Document:

ex10-3.htm

    Exhibit
10.3

     

    
      EMPLOYMENT
AGREEMENT

       

      This
EMPLOYMENT AGREEMENT is made as of September 1, 2009 by and between DirectView
Holdings, Inc., a Delaware corporation(the “Company”), and Roger
Ralston (“Executive”).

       

      WITNESSETH:

       

      WHEREAS,
Executive wishes to be employed by the Company with the duties and
responsibilities as hereinafter described, and the Company desires to assure
itself of the availability of Executive’s services in such
capacity.

       

      NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
Company and Executive hereby agree as follows:

       

      1.         EMPLOYMENT. The
Company hereby agrees to employ Executive, and Executive hereby agrees to serve
the Company, upon the terms and conditions hereinafter set forth.

       

      2.         TERM. The employment
of Executive by the Company pursuant to this Agreement shall be for a sixty
three (63) month period commencing on September 1, 2009 (the “Employment
Term”).

       

      3.         DUTIES. Executive
shall, subject to overall direction consistent with the legal authority of the
Board of Directors of the Company (the “Board”), serve as,
and have all power and authority inherent in the offices of CEO and
President of the Company and as well as a member of the Board and shall be
responsible for those areas in the conduct of the business reasonably assigned
to him by the Board. Executive shall devote substantially all his business time
and efforts to the business of the Company; provided, however, that it is
understood and agreed that, while Executive may devote time to other business
matters in which he may have an interest, in the event of a conflict,
Executive’s first and primary responsibility shall be to the performance of his
duties for the Company.

       

      4.         COMPENSATION AND OTHER
PROVISIONS. Executive shall be entitled to the compensation and benefits
hereinafter described in subparagraphs (A) through (D) (such compensation and
benefits being hereinafter referred to as “Compensation
Benefits”).

       

      A.  BASE SALARY. The
Company shall pay to Executive a base salary (the “Base Salary”) as
follows:

       

      i.          $150,000
per annum (pro rated) for the period commencing on September 1, 2009 and ending
on December 31, 2009;

       

      ii.         $200,000
per annum for the period commencing on January 1, 2010 and ending on December
31, 2010;

       

      iii.        $250,000
per annum for the period commencing on January 1, 2011 and ending on December
31, 2011;

       

      iv.        $300,000
per annum for the period commencing on January 1, 2012 and ending on December
31, 2012;

       

      v.         $350,000
per annum for the period commencing on January 1, 2013 and ending on December
31, 2013; and

       

      vi.        $400,000
per annum for the period commencing on January 1, 2014 and ending on December
31, 2014.

       

      
        
          
          

        

        
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      B.  COMPENSATION
ADJUSTMENT. The Base Salary and Executive’s other compensation will be
reviewed by the Board of Directors of the Company (the “Board”) at least
annually and may be increased (but not decreased) from time to time as the Board
may determine.

       

      C.  PARTICIPATION IN BENEFIT
PLANS. During the Employment Term, Executive shall be eligible to
participate in all Executive benefit plans and arrangements now in effect or
which may hereafter be established, including, without limitation, all life,
group insurance and medical care plans and all disability, retirement and other
Executive benefit plans of the Company. Should the Executive not want to
participate in the Company’s health plan, with Board approval, the company will
reimburse the Executive for the expense incurred in participating in another
plan.

       

      D.  OTHER PROVISIONS.
During the Employment Term, Executive shall be entitled to (i) four (4) weeks
paid vacation per annum, (ii) an automobile allowance of $750 per month (pro
rated) which shall increase at five percent (5%) per annum beginning on January
1, 2010 and each year thereafter, and (iii) receive a mobile phone allowance of
$500 per month (pro rated) which shall increase five percent (5%) per annum
beginning on January 1, 2010 and each year thereafter. Executive shall make
himself available via email enabled mobile phone (such as a blackberry, iphone
or similar mobile device) during periods in which they are not in the offices of
the Company. Executive shall be reimbursed for all reasonable expenses incurred
by him in the performance of his duties, including, but not limited to,
entertainment, travel and other expenses incurred in connection with such
duties.

       

      E.  DISCRETIONARY
BONUSES. Executive shall be entitled to receive annual and/or interim
cash bonuses and/or other bonuses (“Bonus Payments”) when
and in such amounts as may be determined by the Board, pursuant to a
recommendation by the compensation committee of the Board. The Board shall meet
at least annually to review Executive’s Bonus Payments and such Bonus Payments
shall be based upon Executive’s performance of the duties assigned to him by the
Board, the Company’s satisfaction of stated performance objectives known to
Executive and/or other relevant factors.

       

      F.   INCENTIVE
COMPENSATION. Executive
shall be entitled to receive incentive compensation pursuant to Exhibit
A based on the performance
of the calendar year 2009, and/or interim cash bonuses and/or other bonuses as
compensation (“Incentive
Compensation”). Additional
compensation for the year 2009 and beyond shall be determined by the Board at a
future date.

       

      G.  INDEMNIFICATION. The
Company shall indemnify and hold harmless Executive to the fullest extent
permitted by law for any action or inaction of Executive while serving as an
officer and director of the Company or, at the Company’s request, as an officer
or director of any other entity affiliated with the Company, or as a fiduciary
of any benefit plan. The Company shall include the Executive under the Company’s
directors and officers’ liability insurance in the same amount and to the same
extent as the Company covers its other officers and directors both (i) during
the Employment Term, and (ii) for a five (5) year period after the Employment
Term.

       

      5.         TERMINATION.
Executive’s employment hereunder shall terminate as a result of any of the
following events:

       

      A.  Executive’s
death;

       

      B.  Executive
shall be unable to perform his duties hereunder by reason of illness, accident
or other physical or mental disability for a continuous period of at least three
(3) months or an aggregate of nine (9) months during any continuous eighteen
(18) month period (“Disability”);

       

      C.  voluntary
resignation by Executive;

       

      D.  termination
by the Company with Cause, where “Cause” shall mean:
(i) final non-appealable adjudication of Executive of a felony, which would have
a material or adverse effect on the business of the Company; or (ii) the
determination of the Board (other than Executive) that Executive has engaged in
intentional misconduct or the gross neglect of his duties, which has a
continuing material adverse effect on the business of the Company;
or

       

      
        
          
          

        

        
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      E.  termination
by the Company for any reason other than Cause.

       

      Any
termination pursuant to subparagraph B, C, D or E of this Section shall be
communicated by a written notice (“Notice of
Termination”), such notice to set forth with specificity the grounds for
termination if termination is for “Cause”. Executive’s employment under this
Agreement shall be deemed to have terminated as follows: (i) if Executive’s
employment is terminated pursuant to subparagraph A above, on the date of his
death; (ii) if Executive’s employment is terminated pursuant to subparagraph B,
D or E above, on the date the Notice of Termination is received by Executive;
and (iii) if Executive’s employment is terminated pursuant to subparagraph C
above, thirty (30) days after the date on which the Company receives Notice of
Termination from Executive. The date on which termination is deemed to have
occurred pursuant to this paragraph is hereinafter referred to as the “Date of Termination”.
If the Notice of Termination is sent to Executive by Company, then it shall be
sent to Executive pursuant to the terms set forth in Section 14 of this
Agreement.

       

      6.         PAYMENTS ON
TERMINATION. In the event that Executive’s employment is terminated
pursuant to Sections 5 A, B, or E above, the Company shall pay to Executive and
or his estate, (i) all of the Compensation Benefits Executive is entitled to
through the Date of Termination (ii) all Incentive Compensation, benefits and
other compensation, if any, due and owing as of the Date of Termination, and
(iii) any Severance Payments that the Executive may be entitled to pursuant to
Section 15(C).

       

      7.         LIFE INSURANCE. If
requested by the Company, Executive shall submit to such physical examinations
and otherwise take such actions and execute and deliver such documents as may be
reasonably necessary to enable the Company to obtain life insurance on the life
of Executive for the benefit of the Company.

       

      8.         REPRESENTATIONS AND
WARRANTIES. Executive represents and warrants to the Company that he is
under no contractual or other restriction or obligation that would prevent the
performance of his duties hereunder or interfere with the rights of the Company
hereunder.

       

      9.         DISCLOSURE AND PROTECTION OF
CONFIDENTIAL INFORMATION.

       

      A.  For
purposes of this Agreement, “Confidential
Information” means knowledge, information and material which is
proprietary to the Company, of which Executive may obtain knowledge or access
through or as a result of his employment by the Company (including information
conceived, originated, discovered or developed in whole or in part by
Executive). Confidential Information includes, but is not limited to, (i)
technical knowledge, information and material such as trade secrets, processes,
formulas, data, know-how, improvements, inventions, computer programs, drawings,
patents, and experimental and development work techniques, and (ii) marketing
and other information, such as supplier lists, customer lists,
marketing and business plans, business or technical needs of customers,
consultants, licensees or suppliers and their methods of doing business,
arrangements with customers, consultants, licensees or suppliers, manuals and
personnel records or data. Confidential Information also includes any
information described above which the Company obtains from another party and
which the Company treats as proprietary or designates as confidential, whether
or not owned or developed by the Company. Notwithstanding the foregoing, any
information which is or becomes available to the general public other than by
breach of this Section 9 shall not constitute Confidential Information for
purposes of this Agreement.

       

      B.  During
the period in which the Executive is employed by the Company and for one (1)
years thereafter, Executive agrees, to hold in confidence all Confidential
Information and not to use such information for Executive’s own benefit or to
reveal, report, publish, disclose or transfer, directly or indirectly, any
Confidential Information to any person or entity, or to utilize any Confidential
Information for any purpose, except in the course of Executive’s work for the
Company or as required by law.

