such terms and conditions as the Administrator shall determine in its sole discretion, subject to the provisions of the Plan. Restricted stock units may be awarded independently of or in connection with any other award under the Plan. A grantee of a restricted stock unit award shall have no rights with respect to such award unless such grantee accepts the award within such period as the Committee shall specify by accepting delivery of an award agreement in such form as the Committee shall determine. A grant of a restricted stock unit entitles the grantee to receive a share of Common Stock or, in the sole discretion of the Administrator, the value of a share, on the date that such restricted stock unit vests.

 

(b)   Vesting/Nontransferability.  The Administrator shall specify at the time of grant the date or dates (which may depend upon or be related to a period of continued employment with the Company, the attainment of performance goals or other conditions or a combination of such conditions) on which the restricted stock units shall vest.  Prior to vesting, restricted stock units may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as otherwise specifically provided in this Plan or the applicable Award Agreement.

 

(c)   Consequence of Termination of Employment. Except as may otherwise be provided by the Committee at any time prior to a grantee’s termination of employment, a grantee’s termination of employment for any reason (including death) shall cause the immediate forfeiture of all restricted stock units that have not yet vested as of the date of such termination of employment.

 

(d)   Stockholder Rights.  The grantee of a restricted stock unit will have the rights of a stockholder only as to shares for which a stock certificate has been issued pursuant to the award and not with respect to any other shares subject to the award.

 

	
2.9  

	
Grant of Unrestricted Stock

 

The Administrator may grant (or sell at a purchase price at least equal to par value) shares of Common Stock free of restrictions under the Plan, to such key persons and in such amounts and subject to such forfeiture provisions as the Administrator shall determine in its sole discretion.  Shares may be thus granted or sold in respect of past services or other valid consideration.

 

 

 

  

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2.10  

	
Grant of Performance Shares

 

(a)   Performance Share Grants.  The Administrator may grant performance share awards to such key persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Administrator shall in its sole discretion determine, subject to the provisions of the Plan.  Such an award shall entitle the grantee to acquire shares of Common Stock, or to be paid the value thereof in cash, as the Administrator shall determine in its sole discretion, if specified performance goals are met.  Performance shares may be awarded independently of, or in connection with, any other award under the Plan.  A grantee shall have no rights with respect to a performance share award unless such grantee accepts the award by accepting delivery of an Award Agreement at such time and in such form as the Administrator shall determine in its sole discretion.

 

(b)   Stockholder Rights.  The grantee of a performance share award will have the rights of a stockholder only as to shares for which a stock certificate has been issued pursuant to the award and not with respect to any other shares subject to the award.

 

(c)   Consequence of Termination of Employment.  Except as may otherwise be provided by the Administrator, the rights of a grantee of a performance share award shall automatically terminate upon the grantee’s termination of employment by the Company or its subsidiaries for any reason (including death).

 

(d)   Exercise Procedures; Automatic Exercise.  At the sole discretion of the Administrator, the applicable Award Agreement may set out the procedures to be followed in exercising a performance share award or it may provide that such exercise shall be made automatically after satisfaction of the applicable performance goals.

 

(e)   Tandem Grants; Effect on Exercise.  Except as otherwise specified by the Administrator, (i) a performance share award granted in tandem with an option may be exercised only while the option is exercisable, (ii) the exercise of a performance share award granted in tandem with any other award shall reduce the number of shares subject to such other award in the manner specified in the applicable Award Agreement, and (iii) the exercise of any award granted in tandem with a performance share award shall reduce the number of shares subject to the latter in the manner specified in the applicable Award Agreement.

 

(f)   Nontransferability.  Performance shares may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as otherwise specifically provided in this Plan or the applicable Award Agreement.  The Administrator at the time of grant shall specify the date or dates (which may depend upon or be related to the attainment of performance goals and other conditions) on which the nontransferability of the performance shares shall lapse.