       

      
        
          
          

        

        
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      C.  Executive
will abide by any and all policies and procedures, whether formal or informal,
that may from time to time be imposed by the Company for the protection of
Confidential Information, and will inform the Company of any defects in, or
improvements that could be made to, such policies and procedures.

       

      D.  Executive
will notify the Company in writing immediately upon receipt of any subpoena,
notice to produce, or other compulsory order or process of any court of law or
government agency which requires or may require the disclosure or other transfer
of Confidential Information.

       

      E.  Upon
termination of Executive’s employment with the Company, Executive will deliver
to the Company or destroy (at Executive’s election) any and all records and
tangible property that contain Confidential Information that are in his
possession or under his control.

       

      10.       COVENANT NOT TO
COMPETE.

       

      A.  In
consideration for the Company entering into this Agreement, Executive covenants
and agrees that during the period in which the Executive is employed by the
Company and for one (1) year thereafter, Executive will not, without the express
prior written consent of the Company, directly or indirectly, compete with the
business of the Company anywhere within the United States of America. Executive
will not undertake any activities that are competitive with or acquire interests
in an entity which is competitive with the business of the Company, whether
alone, as a partner, or as an officer, director, Executive, independent
contractor, consultant or shareholder holding 5% or more of the outstanding
voting stock of any other corporation, or as a trustee, fiduciary or other
representative of any other person or entity.

       

      B.  During
the period in which the Executive is employed by the Company and for one (1)
year thereafter, Executive will not, directly or indirectly, solicit or induce
any Executive of the Company or any Executive of a subsidiary of the Company to
leave his or her employment, or solicit or induce any consultant or independent
contractor to sever that person’s relationship with the Company.

       

      C.  If
any court shall determine that the duration or geographical limit of any
covenant contained in this Section 10 is unenforceable, it is the intention of
the parties that covenant shall not be terminated but shall be deemed amended to
the extent required to render it valid and enforceable, such amendment to apply
only in the jurisdiction of the court that has made such
adjudication.

       

      D.  Executive
acknowledges and agrees that (i) the covenants contained in Sections 9 and 10
hereof are of the essence in this Agreement and that such covenants are
reasonable and necessary to protect and preserve the interests, properties, and
business of the Company, and (ii) irreparable loss and damage will be suffered
by the Company should Executive breach any of such covenants.

       

      11.       AVAILABILITY OF INJUNCTIVE
RELIEF. Executive acknowledges and agrees that any breach by him of the
provisions of Sections 9 or 10 hereof will cause the Company irreparable injury
and damage for which it cannot be adequately compensated in damages. Executive
therefore expressly agrees that the Company shall be entitled to seek injunctive
and/or other equitable relief, on a temporary or permanent basis to prevent an
anticipatory or continuing breach of this Agreement. Nothing herein shall be
construed as a waiver by the Company of any right it may have or hereafter
acquired to monetary damages by reason of any injury to its property, business
or reputation or otherwise arising out of any wrongful act or omission of
it.

       

      12.       SURVIVAL. The
covenants, agreements, representations and warranties contained in or made
pursuant to this Agreement shall survive Executive’s termination of employment,
irrespective of any investigation made by or on behalf of any
party.

       

      13.       MODIFICATION. This
Agreement sets forth the entire understanding of the parties with respect to the
subject matter hereof, supersedes all existing agreements between them
concerning such subject matter, and may be modified only by a written instrument
duly executed by each party.

       

      
        
          
          

        

        
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      14.       NOTICES. Any notice
required or permitted hereunder shall be deemed validly given if delivered by
hand, verified overnight delivery, or by first class, certified mail to the
following addresses (or to such other address as the addressee shall notify in
writing to the other party):

       

      
        	 
      	
                If
      to Executive

              	
                Roger
      Ralston

              

      

      
        	
                 
      

              	
                 

              

      

      
        	 
      	
                If
      to the Company:

              	
                7700
      West Camino Real, Suite 403

                Boca
      Raton, FL 33433

              

      

       

      15.       SEVERANCE PROVISIONS.
Upon the occurrence of a Triggering Event, as hereinafter defined, Executive
shall be entitled to the immediate receipt of all Severance Payments from the
Company in accordance with the terms hereinafter set forth:

       

      A.  TRIGGERING EVENT. The
occurrence of any of the following events shall be defined as a “Triggering Event” for
purposes of this Agreement:

       

      i.          The
Company’s termination of Executive’s employment for any reason whatsoever (other
than for Cause);

       

      ii.         The
voluntary resignation of Executive for any reason whatsoever within ninety (90)
days following a Change of Control; or

       

      iii.        The
voluntary resignation of Executive for “good reason”, which for purposes hereof
shall include, without limitation, (i) a demotion, (ii) a reduction in salary,
benefits, bonuses, incentives or perquisites, or (iii) the relocation of the
principal office of the Company or the relocation of Executive outside of
Broward or Palm Beach Counties, Florida; or

       

      iv.        The
death or Disability of Executive.

       

      B.  CHANGE
OF CONTROL. For purposes of this Agreement, the term “Change of Control” shall
mean the occurrence of any of the following events:

       

      i.          Twenty
five percent (25%) or more of the Company’s voting stock shall be acquired by
any person (other than executives of the Company as of the date hereof ), entity
or affiliated group;

       

      ii.         If
any individuals who at the beginning of any calendar year who were members of
the Board (“Incumbent Directors”) cease for any reason (other than death) to
constitute at least a majority thereof; provided that each new director whose
election, or nomination for election by the Company’s shareholders, was approved
by a vote of at least a majority of the directors then still in office who were
directors at the beginning of such period shall be deemed an Incumbent Director
unless such approval was made directly or indirectly in connection with an
actual or threatened election contest with respect to directors or as a result
of any other actual or threatened solicitation of proxies or consents by or on
behalf of any person other than the Board;

       

      iii.        Any
merger, consolidation or business combination pursuant to which the Company is
not the surviving corporation or twenty five percent (25%) or more of the
Company’s voting stock shall be owned or controlled by any person (other than
executives of the Company as of the date hereof), entity or affiliated
group;

       

      iv.       A
liquidation or dissolution of the Company; or

       

      v.      The
sale of all or substantially all of the Company’s assets.

       

       

      
        
          
          

        

        
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      C.  SEVERANCE PAYMENTS.
For purposes of this Agreement, the term “Severance Payment”
shall mean that:

       

      i.          Executive
shall receive a lump sum payment equal to the sum of (i) the product of (x) two
(2) and (y) the Executive’s highest annual Base Salary as of the date of
termination; and (ii) the product of (x) two (2) and (y) the sum of (A) highest
Bonus Payment, (B) highest Incentive Compensation that Executive was entitled to
receive pursuant to Exhibit A in respect of any year within the three (3) years
preceding the Triggering Event and (C) any other compensation payments the
Executive is entitled pursuant to Section 4(D).

       

      SEVERANCE
PAYMENT FORMULA:

       

      Severance
Payment = [(2)(highest Base Salary)] + [(2)( highest Bonus Payment + highest
Incentive Compensation + other compensation payments)]

       

      ii.         All
stock options, warrants, Incentive Compensation other stock appreciation rights
and other similar securities shall accelerate and become immediately and fully
vested and all conditions applicable to all contingently issued options,
warrants, stock appreciation rights and other similar securities shall be deemed
waived by the Company. In addition, the Company will maintain in effect a
registration statement covering the Executive’s Shares, as hereinafter
defined.

       

      iii.        All
common shares underlying any stock options, warrants, Incentive Compensation, or
other stock appreciation rights shall be covered by the Company by an effective
or current registration statement under the Securities Act of 1933, as amended
(the “Securities
Act”);

       

      iv.        All
Compensation Benefits applicable to Executive and his family members under
Sections 4.A, B and C of the Agreement shall continue for a period of two (2)
years following the later of

       

      (i) the
Triggering Event or (ii) the expiration of the Employment Term (as if the
Triggering Event had not occurred);

       

      v.         In
the event that Severance Payments are deemed to be “excess parachute payments”
as defined under Section 280G of the Internal Revenue Code, then the Company
shall pay to Executive an additional lump sum cash payment as shall be necessary
to provide Executive with the same “after-tax” compensation and benefits as if
no such excise tax had been imposed;

       

      vi.        The
Company shall pay, as and when due, any and all attorneys’ fees and costs that
Executive may incur in connection with the enforcement of his rights under this
Agreement or any dispute or settlement in connection herewith;

       

      vii.       Notwithstanding
the forgoing, if a Triggering Event occurs on or prior to the first date that an
Incentive Compensation payment is to be made to Executive, then the Incentive
Compensation for purposes of this Section 15 shall be deemed to be the greater
of (i) one hundred percent (100%) of Executive’s Base Salary, or (ii) the amount
earned pursuant to the terms set forth in Exhibit
A;

       

      viii.       Severance
Payments will not be subject to mitigation in any respect; and

       

      ix.        The
non-competition and non-solicitation periods described in Section 10 of this
Agreement shall be reduced from one (1) year to three (3) months (other than by
virtue of the expiration of the Executive’s period of employment under this
Agreement or section 5 C).

       

      D.  COMPLIANCE WITH CODE SECTION
409A.

       

      i.          It
is the intention of both the Company and Executive that the benefits and rights
to which Executive could be entitled pursuant to this Agreement comply with
Section 409A of the Code and the Treasury Regulations and other guidance
promulgated or issued there under (“Section 409A”), to
the extent that the requirements of Section 409A are applicable thereto, and the
provisions of this Agreement shall be construed in a manner consistent with that
intention. If Executive or the Company believes, at any time, that any such
benefit or right that is subject to Section 409A does not so comply, it shall
promptly advise the other and shall negotiate reasonably and in good faith to
amend the terms of such benefits and rights such that they comply with Section
409A (with the most limited possible economic effect on Executive and on the
Company).

       

      
        
          
          

        

        
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      ii.         If
and to the extent required to comply with Section 409A, no payment or benefit
required to be paid under this Agreement on account of termination of
Executive’s employment shall be made unless and until Executive incurs a
“separation from service” within the meaning of Section 409A.

       

      iii.        If
Executive is a “specified Executive,”
then no payment or benefit that is payable on account of Executive’s “separation
from service”, as that term is defined for purposes of Section 409A, shall be
made before the date that is six months after Executive’s “separation from
service” (or, if earlier, the date of Executive’s death) if and to the extent
that such payment or benefit constitutes deferred compensation (or may be
nonqualified deferred compensation) under Section 409A and such deferral is
required to comply with the requirements of Section 409A. Any payment or
benefit delayed by reason of the prior sentence shall be paid out or provided in
a single lump sum at the end of such required delay period in order to catch up
to the original payment schedule. For purposes of this Section, Executive shall
be considered to be a “specified Executive” if, at the time of his or her
separation from service, Executive is a “key Executive”,
within the meaning of Section 416(i) of the Code, of the Company (or any person
or entity with whom the Company would be considered a single employer under
Section 414(b) or Section 414(c) of the Code) any stock in which is publicly
traded on an established securities market or otherwise.

       

      iv.        Neither
the Company nor Executive, individually or in combination, may accelerate any
payment or benefit that is subject to Section 409A, except in compliance with
Section 409A and the provisions of this Agreement, and no amount that is subject
to Section 409A shall be paid prior to the earliest date on which it may be paid
without violating Section 409A.

       

      v.         For
purposes of applying the provisions of Section 409A to this Agreement, each
separately identified amount to which Executive is entitled under this Agreement
shall be treated as a separate payment. In addition, to the extent permissible
under Section 409A, any series of installment payments under this Agreement
shall be treated as a right to a series of separate payments.

       

      E.  INDEPENDENT COUNSEL.
The Company and Executive agree that each of them have been, or were advised and
fully understand, that they are entitled to be represented by independent legal
counsel with respect to all matters contemplated herein from the commencement of
negotiations at all times through the execution hereof

       

      16.       WAIVER. Any waiver by
either party of a breach of any provision of this Agreement shall not operate as
or be construed to be a waiver of any other breach of such provision or of any
breach of any other provision of this Agreement. The failure of a party to
insist upon strict adherence to any term of this Agreement on one or more
occasions shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement. All waivers must be in writing.

       

      17.       BINDING EFFECT. The
Company’s rights and obligations under this Agreement shall not be transferable
by assignment or otherwise, and any attempt to do any of the foregoing shall be
void. The provisions of this Agreement shall be binding upon the Executive and
his heirs and personal representatives, and shall be binding upon and inure to
the benefit of the Company, its successors and assigns.

       

      18.       HEADINGS. The
headings in this Agreement are solely for convenience of reference and shall be
given no effect in the construction or interpretation of this
Agreement.

       

      19.       GOVERNING LAW; VENUE.
This Agreement is to be performed in the State of Florida, and the validity,
construction and enforcement of, and the remedies under, this Agreement shall be
governed in accordance with the laws of the State of Florida, without giving
effect to any choice of laws principles. In the event of any litigation arising
out of or relating to this Agreement, exclusive venue shall be in Palm Beach
County, Florida.

       

      
        
          
          

        

        
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      20.       ENTIRE AGREEMENT.
This writing constitutes the binding and entire agreement of the parties
superseding and extinguishing all prior agreements or understandings regarding
the subject matter hereof, and may not be modified without the written agreement
by the parties.

       

      21.       INVALIDITY. The
invalidity or unenforceability of any term of this Agreement shall not
invalidate, make unenforceable or otherwise affect any other term of this
Agreement, which shall remain in full force and effect.

       

      22.       ATTORNEYS’ FEES.
Except for any disputes arising pursuant to Section 15 of this Agreement, if any
dispute or litigation arises hereunder between any of the parties hereto, then
the prevailing party shall be entitled to all reasonable costs and expenses
incurred by it in connection therewith (including, without limitation, all
reasonable attorneys’ fees and costs incurred before and at any trial or other
proceeding and at all tribunal levels), as well as all other relief granted in
any suit or other proceeding. As used
herein, a party shall be deemed “prevailing” when it recovers (i) as to a damage
claim, an aggregate of more than fifty percent (50%) of the damages which it
seeks among its various asserted claims exclusive of interest, attorney’s fees,
costs incurred and exemplary damages and (ii) as to an equity claim, substantial
injunctive or other equitable relief upon its asserted claim. Either of the
parties herein shall be entitled to request the trier of fact in any dispute,
litigation or arbitration between them, to determine which of the parties is
“prevailing”.

       

      23.       DAMAGES. The Company
and the Executive agree that the Executive will suffer a monetary loss if the
common shares underlying the stock options, warrants, Incentive Compensation or
other stock appreciation rights owned or held by Executive (the “Executive’s
Securities”) are not covered for resale under a current registration statement
under the Securities Act. Accordingly, so long as the Company is subject to
reporting and filing obligations under the Securities Act of 1934, the Company
shall deliver for each thirty (30) consecutive day period that the Executive’s
Securities are not covered by a current registration statement (or such lessor
pro-rata amount for any period of less than thirty days) to the Executive as
Liquidated Damages, an amount equal to five percent (5%) of the total aggregate
market value of the Executive’s Securities . The Company must pay the Liquidated
Damages in cash. The Liquidated Damages must be paid within ten (10) days after
the end of each thirty (30) day period or shorter part thereof for which
Liquidated Damages are payable.

       

      WITNESS
WHEREOF, the parties have executed this Agreement as of the date first
hereinabove written.

       

      DirectView
Holdings, Inc., a Delaware Corporation

       

      Scott
Burns

      Name

       

      /s/ Scott
Burns

      Signature

       

      President

      Title

       

       

      Executive

       

      Roger
Ralston, a Florida resident

       

      Roger
Ralston

      Name

       

      /s/ Roger
Ralston

      Signature

       

      
        
          
          

        

        
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      EXHIBIT
A

       

      

       

      1.           Incentive
Compensation: As compensation the Employee shall be entitled to Incentive
Compensation, in addition to Base Salary.  Employee shall be entitled
to Incentive Compensation which shall be determined, and distributed as
follows;

       

      (i)           Operating Results: The
calculation of Operating Results will be made by the Company on an annual basis
as determined by the filing of audited consolidated financial statements of the
Company in its Form 10K filing.  The calculation of the “Operating
Results” shall be made in accordance with the following
formula:

       

      Total
Consolidated Net Income

       

      +     Non
Cash
Charges                                                      

       

      +     Dividends 

        
          

        

      

       

      =     Operating
Results

       

       

      (ii)           “Total Consolidated Net
Income” (after taxes) shall be defined as the total consolidated net
income as reflected in the consolidated statements of operations of the Company
and its subsidiaries for the year ended December 31, 2010 as reported in the
audited consolidated financial statements (exclusive of our minority interest)
pursuant to generally accepted auditing standards as established by the Auditing
Standards Board (United States) and in accordance with the auditing standards of
the Public Company Accounting Oversight Board (United States) (“GAAP”).

       

       

      (iii)           “Non Cash Charges”
shall include all non cash charges expensed in the consolidated statements of
operations of the Company and its subsidiaries for the year ended December 31,
2010 as reported in the audited consolidated financial statements pursuant to
GAAP.

       

       

      (iv)           “Dividends” shall
include all payments, cash or other expenses by the Company which are not
related to the business operations of the subsidiaries of the
Company.

       

      
        
          
          

        

        
          Page
9

          
            

          

        

        
          
          

        

      

       

      2.           Employee
shall be entitled to Incentive Compensation which shall be determined, and
distributed, as a percentage of Base Salary in accordance with the following
schedule:

       

       

      
        
          
            
              	
                      2010 Operating Results

                    	
                      %

                    
	 
      	 
      
	
                       $  3,000,000

                    	
                      200%

                    
	
                       $  2,000,000

                    	
                      150%

                    
	
                       $  1,000,000

                    	
                      100%

                    
	
                       $  500,000

                    	
                      75%

                    

            

          

        

      

      

       

      3.           Employee
shall be entitled to receive such Incentive Compensation in accordance with the
following schedule:

       

       

      i.        25%
of the Incentive Compensation shall be due no later than June 30,
2011

      ii.       25%
of the Incentive Compensation shall be due no later than September 30,
2011

      iii.      50%
of the Incentive Compensation shall be due no later than December 31,
2011

      

      
Page
10ex10-d.htm

Exhibit 10(d)

 

 

 

 

THE COMTECH TELECOMMUNICATIONS CORP.