 

ARTICLE III

Miscellaneous

 

	
3.1  

	
Amendment of the Plan; Modification of Awards

 

(a)   Amendment of the Plan.  The Board of Directors may from time to time suspend, discontinue, revise or amend the Plan in any respect whatsoever, except that no such amendment shall materially impair any rights or materially increase any obligations under any award theretofore made under the Plan without the consent of the grantee (or, upon the grantee’s death, the person having the right to exercise the award).  For purposes of this Section 3.1, any action of the Board of Directors or the Administrator that in any way alters or affects the tax treatment of any award shall not be considered to materially impair any rights of any grantee.

 

(b)   Stockholder Approval Requirement.  Stockholder approval shall be required with respect to any amendment to the Plan that (i) increases the aggregate number of shares that may be issued pursuant to incentive stock options or changes the class of employees eligible to receive such options; or (ii) materially increases the benefits under the Plan to persons whose transactions in Common Stock are subject to Section 16(b) of the 1934 Act or increases the benefits under the Plan or materially increases the number of shares which may be issued to such persons, or materially modifies the eligibility requirements affecting such persons.

 

 

 

  

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(c)   Modification of Awards.  The Administrator may cancel any award under the Plan.  The Administrator also may amend any outstanding Award Agreement, including, without limitation, by amendment which would: (i) accelerate the time or times at which the award becomes unrestricted or may be exercised; (ii) waive or amend any goals, restrictions or conditions set forth in the Agreement; or (iii) waive or amend the operation of Section 2.5 with respect to the termination of the award upon termination of employment.  However, any such cancellation or amendment (other than an amendment pursuant to Sections 3.7 or 3.8(b)) that materially impairs the rights or materially increases the obligations of a grantee under an outstanding award shall be made only with the consent of the grantee (or, upon the grantee’s death, the person having the right to exercise the award).

 

	
3.2  

	
Consent Requirement

 

(a)   No Plan Action Without Required Consent.  If the Administrator shall at any time determine in its sole discretion that any Consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of any award under the Plan, the issuance or purchase of shares or other rights thereunder, or the taking of any other action thereunder (each such action being hereinafter referred to as a “Plan Action”), then such Plan Action shall not be taken, in whole or in part, unless and until such Consent shall have been effected or obtained to the full satisfaction of the Administrator.

 

(b)   Consent Defined.  The term “Consent” as used herein with respect to any Plan Action means (i) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the grantee with respect to the disposition of shares, or with respect to any other matter, which the Administrator shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made and (iii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies.

 

	
3.3  

	
Nonassignability

 

Except as provided in Sections 2.5(e), 2.6, 2.7(d) and 2.9(f): (a) no award or right granted to any person under the Plan or under any Award Agreement shall be assignable or transferable other than by will or by the laws of descent and distribution; and (b) all rights granted under the Plan or any Award Agreement shall be exercisable during the life of the grantee only by the grantee or the grantee’s legal representative.

 

	
3.4  

	
Requirement of Notification of Election Under Section 83(b) of the Code

 

If any grantee shall, in connection with the acquisition of shares of Common Stock under the Plan, make the election permitted under section 83(b) of the Code (i.e., an election to include in gross income in the year of transfer the value of unvested restricted stock), such grantee shall notify the Company of such election within 10 days of filing notice of the election with the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under the authority of Code section 83(b).

 

	
3.5  

	
Requirement of Notification Upon Disqualifying Disposition Under Section 421(b) of the Code

 

Each grantee of an incentive stock option shall notify the Company of any disposition of shares of Common Stock issued pursuant to the exercise of such option under the circumstances described in section 421(b) of the Code (relating to certain disqualifying dispositions), within 10 days of such disposition.

 

	
3.6  

	
Withholding Taxes

 

(a)   With Respect to Cash Payments.  Whenever cash is to be paid pursuant to an award under the Plan, the Company shall be entitled to deduct therefrom an amount sufficient in its opinion to satisfy all federal, state and other governmental tax withholding requirements related to such payment.