 

 

2000 STOCK INCENTIVE PLAN

 

 

AMENDED AND RESTATED

 

 

EFFECTIVE JUNE 2, 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 TABLE OF CONTENTS

 

	 	Page	 
	
ARTICLE I PURPOSE 
	1	 
	
ARTICLE II DEFINITION
	1	 
	
2.1            "Acquisition Event"
	1	 
	
2.2            "Affiliate"
	1	 
	
2.3            "Award" 
	2	 
	
2.4            "Board" 
	2	 
	
2.5            "Cause" 
	2	 
	
2.6            "Change in Control"
	2	 
	
2.7            "Code" 
	2	 
	
2.8            "Committee" 
	2	 
	
2.9            "Common Stock"
	3	 
	
2.10          "Company"
	3	 
	
2.11          "Consultant"
	3	 
	
2.12          "Detrimental Activity" 
	3	 
	
2.13          "Disparagement" 
	4	 
	
2.14          "Disability" 
	4	 
	
2.15          "Effective Date"
	4	 
	
2.16          "Eligible Employee" 
	4	 
	
2.17          "Exchange Act" 
	4	 
	
2.18          "Family Member" 
	4	 
	
2.19          "Fair Market Value" 
	4	 
	
2.20          "Foreign Jurisdiction" 
	5	 
	
2.21          "Incentive Stock Option"
	5	 
	
2.22          "Limited Stock Appreciation Right"
	5	 
	
2.23          "Non-Employee Director" 
	5	 
	
2.24          "Non-Qualified Stock Option" 
	5	 
	
2.25          "Non-Tandem Stock Appreciation Right"
	5	 
	
2.26          "Other Stock-Based Award" 
	5	 
	
2.27          "Parent" 
	5	 
	
2.28          "Participant" 
	5	 
	
2.29          "Performance Criteria" 
	6	 
	
2.30          "Performance Cycle" 
	6	 
	
2.31          "Performance Goal" 
	6	 
	
2.32          "Performance Period" 
	6	 
	
2.33          "Performance Share" 
	6	 
	
2.34          "Performance Unit" 
	6	 
	
2.35          "Performance Unit Cycle"
	6	 
	
2.36          "Plan"
	6	 
	
2.37          "Reference Stock Option"
	6	 
	
2.38          "Restricted Stock" 
	6	 
	
2.39          "Restriction Period"
	6	 
	
2.40          "Retirement"
	6	 

 

 

 

 

 

 

	
2.41          “Rule 16b-3” 
	6	 
	
2.4            “Section 162(m) of the Code” 
	7	 
	
2.43          “Section 409A of the Code” 
	7	 
	
2.44          “Securities Act” 
	7	 
	
2.45          “Stock Appreciation Right” 
	7	 
	
2.46          “Stock Option” 
	7	 
	
2.47          “Subsidiary” 
	7	 
	
2.48          “Tandem Stock Appreciation Right” 
	7	 
	
2.49          “Ten Percent Stockholder” 
	7	 
	
2.50          “Termination of Consultancy” 
	7	 
	
2.51          “Termination of Directorship” 
	7	 
	
2.52          “Termination of Employment” 
	7	 
	
2.53          “Transfer” 
	8	 
	
ARTICLE III ADMINISTRATION 
	8	 
	
3.1            The Committee 
	8	 
	
3.2            Grants of Awards 
	8	 
	
3.3            Guidelines 
	9	 
	
3.4            Decisions Final 
	10	 
	
3.5            Reliance on Counsel 
	10	 
	
3.6            Procedures 
	10	 
	
3.7            Designation of Consultants/Liability
	10	 
	
ARTICLE IV SHARE AND OTHER LIMITATIONS 
	11	 
	
4.1            Shares
	11	 
	
4.2            Changes
	13	 
	
4.3            Minimum Purchase Price 
	14	 
	
4.4            Assumption of Awards 
	14	 
	
ARTICLE V ELIGIBILITY 
	15	 
	
5.1            General Eligibility 
	15	 
	
5.2            Incentive Stock Options 
	15	 
	
5.3            Non-Employee Directors 
	15	 
	
ARTICLE VI STOCK OPTIONS 
	15	 
	
6.1            Stock Options 
	15	 
	
6.2            Grants 
	15	 
	
6.3            Terms of Stock Options 
	16	 
	
ARTICLE VII STOCK APPRECIATION RIGHTS 
	18	 
	
7.1            Tandem Stock Appreciation Rights 
	18	 
	
7.2            Terms and Conditions of Tandem Stock Appreciation Rights 
	18	 
	
7.3            Non-Tandem Stock Appreciation Rights 
	20	 
	
7.4            Terms and Conditions of Non-Tandem Stock Appreciation Rights 
	20	 
	
7.5            Limited Stock Appreciation Rights 
	21	 
	
ARTICLE VIII RESTRICTED STOCK 
	21	 
	
8.1            Awards of Restricted Stock 
	21	 
	
8.2            Awards and Certificates 
	21	 
	
8.3            Restrictions and Conditions on Restricted Stock Awards 
	22	 
	
ARTICLE IX PERFORMANCE SHARES 
	24	 
	
9.1            Award of Performance Shares 
	24	 

 

 

 

 

 

 

	
9.2            Terms and Conditions 
	24	 
	
ARTICLE X CASH INCENTIVE AWARDS AND PERFORMANCE UNITS 
	25	 
	
10.1          Cash Incentive Awards 
	25	 
	
10.2          Awards of Performance Units 
	26	 
	
10.3          Terms and Conditions 
	26	 
	
ARTICLE XI OTHER STOCK-BASED AWARDS 
	28	 
	
11.1          Other Awards 
	28	 
	
11.2          Terms and Conditions 
	28	 
	
ARTICLE XII NON-TRANSFERABILITY AND TERMINATION  OF EMPLOYMENT/CONSULTANCY
	29	 
	
12.1          Non-Transferability 
	29	 
	
12.2          Termination of Employment or Termination of Consultancy 
	30	 
	
ARTICLE XIII NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS 
	32	 
	
13.1          Stock Options 
	32	 
	
13.2          Grants 
	32	 
	
13.3          Non-Qualified Stock Options 
	32	 
	
13.4          Terms of Stock Options 
	32	 
	
13.5          Termination of Directorship 
	33	 
	
13.6          Acceleration of Exercisability 
	34	 
	
13.7          Changes
	34	 
	
ARTICLE XIV CHANGE IN CONTROL PROVISIONS 
	35	 
	
14.1          Benefits 
	35	 
	
14.2          Change in Control 
	36	 
	
ARTICLE XV TERMINATION OR AMENDMENT OF PLAN 
	37	 
	
ARTICLE XVI UNFUNDED PLAN 
	38	 
	
16.1          Unfunded Status of Plan 
	38	 
	
ARTICLE XVII GENERAL PROVISIONS 
	38	 
	
17.1          Legend 
	38	 
	
17.2          Other Plans 
	38	 
	
17.3          Right to Employment/Consultancy 
	38	 
	
17.4          Withholding of Taxes 
	39	 
	
17.5          Listing and Other Conditions. 
	39	 
	
17.6          Governing Law 
	39	 
	
17.7          Construction 
	39	 
	
17.8          Other Benefits 
	40	 
	
17.9          Costs 
	40	 
	
17.10        No Right to Same Benefits 
	40	 
	
17.11        Death/Disability 
	40	 
	
17.12        Section 16(b) of the Exchange Act 
	40	 
	
17.13        Section 409A of the Code 
	40	 
	
17.14        Severability of Provisions 
	40	 
	
17.15        Headings and Captions 
	41	 
	
ARTICLE XVIII EFFECTIVE DATE OF PLAN 
	41	 
	
ARTICLE XIX TERM OF PLAN 
	41	 

 

 

 

 

 

 

 

 

 

 

 

THE COMTECH TELECOMMUNICATIONS CORP.

 

 

	
2000 STOCK INCENTIVE PLAN

 

 

AMENDED AND RESTATED

 

EFFECTIVE JUNE 2, 2009

 

 

ARTICLE I

 

PURPOSE

 

 

          The purpose of The Comtech Telecommunications Corp. 2000 Stock Incentive Plan is to enhance the profitability and value of the
Company for the benefit of its stockholders by enabling the Company: (i) to offer employees of, and Consultants to, the Company and its Affiliates stock-based incentives and other equity interests in the Company and cash-based incentive Awards, thereby creating a means to attract, retain, motivate and reward such individuals and, through awards with a value based on the value of Company stock, to strengthen the mutuality of interests between such individuals and the Company's stockholders; and (ii) to
make equity based awards to Non-Employee Directors, thereby creating a means to attract, retain and reward such Non-Employee Directors and strengthen the mutuality of interests between Non-Employee Directors and the Company's stockholders.

 

 

ARTICLE II

 

DEFINITIONS

 

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

 

2.1 "Acquisition Event" has the meaning set forth in Section 4.2(d).

 

2.2 "Affiliate" means each of the following: (i) any Subsidiary; (ii) any Parent; (iii) any corporation, trade or
business (including, without limitation, a partnership or limited liability company) which is directly or indirectly controlled 50% or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) by the Company or one of its Affiliates; and (iv) any other entity in which the 

 

 

 

 

 

 

Company or any of its Affiliates has a material equity interest and which is designated as an "Affiliate" by resolution of the Committee.

 

2.3 "Award" means any award under this Plan of any:   (i) Stock Option; (ii) Stock Appreciation Right;
(iii) Restricted Stock; (iv) Performance Share; (v) Performance Unit; (vi) Other Stock-Based Award; (vii) other award providing benefits similar to (i) through (vi) designed to meet the requirements of a Foreign Jurisdiction; or (viii) cash incentive Award awarded under Section 10.1.  An Award other than a cash incentive Award is referred to as an “Equity Award.”

 

2.4 "Board" means the Board of Directors of the Company.

 

2.5 "Cause" means, with respect to a Participant's Termination of Employment or Termination of Consultancy:  (i) in
the case where there is no employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award (or where there is such an agreement but it does not define "cause" (or words of like import)), termination due to a Participant's commission of a fraud or a felony in connection with his or her duties as an employee of the Company or an Affiliate, willful misconduct or any act of disloyalty,
dishonesty, fraud, breach of trust or confidentiality as to the Company or an Affiliate or any other act which is intended to cause or may reasonably be expected to cause economic or reputational injury to the Company or an Affiliate; or (ii) in the case where there is an employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award that defines "cause" (or words of like
import), as defined under such agreement; provided, however, that with regard to any agreement that conditions "cause" on occurrence of a change in control, such definition of "cause" shall not apply until a change in control actually takes place and then only with regard to a termination thereafter.  With respect to a Participant's Termination of Directorship, "cause" shall mean an act or failure to act that constitutes cause for removal of a director under applicable Delaware law.

 

2.6 "Change in Control" has the meaning set forth in Article XIII or Article XIV, as applicable.

 

2.7 "Code" means the Internal Revenue Code of 1986, as amended.  Any reference to any section of the Code shall also
be a reference to any successor provision.

 

2.8 "Committee" means:  (a) with respect to the application of this Plan to Eligible Employees and Consultants,
a committee or subcommittee of the Board appointed from time to time by the Board, which committee or subcommittee shall consist of two or more Non-Employee Directors, each of whom is intended to be, to the extent required by Rule 16b-3, a "non-employee director" as defined in Rule 16b-3 and, to the extent required by Section 162(m) of the Code and any regulations thereunder, an "outside director" as defined under Section 162(m) of the Code; provided, however, that 

 

 

 

2

 

 

if and to the extent that no Committee exists which has the authority to administer this Plan, the functions of the Committee shall be exercised by the Board and all references herein to the Committee shall  be deemed to be references to the Board; and (b) with respect to the application of this Plan to Non-Employee Directors, the Board.

 

2.9 "Common Stock" means the common stock, $.10 par value per share, of the Company.

 

2.10 "Company" means Comtech Telecommunications Corp., a Delaware corporation, and its successors by operation of law.

 

2.11 "Consultant" means any advisor or consultant to the Company or its Affiliates.

 

2.12 "Detrimental Activity" means  (a) the disclosure to anyone outside the Company or its Affiliates, or the use
in any manner other than in the furtherance of the Company's or its Affiliate's business, without written authorization from the Company, of any confidential information or proprietary information, relating to the business of the Company or its Affiliates, acquired by a Participant prior to the Participant's Termination;  (b) activity while employed that results, or if known could result, in the Participant's Termination that is classified by the Company as a Termination for Cause;  (c) any
attempt, directly or indirectly, to solicit, induce or hire (or the identification for solicitation, inducement or hire) any non-clerical employee of the Company or its Affiliates to be employed by, or to perform services for, the Participant or any person or entity with which the Participant is associated (including, but not limited to, due to the Participant's employment by, consultancy for, equity interest in, or creditor relationship with such person or entity) or any person or entity from which the Participant
receives direct or indirect compensation or fees as a result of such solicitation, inducement or hire (or the identification for solicitation, inducement or hire) without, in all cases, written authorization from the Company;  (d) any attempt, directly or indirectly, to solicit in a competitive manner any current or prospective customer of the Company or its Affiliates without, in all cases, written authorization from the Company;  (e) the Participant's Disparagement, or inducement
of others to do so, of the Company or its Affiliates or their past and present officers, directors, employees or products;  (f) without written authorization from the Company, the rendering of services for any organization, or engaging, directly or indirectly, in any business, which is competitive with the Company or its Affiliates, or which organization or business, or the rendering of services to such organization or business, is otherwise prejudicial to or in conflict with the interests of the
Company or its Affiliates, or (g) breach of any agreement between the Participant and the Company or an Affiliate (including, without limitation, any employment agreement or non-competition or non-solicitation agreement).  Unless otherwise determined by the Committee at grant, Detrimental Activity shall not be deemed to occur after the end of the one-year period following the Participant's Termination.   For purposes of subsections (a), (c), (d) and (f) above, the Chief Executive
Officer and the General Counsel of the Company shall each have authority to provide the Participant with written authorization to engage in the activities contemplated thereby 

 

 

3

 

 

and no other person shall have authority to provide the Participant with such authorization.

 

2.13 "Disparagement" means making comments or statements to the press, the Company's or its Affiliates' employees, consultants
or any individual or entity with whom the Company or its Affiliates has a business relationship which would adversely affect in any manner:  the conduct of the business of the Company or its Affiliates (including, without limitation, any products or business plans or prospects), or the business reputation of the Company or its Affiliates, or any of their products, or their past or present officers, directors or employees.

 

2.14 "Disability" means, with respect to an Eligible Employee, Consultant or Non-Employee Director, a permanent and total disability,
as determined by the Committee in its sole discretion, provided that in no event shall any disability that is not a permanent and total disability, as defined in Section 22(e)(3) of the Code, shall be treated as a Disability.  A Disability shall only be deemed to occur at the time of the determination by the Committee of the Disability.  Notwithstanding the foregoing, for Awards that are subject to Section 409A of the Code, Disability shall mean that a Participant is disabled under Section
409A(a)(2)(C)(i) of the Code.

 

2.15 "Effective Date" means the effective date of this Plan as defined in Article XVIII.

 

2.16 "Eligible Employee" means each employee of the Company or an Affiliate.

 

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

 

2.18 "Family Member" shall mean "family member" as defined in Section A1(a)(5) of the general instructions of Form S-8.

 

2.19 "Fair Market Value" means, unless otherwise required by any applicable provision of the Code or any regulations issued thereunder,
as of any date, the last sales price for the Common Stock or the average of trading prices for Common Stock on the applicable date, as specified by the Committee:  (i) as reported on the principal national securities exchange on which it is then traded or The Nasdaq Stock Market LLC or (ii) if not traded on any such national securities exchange or The Nasdaq Stock Market LLC as quoted on an automated quotation system sponsored by the National Association of Securities Dealers, Inc.  If
the Common Stock is not readily tradable on a national securities exchange, The Nasdaq Stock Market LLC or any automated quotation system sponsored by the National Association of Securities Dealers, Inc., its Fair Market Value shall be set in good faith by the Committee.  Notwithstanding anything herein to the contrary, "Fair Market Value" means the price for Common Stock set by the Committee in good faith based on reasonable methods set forth under Section 422 of the Code and the regulations thereunder
including, without limitation, a method utilizing the average of 

 

 

 

4

 

 

prices of the Common Stock reported on the principal national securities exchange on which it is then traded during a reasonable period designated by the Committee.  For purposes of the grant of any Stock Option or Stock Appreciation Right, the applicable date shall be the date of grant of the Stock Option or Stock Appreciation Right (which must be at or after the date on
which such grant is duly authorized) or, if so specified by the Committee, the latest trading date for which the last sales price or average trading price is available at the time of grant, provided that for purposes of the exercise of any Stock Option or Stock Appreciation Right, the applicable date shall be the date a notice of exercise is received by the Secretary of the Company or, if not a day on which the applicable market is open, the next day that it is open.  For purposes of the conversion
of a Performance Unit to shares of Common Stock for reference purposes, the applicable date shall be the date determined by the Committee in accordance with Section 10.2

 

2.20 "Foreign Jurisdiction" means any jurisdiction outside of the United States including, without limitation, countries, states,
provinces and localities.

 

2.21 "Incentive Stock Option" means any Stock Option awarded to an Eligible Employee under this Plan intended to be and designated
as an "Incentive Stock Option" within the meaning of Section 422 of the Code.

 

2.22 "Limited Stock Appreciation Right" means an Award of a limited Tandem Stock Appreciation Right or a Non-Tandem Stock Appreciation
Right made pursuant to Section 7.5 of this Plan.

 

2.23 "Non-Employee Director" means a director of the Company who is not an active employee of the Company or an Affiliate and who
is not an officer, director or employee of the Company or any Affiliate.

 

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

 

2.25 "Non-Tandem Stock Appreciation Right" means a Stock Appreciation Right entitling a Participant to receive an amount in cash
or Common Stock (as determined by the Committee in its sole discretion) equal to the excess of:  (i) the Fair Market Value of a share of Common Stock as of the date such right is exercised, over (ii) the aggregate exercise price of such right.

 

2.26 "Other Stock-Based Award" means an Award of Common Stock and other Awards made pursuant to Article XI that are valued in whole
or in part by reference to, or are payable in or otherwise based on, Common Stock, including, without limitation, an Award valued by reference to performance of an Affiliate.

 

2.27 "Parent" means any parent corporation of the Company within the meaning of Section 424(e) of the Code.

 

2.28 "Participant" means any Eligible Employee or Consultant to whom an Award has been made under this Plan and each Non-Employee
Director of the Company; provided, however, that a Non-Employee Director shall be a Participant for 

 

 

 

5

 

 

purposes of the Plan solely with respect to awards of Stock Options pursuant to Article XIII.

 

2.29 "Performance Criteria" has the meaning set forth in Exhibit A.

 

2.30 "Performance Cycle" has the meaning set forth in Section 10.1.

 

2.31 "Performance Goal" means the objective performance goals established by the Committee in accordance with Section 162(m) of
the Code and based on one or more Performance Criteria.

 

2.32 "Performance Period" has the meaning set forth in Section 9.1.

 

2.33 "Performance Share" means an Award made pursuant to Article IX of this Plan of the right to receive Common Stock or, as determined
by the Committee in its sole discretion, cash of an equivalent value at the end of the Performance Period or thereafter.

 

2.34 "Performance Unit" means an Award made pursuant to Article X of this Plan of the right to receive a fixed dollar amount, payable
in cash or Common Stock (or a combination of both) as determined by the Committee in its sole discretion, at the end of a specified Performance Unit Cycle or thereafter.