 

 

  

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(b)   With Respect to Delivery of Common Stock.  Whenever shares of Common Stock are to be delivered pursuant to an award under the Plan, the Company shall be entitled to require as a condition of delivery that the grantee remit to the Company an amount sufficient in the opinion of the Company to satisfy all federal, state and other governmental tax withholding requirements related thereto.  With the approval of the Administrator, which the Administrator shall have sole discretion whether or not to give, the grantee may satisfy the foregoing condition by electing to have the Company withhold from delivery shares having a value equal to the amount of tax to be withheld. Such shares shall be valued at their Fair Market Value as of the date on which the amount of tax to be withheld is determined. Fractional share amounts shall be settled in cash.  Such a withholding election may be made with respect to all or any portion of the shares to be delivered pursuant to an award.

 

	
3.7  

	
Adjustment Upon Changes in Common Stock

 

(a)   Corporate Events.  In the event of any change in the number of shares of Common Stock outstanding by reason of any stock dividend or split, reverse stock split, recapitalization, merger, consolidation, combination or exchange of shares or similar corporate change (collectively referred to as “corporate events”), the Administrator shall make the following adjustments:

 

(i)   Shares Available for Grants.  The maximum number of shares of Common Stock with respect to which the Administrator may grant awards under Article II hereof, as described in Section 1.5(a), and the individual annual limit described in Section 1.5(e), shall be appropriately adjusted by the Administrator.  In the event of any change in the number of shares of Common Stock outstanding by reason of any event or transaction other than a corporate event, the Administrator may, but need not, adjust the maximum number of shares of Common Stock with respect to which the Administrator may grant awards under Article II hereof, as described in Section 1.5(a), and the individual annual limit described in Section 1.5(e), with respect to the number and class of shares of Common Stock, in each case as the Administrator may deem appropriate.

 

(ii)   Restricted Stock.  Unless the Administrator in its sole discretion otherwise determines, any securities or other property (including dividends paid in cash) received by a grantee with respect to a share of restricted stock as a result of a corporate event, the issue date with respect to which occurs prior to such event, but which has not vested as of the date of such event, will not vest until such share of restricted stock vests, and shall be promptly deposited with the Company or other custodian designated pursuant to Section 2.7(c) hereof.

 

(iii)   Restricted Stock Units and Performance Shares The Administrator shall adjust outstanding grants of shares of restricted stock units or performance shares to reflect any corporate event as the Administrator may deem appropriate to prevent the enlargement or dilution of rights of grantees.

 

(iv)   Options, Stock Appreciation Rights and Dividend Equivalent Rights.  Subject to any required action by the stockholders of the Company, in the event of any increase or decrease in the number of issued shares of Common Stock resulting from a corporate event or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company, the Administrator shall proportionally adjust the number of shares of Common Stock subject to each outstanding option and stock appreciation right, the exercise price-per-share of Common Stock of each such option and stock appreciation right and the number of any related dividend equivalent rights.

 

(b)   Outstanding Options, Stock Appreciation Rights, Restricted Stock Units, Performance Shares and Dividend Equivalent Rights – Certain Mergers.  Subject to any required action by the stockholders of the Company, in the event that the Company shall be the surviving corporation in any merger or consolidation (except a merger or consolidation as a result of which the holders of shares of Common Stock receive securities of another corporation), each option, stock appreciation right, restricted stock unit, performance share and dividend equivalent right outstanding on the date of such merger or consolidation shall pertain to and apply to the securities which a holder of

 

 

  

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the number of shares of Common Stock subject to such option, stock appreciation right, restricted stock unit, performance share or dividend equivalent right would have received in such merger or consolidation.

 

(c)   Outstanding Options, Stock Appreciation Rights, Restricted Stock Units, Performance Shares and Dividend Equivalent Rights -- Certain Other Transactions.  In the event of (i) a dissolution or liquidation of the Company, (ii) a sale of all or substantially all of the Company’s assets, (iii) a merger or consolidation involving the Company in which the Company is not the surviving corporation or (iv) a merger or consolidation involving the Company in which the Company is the surviving corporation but the holders of shares of Common Stock receive securities of another corporation and/or other property, including cash, the Administrator shall, in its sole discretion, have the power to:

 