 

2.35 "Performance Unit Cycle" has the meaning set forth in Section 10.2.

 

2.36 "Plan"means The Comtech Telecommunications Corp. 2000 Stock Incentive Plan.

 

2.37 "Reference Stock Option" has the meaning set forth in Section 7.1.

 

2.38 "Restricted Stock" means an Award of shares of Common Stock under this Plan that is subject to restrictions under Article
VIII.

 

2.39 "Restriction Period" has the meaning set forth in Section 8.3(a) with respect to Restricted Stock.

 

2.40 "Retirement" means a Termination of Employment or Termination of Consultancy other than a termination for Cause or due to
death or Disability by a Participant at or after age 65 or such earlier date after age 50 as may be approved by the Committee with regard to such Participant.  With respect to a Participant's Termination of Directorship, Retirement shall mean the failure to stand for reelection or the failure to be reelected at or after a Participant has attained age 65 or, with the consent of the Board, before age 65 but after age 50.

 

2.41 "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the Exchange Act as then in effect or any successor provisions.

 

 

 

6

 

 

2.42 "Section 162(m) of the Code" means Section 162(m) of the Code and any Treasury regulations thereunder.

 

2.43 "Section 409A of the Code" means Section 409A of the Code and any Treasury regulations thereunder.

 

2.44 "Securities Act" means the Securities Act of 1933, as amended.  Any reference to any section of the Securities Act
shall also be a reference to any successor provision.

 

2.45 "Stock Appreciation Right" or "SAR" means the right pursuant to an Award granted under Article VII.

 

2.46 "Stock Option" or "Option" means any option to purchase shares of Common Stock granted to Eligible Employees or Consultants
under Article VI or to Non-Employee Directors under Article XIII.

 

2.47 "Subsidiary" means any subsidiary corporation of the Company within the meaning of Section 424(f) of the Code.

 

2.48 "Tandem Stock Appreciation Right" means a Stock Appreciation Right entitling the holder to surrender to the Company all (or
a portion) of a Stock Option in exchange for an amount in cash or Common Stock (as determined by the Committee in its sole discretion) equal to the excess of:  (i) the Fair Market Value, on the date such Stock Option (or such portion thereof) is surrendered, of the Common Stock covered by such Stock Option (or such portion thereof), over (ii) the aggregate exercise price of such Stock Option (or such portion thereof).

 

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

 

2.50 "Termination of Consultancy" means, with respect to a Consultant, that the Consultant is no longer acting as a consultant
to the Company or an Affiliate.  In the event an entity shall cease to be an Affiliate, there shall be deemed a Termination of Consultancy of any individual who is not otherwise a Consultant to the Company or another Affiliate at the time the entity ceases to be an Affiliate.  In the event that a Consultant becomes an Eligible Employee upon the termination of his consultancy, the Committee, in its sole and absolute discretion, may determine that no Termination of Consultancy shall be deemed
to occur until such time as such Consultant is no longer a Consultant or an Eligible Employee.

 

2.51 "Termination of Directorship" means, with respect to a Non-Employee Director, that the Non-Employee Director has ceased to
be a director of the Company.

 

2.52 "Termination of Employment" means:  (i) a termination of employment (for reasons other than a military or personal
leave of absence granted by the 

 

 

7

 

 

Company) of a Participant from the Company and its Affiliates; or (ii) when an entity which is employing a Participant ceases to be an Affiliate, unless the Participant otherwise is, or thereupon becomes, employed by the Company or another Affiliate.  In the event that an Eligible Employee becomes a Consultant upon the termination of his employment, the Committee, in
its sole and absolute discretion, may determine that no Termination of Employment shall be deemed to occur until such time as such Eligible Employee is no longer an Eligible Employee or a Consultant.

 

2.53 "Transfer" means anticipate, alienate, attach, sell, assign, pledge, encumber, charge, hypothecate or otherwise transfer and
“Transferred” has a correlative meaning.

 

 

ARTICLE III

 

ADMINISTRATION

 

3.1 The Committee.  The Plan shall be administered and
interpreted by the Committee.  If for any reason the appointed Committee does not meet the requirements of Rule 16b-3 or Section 162(m) of the Code, such noncompliance with the requirements of Rule 16b-3 and Section 162(m) of the Code shall not affect the validity of Awards, grants, interpretations or other actions of the Committee.

 

3.2 Grants of Awards.  The Committee shall have full
authority to grant to Eligible Employees and Consultants, pursuant to the terms of this Plan:  (i) Stock Options; (ii) Tandem Stock Appreciation Rights and Non-Tandem Stock Appreciation Rights; (iii) Restricted Stock; (iv) Performance Shares; (v) Performance Units; (vi) Other Stock-Based Awards; (vii) other awards providing benefits similar to (i) through (vi) designed to meet the requirements of Foreign Jurisdictions; and (viii) cash incentive Awards under Section
10.1.  All Equity Awards shall be granted by, confirmed by, and subject to the terms of, a written agreement executed by the Company and the Participant.  In particular, the Committee shall have the authority:

 

    (a) to select the Eligible Employees and Consultants to whom Awards may from time to time be granted hereunder;

 

    (b) to determine whether and to what extent Awards, including any combination of two or more Awards, are
to be granted hereunder to one or more Eligible Employees or Consultants;

 

    (c) to determine, in accordance with the terms of this Plan, the number of shares of Common Stock to be
covered by each Equity Award granted hereunder;

 

    (d) to determine the terms and conditions, not inconsistent with the terms of this Plan, of any Award
granted hereunder (including, but not limited to, the exercise or purchase price (if any), any restriction or limitation, any vesting schedule or acceleration thereof and any forfeiture restrictions or waiver thereof, 

 

 

 

8

 

 

regarding any Award and the shares of Common Stock relating thereto, based on such factors, if any, as the Committee shall determine, in its sole discretion);

 

    (e) to determine whether and under what circumstances a Stock Option may be settled in cash, Common Stock
and/or Restricted Stock under Section 6.3(d) or, with respect to Stock Options granted to Non-Employee Directors, Section 13.4(d);

 

    (f) to the extent permitted by law, to determine whether, to what extent and under what circumstances
to provide loans (which shall bear interest at the rate the Committee shall provide) to Eligible Employees and Consultants in order to exercise Stock Options under this Plan or to purchase Awards under this Plan (including shares of Common Stock);

 

    (g) to determine whether a Stock Option is an Incentive Stock Option or Non-Qualified Stock Option, whether
a Stock Appreciation Right is a Tandem Stock Appreciation Right or Non-Tandem Stock Appreciation Right or whether an Award is intended to satisfy Section 162(m) of the Code;

 

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

 

    (i) to modify, extend or renew an Award, subject to Article XV herein,  provided, however, that
if an Award is modified, extended or renewed and thereby deemed to be the issuance of a new Award under the Code or the applicable accounting rules, the exercise price of an Award may continue to be the original exercise price even if less than the Fair Market Value of the Common Stock at the time of such modification, extension or renewal; provided further, however, that such Award may be restructured to comply with Section 409A of the Code to avoid any adverse tax consequences, to the extent applicable.

 

3.3 Guidelines.  Subject to Article XV hereof, the Committee
shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing this Plan and perform all acts, including the delegation of its administrative responsibilities, as it shall, from time to time, deem advisable; to construe and interpret the terms and provisions of this Plan and any Award issued under this Plan (and any agreements relating thereto); and to otherwise supervise the administration of this Plan.  The Committee may correct any defect, supply
any omission or reconcile any inconsistency in this Plan or in any agreement relating thereto in the manner and to the extent it shall deem necessary to effectuate the purpose and intent of this Plan.  The Committee may adopt special guidelines and provisions for persons who are residing in, or subject to, the taxes of, Foreign Jurisdictions to comply with applicable tax and securities laws and may impose any limitations and restrictions that it deems necessary to comply with the applicable tax and
securities laws of such Foreign Jurisdictions.  To the 

 

 

9

 

 

extent applicable, this Plan is intended to comply with Section 162(m) of the Code and the applicable requirements of Rule 16b-3 and shall be limited, construed and interpreted in a manner so as to comply therewith.

 

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

 

3.5 Reliance on Counsel.  The Company, the Board or
the Committee may consult with legal counsel, who may be counsel for the Company or other counsel, with respect to its obligations or duties hereunder, or with respect to any action or proceeding or any question of law, and shall not be liable with respect to any action taken or omitted by it in good faith pursuant to the advice of such counsel.

 

3.6 Procedures.  If the Committee is appointed, the
Board shall designate one of the members of the Committee as chairman and the Committee shall hold meetings, subject to the By-Laws of the Company, at such times and places as it shall deem advisable.  A majority of the Committee members shall constitute a quorum.  All determinations of the Committee shall be made by a majority of its members.  Any decision or determination reduced to writing and signed by all the Committee members in accordance with the By-Laws of the Company, shall
be fully as effective as if it had been made by a vote at a meeting duly called and held.  The Committee shall keep minutes of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable.

 

3.7 Designation of Consultants/Liability.

 

    (a) The Committee may designate employees of the Company and professional advisors to assist the Committee in the administration of this Plan and may grant authority to officers
to execute agreements or other documents on behalf of the Committee.