(i)   cancel, effective immediately prior to the occurrence of such event, each option, stock appreciation right, restricted stock unit and performance share (including each dividend equivalent right related thereto) outstanding immediately prior to such event (whether or not then exercisable), and, in full consideration of such cancellation, pay to the grantee (A) to whom such option or stock appreciation right was granted an amount in cash, for each share of Common Stock subject to such option or stock appreciation right, respectively, equal to the excess of (x) the value, as determined by the Administrator in its sole discretion, of the property (including cash) received by the holder of a share of Common Stock as a result of such event over (y) the exercise price of such option or stock appreciation right and (B) to whom such restricted stock unit and performance share was granted, for each share of Common Stock subject to such award, the value, as determined by the Administrator in its sole discretion, of the property (including cash) received by the holder of a share of Common Stock as a result of such event; or

 

(ii)   provide for the exchange of each option, stock appreciation right, restricted stock unit and performance share (including any related dividend equivalent right) outstanding immediately prior to such event (whether or not then exercisable) for an option on, stock appreciation right, restricted stock unit, performance share and dividend equivalent right with respect to, as appropriate, some or all of the property which a holder of the number of shares of Common Stock subject to such option, stock appreciation right or restricted stock unit would have received and, incident thereto, make an equitable adjustment as determined by the Administrator in its sole discretion in the exercise price of the option or stock appreciation right, or the number of shares or amount of property subject to the option, stock appreciation right, restricted stock unit, performance share or dividend equivalent right or, if the Administrator so determines in its sole discretion, provide for a cash payment to the grantee to whom such option, stock appreciation right, restricted stock unit or performance share was granted in partial consideration for the exchange of the option, stock appreciation right, restricted stock unit or performance share.

 

(d)   Outstanding Options, Stock Appreciation Rights, Restricted Stock Units, Performance Shares and Dividend Equivalent Rights -- Other Changes.  In the event of any change in the capitalization of the Company or a corporate change other than those specifically referred to in Sections 3.7(a), (b) or (c) hereof, the Administrator may, in its sole discretion, make such adjustments in the number and class of shares subject to options, stock appreciation rights, restricted stock units, performance shares and dividend equivalent rights outstanding on the date on which such change occurs and in the per-share exercise price of each such option and stock appreciation right as the Administrator may consider appropriate to prevent dilution or enlargement of rights.  In addition, if and to the extent the Administrator, in its sole discretion, determines it is appropriate, the Administrator may elect to cancel each option, stock appreciation right, restricted stock unit and performance share (including each dividend equivalent right related thereto) outstanding immediately prior to such event (whether or not then exercisable), and, in full consideration of such cancellation, pay to the grantee to whom such award was granted an amount in cash, (A) for each share of Common Stock subject to such option or stock appreciation right, respectively, equal to the excess of (i) the Fair Market Value of Common Stock on the date of such cancellation over (ii) the exercise price of such option or stock appreciation right (B) for each share of Common Stock subject to such restricted stock unit or performance share equal to the Fair Market Value of Common Stock on the date of such cancellation.

 

(e)   No Other Rights.  Except as expressly provided in the Plan, no grantee shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase

 

 

  

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or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger or consolidation of the Company or any other corporation.  Except as expressly provided in the Plan, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Common Stock subject to an award or the exercise price of any option or stock appreciation right.

 

	
3.8  

	
Change in Control

 

(a)   Change in Control Defined.  For purposes of this Section 3.8, “Change in Control” shall mean the occurrence of any of the following:

 

(i)   any person or “group” (within the meaning of Section 13(d)(3) of the 1934 Act), other than Genco or Peter C. Georgiopoulos acquiring “beneficial ownership” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of fifty percent (50%) or more of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Company;

 

(ii)   the sale of all or substantially all of the Company’s assets in one or more related transactions to a person other than such a sale to a subsidiary of the Company which does not involve a change in the equity holdings of the Company or to an entity which Genco or Peter C. Georgiopoulos directly or indirectly controls; or

 

(iii)   any merger, consolidation, reorganization or similar event of the Company or any of its subsidiaries, as a result of which the holders of the voting stock of the Company immediately prior to such merger, consolidation, reorganization or similar event do not directly or indirectly hold at least fifty-one percent (51%) of the aggregate voting power of the capital stock of the surviving entity.