 

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

 

 

10

 

 

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

 

 

ARTICLE IV

 

SHARE AND OTHER LIMITATIONS

 

4.1 Shares.

 

   (a) General Limitation.  The
aggregate number of shares of Common Stock which may be issued or used for reference purposes under this Plan or with respect to which Equity Awards may be granted shall not exceed 6,587,500 shares of Common Stock (subject to any increase or decrease pursuant to Section 4.2) with respect to all types of Equity Awards, plus 1,986,603 shares of Common Stock relating to outstanding awards assumed by this Plan under Section 4.4 and awards available for grant under the Comtech Telecommunications Corp. 1993 Incentive
Stock Option Plan, as amended (the "1993 Plan"), for a total of 8,574,103 shares of Common Stock.  The shares of Common Stock available under this Plan may be either authorized and unissued Common Stock or Common Stock held in or acquired for the treasury of the Company.  If any Stock Option or Stock Appreciation Right granted under this Plan expires, terminates or is canceled for any reason without having been exercised in full or, with respect to Stock Options, the Company repurchases any
Stock Option, the number of shares of Common Stock underlying such unexercised or repurchased Stock Option or any unexercised Stock Appreciation Right shall again be available for the purposes of Equity Awards under this Plan.  If any shares of Restricted Stock, Performance Shares or Performance Units awarded under this Plan to a Participant are forfeited or repurchased by the Company for any reason, the number of forfeited or repurchased shares of Restricted Stock, Performance Shares or Performance
Units shall again be available for the purposes of Equity Awards under this Plan.  If a Tandem Stock Appreciation Right is granted or a Limited Stock Appreciation Right is granted in tandem with a Stock Option, such grant shall only apply once against the maximum number of shares of Common 

 

 

11

 

 

Stock which may be issued under this Plan. In determining the number of shares of Common Stock available for Equity Awards, if Common Stock has been exchanged by a Participant as full or partial payment of exercise price or withholding taxes, or if the number shares of Common Stock otherwise deliverable has been reduced for the payment
of exercise price or withholding taxes, the number of shares of Common Stock exchanged as payment for the payment of exercise price or withholding taxes, or reduced, shall again be available for purposes of Equity Awards under this Plan.

 

    (b) Individual Participant
Limitations.  (i)  The maximum number of shares of Common Stock subject to any Award of Stock Options, Stock Appreciation Rights, Performance Shares or shares of Restricted Stock for which the grant of such Award or the lapse of the relevant Restriction Period is subject to the attainment of Performance Goals in accordance with Section 8.3(a)(ii) herein which may be granted under this Plan during any fiscal
year of the Company to each Eligible Employee or Consultant shall be 225,000 shares per type of Award (which shall be subject to any increase or decrease pursuant to Section 4.2), provided that the maximum number of shares of Common Stock for all types of Equity Awards does not exceed 225,000 (which shall be subject to any increase or decrease pursuant to Section 4.2) during any fiscal year of the Company.  If a Tandem Stock Appreciation Right is granted or a Limited Stock Appreciation Right is granted
in tandem with a Stock Option, it shall apply against the Eligible Employee's or Consultant's individual share limitations for both Stock Appreciation Rights and Stock Options.

 

    (ii) There are no annual individual Eligible Employee or Consultant share limitations on Restricted Stock
for which the grant of such Award or the lapse of the relevant Restriction Period is not subject to attainment of Performance Goals in accordance with Section 8.3(a)(ii) hereof.

 

    (iii) The maximum value at grant of Performance Units which may be granted under this Plan during any
fiscal year of the Company to each Eligible Employee or Consultant shall be $100,000.  Each Performance Unit shall be referenced to one share of Common Stock and shall be charged against the available shares under this Plan at the time the unit value measurement is converted to a referenced number of shares of Common Stock in accordance with Section 10.2.

 

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

 

 

12

 

 

    (v) The maximum potential amount earnable under all cash incentive Awards granted under this Plan for
any fiscal year of the Company to each Eligible Employee shall be such Eligible Employee’s “Annual Limit,” which in each fiscal year shall be $4 million plus the amount of the Eligible Person's unused Annual Limit as of the close of the previous fiscal year.  This limitation is separate and not affected by the number of Awards granted during such fiscal year subject to the limitations under Section 4.1(b)(i) – (iv).  For this purpose, (i) the potential amount earnable
means the maximum amount potentially payable, without regard to whether it is to be paid currently or on a deferred basis or continues to be subject to any service requirement or other non-performance condition, (ii) a Participant's Annual Limit is used to the extent an amount may be potentially earned or paid under a cash incentive Award, regardless of whether such amount is in fact earned or paid, and (iii) a cash incentive Award is “granted” for the earliest fiscal year included in the Performance
Cycle for that Award, regardless of whether the terms of the Award do or do not create a legal right on the part of the Participant ultimately to receive a payment with respect to such Award.

 

4.2 Changes.

 

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

 

    (b) Subject to the provisions of Section 4.2(d), in the event of any such change in the capital structure
or business of the Company by reason of any stock split, reverse stock split, stock dividend, combination or reclassification of shares, recapitalization, or other change in the capital structure of the Company, merger, consolidation, spin-off, reorganization, partial or complete liquidation, issuance of rights or warrants to purchase any Common Stock or securities convertible into Common Stock, or any other corporate transaction or event having an effect similar to any of the foregoing and effected without receipt
of consideration by the Company, then the aggregate number and kind of shares which thereafter may be issued under this Plan, the number and kind of shares or other property (including cash) to be issued upon exercise of an outstanding Stock Option or other Awards granted under this Plan and the purchase price thereof shall be appropriately adjusted consistent with such change in such manner as the Committee may deem equitable to prevent substantial dilution or enlargement of the rights granted to, or available
for, Participants under this Plan, and any such 

 

 

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adjustment determined by the Committee in good faith shall be final, binding and conclusive on the Company and all Participants and employees and their respective heirs, executors, administrators, successors and assigns.

 

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

 

    (d) In the event of a merger or consolidation in which the Company is not the surviving entity or in the
event of any transaction that results in the acquisition of substantially all of the Company's outstanding Common Stock by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of all or substantially all of the Company's assets (all of the foregoing being referred to as "Acquisition Events"), then the Committee may, in its sole discretion, terminate all outstanding Stock Options and Stock Appreciation Rights, effective as of the date of
the Acquisition Event, by delivering notice of termination to each Participant at least 30 days prior to the date of consummation of the Acquisition Event, in which case during the period from the date on which such notice of termination is delivered to the consummation of the Acquisition Event, each such Participant shall have the right to exercise in full all of his or her Stock Options and Stock Appreciation Rights that are then outstanding (without regard to any limitations on exercisability otherwise contained
in the Stock Option or Award Agreements), but any such exercise shall be contingent upon and subject to the occurrence of the Acquisition Event, and, provided that, if the Acquisition Event does not take place within a specified period after giving such notice for any reason whatsoever, the notice and exercise pursuant thereto shall be null and void.

 

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

 

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

 

4.4 Assumption of Awards.  Awards that were granted
prior to the Effective Date under the (i) Comtech Telecommunications Corp. 1982 Incentive Stock Option Plan (the "1982 Plan"), and (ii) the 1993 Plan, shall be transferred and assumed by this Plan as of the Effective Date.  Notwithstanding the foregoing, such Awards shall 

 

 

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          continue to be governed by the terms of the applicable agreement in effect prior to the Effective Date.

 

 

ARTICLE V

 

ELIGIBILITY

 

5.1 General Eligibility.  All Eligible Employees and
Consultants and prospective employees of and Consultants to the Company and its Affiliates are eligible to be granted Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock, Performance Shares, Performance Units, Other Stock-Based Awards, awards providing benefits similar to each of the foregoing designed to meet the requirements of Foreign Jurisdictions under this Plan, and cash incentive Awards.  Eligibility for the grant of an Award and actual participation in this Plan shall be
determined by the Committee in its sole discretion.  The vesting and exercise of Awards granted to a prospective employee or Consultant are conditioned upon such individual actually becoming an Eligible Employee or Consultant.

 

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

 

5.3 Non-Employee Directors.  Non-Employee Directors
are only eligible to receive an Award of Stock Options in accordance with Article XIII of the Plan.

 

 

ARTICLE VI

 

STOCK OPTIONS

 

6.1 Stock Options.  Each Stock Option granted hereunder
shall be one of two types: (i) an Incentive Stock Option intended to satisfy the requirements of Section 422 of the Code; or (ii) a Non-Qualified Stock Option.

 

6.2 Grants.  The Committee shall have the authority
to grant to any Eligible Employee one or more Incentive Stock Options, Non-Qualified Stock Options or both types of Stock Options (in each case with or without Stock Appreciation Rights).  To the extent that any Stock Option does not qualify as an Incentive Stock Option (whether because of its provisions or the time or manner of its exercise or otherwise), such Stock Option or the portion thereof which does not qualify, shall constitute a separate Non-Qualified Stock Option.  The Committee
shall have the authority to grant any Consultant one or more Non-Qualified Stock Options (with or without Stock Appreciation Rights).  Notwithstanding any other provision of this Plan to the contrary or any provision in an agreement evidencing the grant of a Stock Option to the contrary, any Stock Option granted to an Eligible Employee of an Affiliate (other than an Affiliate which is a Parent or a Subsidiary) shall be a Non-Qualified Stock Option.

 

 

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

 

    (a) Exercise Price.  The
exercise price per share of Common Stock purchasable under an Incentive Stock Option or a Stock Option intended to be "performance-based" for purposes of Section 162(m) of the Code shall be determined by the Committee at the time of grant, but shall not be less than 100% of the Fair Market Value of the share of Common Stock at the time of grant; provided, however, that if an Incentive Stock Option is granted to a Ten Percent Stockholder, the exercise price shall be no less than 110% of the Fair Market Value of
the Common Stock.  The exercise price per share of Common Stock purchasable under a Non-Qualified Stock Option shall be determined by the Committee; provided, that if the exercise price is less than 100% of the Fair Market Value of the Common Stock at the time of grant it is intended that such Award will be structured to comply with Section 409A of the Code, to the extent applicable.