 

Notwithstanding the foregoing, for each award subject to Section 409A of the Code, a Change in Control shall be deemed to occur under this Plan with respect to such Award only if a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company shall also be deemed to have occurred under Section 409A of the Code.

 

(b)   Effect of a Change in Control.  Unless the Administrator provides otherwise in an Award Agreement, upon the occurrence of a Change in Control:

 

(i)   notwithstanding any other provision of this Plan, any award then outstanding shall become fully vested and any award in the form of an option or stock appreciation right shall be immediately exercisable;

 

(ii)   to the extent permitted by law, the Administrator may, in its sole discretion, amend any Award Agreement in such manner as it deems appropriate;

 

(iii)      a grantee whose employment terminates for any reason, other than for cause, concurrent with or within one year following the Change in Control, may exercise any outstanding option or stock appreciation right, but only to the extent that the grantee was entitled to exercise the award on his termination of employment date, until the earlier of (A) the original expiration date of the award and (B) the later of (x) the date provided for under the terms of Section 2.5 without reference to this Section 3.8(b)(iii) and (y) the first anniversary of the grantee’s termination of employment.

 

(c)   Miscellaneous.  Whenever deemed appropriate by the Administrator, any action referred to in paragraph (b)(ii) of this Section 3.8 may be made conditional upon the consummation of the applicable Change in Control transaction.

 

 

  

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3.9  

	
Right of Discharge Reserved

 

Nothing in the Plan or in any Award Agreement shall confer upon any grantee the right to continue his employment with the Company or affect any right that the Company may have to terminate such employment.

 

	
3.10  

	
Non-Uniform Determinations

 

The Administrator’s determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or who are eligible to receive, awards under the Plan (whether or not such persons are similarly situated).  Without limiting the generality of the foregoing, the Administrator shall be entitled, among other things, to make non-uniform and selective determinations, and to enter into non-uniform and selective Award Agreements, as to (a) the persons to receive awards under the Plan, and (b) the terms and provisions of awards under the Plan.

 

	
3.11  

	
Other Payments or Awards

 

Nothing contained in the Plan shall be deemed in any way to limit or restrict the Company from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect.

 

	
3.12  

	
Headings

 

Any section, subsection, paragraph or other subdivision headings contained herein are for the purpose of convenience only and are not intended to expand, limit or otherwise define the contents of such subdivisions.

 

	
3.13  

	
Effective Date and Term of Plan

 

(a)   Adoption; Stockholder Approval.  The Plan was adopted by the Board of Directors and although the Company intends to obtain approval of the Plan by the Company’s stockholders within the time period required to allow grants of options hereunder to qualify as incentive stock options, awards under the Plan prior to such stockholder approval may, but need not, be made subject to such approval.

 

(b)   Termination of Plan.  Unless sooner terminated by the Board of Directors or pursuant to Paragraph (a) above, the provisions of the Plan respecting the grant of incentive stock options shall terminate on the tenth anniversary of the adoption of the Plan by the Board of Directors, and no incentive stock option awards shall thereafter be made under the Plan.  All such awards made under the Plan prior to its termination shall remain in effect until such awards have been satisfied or terminated in accordance with the terms and provisions of the Plan and the applicable Award Agreements.

 

	
3.14  

	
Restriction on Issuance of Stock Pursuant to Awards

 

The Company shall not permit any shares of Common Stock to be issued pursuant to Awards granted under the Plan unless such shares of Common Stock are fully paid and non-assessable under applicable law.

 

	
3.15  

	
Governing Law

 

Except to the extent preempted by any applicable federal law, the Plan will be construed and administered in accordance with the laws of the State of New York, without giving effect to principles of conflict of laws.

 

	
3.16  

	
Compliance with Section 409A of the Code

 

Notwithstanding anything to the contrary contained in the Plan or in any Agreement, to the extent that the Administrator determines that the Plan or any Award is subject to Section 409A of the Code and fails to comply with the requirements of Section 409A of the Code, the Administrator reserves the right to amend or terminate the 

 

 

 

 

  

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Plan and/or amend, restructure, terminate or replace the Award in order to cause the Award to either not be subject to Section 409A of the Code or to comply with the applicable provisions of such section.

 

 

 

 

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