 

    (b) Stock Option Term.  The
term of each Stock Option shall be fixed by the Committee; provided, however, that no Stock Option shall be exercisable more than 10 years after the date such Stock Option is granted; and further provided that the term of an Incentive Stock Option granted to a Ten Percent Stockholder shall not exceed 5 years.

 

    (c) Exercisability.  Stock
Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at grant.  If the Committee provides, in its discretion, that any Stock Option is exercisable subject to certain limitations (including, without limitation, that such Stock Option is exercisable only in installments or within certain time periods), the Committee may waive such limitations on the exercisability at any time at or after grant in whole or in part (including,
without limitation, waiver of the installment exercise provisions or acceleration of the time at which such Stock Option may be exercised), based on such factors, if any, as the Committee shall determine, in its sole discretion.

 

    (d) Method of Exercise.  Subject
to whatever installment exercise and waiting period provisions apply under subsection (c) above, Stock Options may be exercised in whole or in part at any time and from time to time during the Stock Option term by giving written notice of exercise to the Secretary of the Company specifying the number of shares to be purchased.  Such notice shall be accompanied by payment in full of the purchase price as follows:  (i) in cash or by check, bank draft or money order payable to the order
of the Company; (ii) to the extent permitted by law, if the Common Stock is traded on a national securities exchange, The Nasdaq Stock Market LLC or quoted on a national quotation system sponsored by the National Association of Securities Dealers, through a "cashless exercise" procedure whereby the Participant delivers irrevocable 

 

 

16

 

 

instructions to a broker satisfactory to the Company to deliver promptly to the Company an amount equal to the purchase price; or (iii) on such other terms and conditions as may be acceptable to the Committee (including, without limitation, the relinquishment of Stock Options or by payment in full or in part in the form of Common
Stock owned by the Participant (and for which the Participant has good title free and clear of any liens and encumbrances) based on the Fair Market Value of the Common Stock on the payment date as determined by the Committee).  No shares of Common Stock shall be issued until payment therefore, as provided herein, has been made or provided for.

 

    (e) Incentive Stock Option
Limitations.  To the extent that the aggregate Fair Market Value (determined as of the time of grant) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an Eligible Employee during any calendar year under this Plan and/or any other stock option plan of the Company, any Subsidiary or any Parent exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options.  In
addition, if an Eligible Employee does not remain employed by the Company, any Subsidiary or any Parent at all times from the time an Incentive Stock Option is granted until 3 months prior to the date of exercise thereof (or such other period as required by applicable law), such Stock Option shall be treated as a Non-Qualified Stock Option.  Should any provision of this Plan not be necessary in order for the Stock Options to qualify as Incentive Stock Options, or should any additional provisions be
required, the Committee may amend this Plan accordingly, without the necessity of obtaining the approval of the stockholders of the Company.

 

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

 

   (g) Other Terms and Conditions.  Stock
Options may contain such other provisions, which shall not be inconsistent with any of the terms of this Plan, as the Committee shall deem appropriate including, without limitation, permitting "reloads" such that the same number of Stock Options are granted as the number of Stock Options exercised, shares used to pay for the exercise price 

 

 

17

 

 

of Stock Options or shares used to pay withholding taxes ("Reloads").  With respect to Reloads, the exercise price of the new Stock Option shall be the Fair Market Value on the date of the "reload" and the term of the Stock Option shall be the same as the remaining term of the Stock Options that are exercised, if applicable,
or such other exercise price and term as determined by the Committee.

 

   (h) Detrimental Activity.  Unless
otherwise determined by the Committee at grant, (i) in the event the Participant engages in Detrimental Activity prior to any exercise of the Stock Option, all Stock Options (whether vested or unvested) held by the Participant shall thereupon terminate and expire, (ii) as a condition of the exercise of a Stock Option, the Participant shall be required to certify (or shall be deemed to have certified) at the time of exercise in a manner acceptable to the Company that the Participant is in compliance
with the terms and conditions of the Plan and that the Participant has not engaged in, and does not intend to engage in, any Detrimental Activity, and (iii) in the event the Participant engages in Detrimental Activity during the one year period following the later of (x) Participant's Termination of Employment or (y) the date the Stock Option is exercised, that any Stock Options shall be immediately forfeited (whether or not then vested) and the Company shall be entitled to recover from the Participant
at any time within one year after the later of (x) or (y), and the Participant shall pay over to the Company, an amount equal to any gain realized as a result of the exercise of any Stock Options (whether at the time of exercise or thereafter).

 

 

ARTICLE VII

 

STOCK APPRECIATION RIGHTS

 

7.1 Tandem Stock Appreciation Rights.  Stock Appreciation
Rights may be granted in conjunction with all or part of any Stock Option (a "Reference Stock Option") granted under this Plan ("Tandem Stock Appreciation Rights").  In the case of a Non-Qualified Stock Option, such rights may be granted either at or after the time of the grant of such Reference Stock Option.  In the case of an Incentive Stock Option, such rights may be granted only at the time of the grant of such Reference Stock Option.  Consultants shall not be eligible for a
grant of Tandem Stock Appreciation Rights granted in conjunction with all or part of an Incentive Stock Option.

 

7.2 Terms and Conditions of Tandem Stock Appreciation Rights.  Tandem
Stock Appreciation Rights shall be subject to such terms and conditions, not inconsistent with the provisions of this Plan, as shall be determined from time to time by the Committee, including Article XII and the following:

 

   (a) Term.  A
Tandem Stock Appreciation Right or applicable portion thereof granted with respect to a Reference Stock Option shall terminate and no longer be exercisable upon the termination or exercise of the Reference Stock Option, except that, unless otherwise determined by the Committee, in its sole 

 

 

 

18

 

 

discretion, at the time of grant, a Tandem Stock Appreciation Right granted with respect to less than the full number of shares covered by the Reference Stock Option shall not be reduced until and then only to the extent the exercise or termination of the Reference Stock Option causes the number of shares covered by the Tandem Stock
Appreciation Right to exceed the number of shares remaining available and unexercised under the Reference Stock Option.

 

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

 

   (c) Method of Exercise.  A
Tandem Stock Appreciation Right may be exercised by a Participant by surrendering the applicable portion of the Reference Stock Option.  Upon such exercise and surrender, the Participant shall be entitled to receive an amount determined in the manner prescribed in this Section 7.2.  Stock Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent the related Tandem Stock Appreciation Rights have been exercised.

 

    (d) Payment.  Upon
the exercise of a Tandem Stock Appreciation Right, a Participant shall be entitled to receive up to, but no more than, an amount in Common Stock equal in value to the excess of the Fair Market Value of one share of Common Stock over the option price per share specified in the Reference Stock Option, multiplied by the number of shares in respect of which the Tandem Stock Appreciation Right shall have been exercised.

 

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

 

   (f) Detrimental Activity.  Unless
otherwise determined by the Committee at grant, (i) in the event the Participant engages in Detrimental Activity prior to any exercise of Tandem Stock Appreciation Rights, all Tandem Stock Appreciation Rights (whether vested or unvested) held by the Participant shall thereupon terminate and expire, (ii) as a condition of the exercise of a Tandem Stock Appreciation Right, the Participant shall be required to certify (or shall be deemed to have certified) at the time of exercise in a manner acceptable
to the Company that the Participant is in compliance with the terms and conditions of the Plan and that the Participant has not engaged in, and does not intend to engage in, any Detrimental Activity, and (iii) in the event the Participant engages in Detrimental Activity during the one year period following the later of (x) Participant's Termination of Employment or (y) the date the Tandem Stock Appreciation Right is exercised, that any Tandem Stock Appreciation Rights shall be immediately forfeited
(whether or not then vested) and the Company shall be 

 

 

19

 

 

entitled to recover from the Participant at any time within one year after the later of (x) or (y), and the Participant shall pay over to the Company, an amount equal to any gain realized as a result of the exercise (whether at the time of exercise or thereafter).

 

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

 

7.4 Terms and Conditions of Non-Tandem Stock Appreciation Rights.  Non-Tandem
Stock Appreciation Rights shall be subject to such terms and conditions, not inconsistent with the provisions of this Plan, as shall be determined from time to time by the Committee, including Article XII and the following:

 

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

 

    (b) Exercisability.  Non-Tandem
Stock Appreciation Rights shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at grant.  If the Committee provides, in its discretion, that any such right is exercisable subject to certain limitations (including, without limitation, that it is exercisable only in installments or within certain time periods), the Committee may waive such limitation on the exercisability at any time at or after grant in whole or in part (including,
without limitation, waiver of  the installment exercise provisions or acceleration of the time at which rights may be exercised), based on such factors, if any, as the Committee shall determine, in its sole discretion.

 

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

 

    (d) Payment.  Upon
the exercise of a Non-Tandem Stock Appreciation Right a Participant shall be entitled to receive, for each right exercised, up to, but no more than, an amount in cash and/or Common Stock (as chosen by the Committee in its sole discretion at grant, or thereafter if no rights of a Participant are reduced) equal in value to the excess of the Fair Market Value of one share of Common Stock on the date the right is exercised over the Fair Market Value of one share of Common Stock on the date the right was awarded to
the Participant; provided, that if payment is made in cash such payment shall be structured to comply with Section 409A of the Code, to the extent applicable.

 

    (e) Detrimental Activity.  Unless
otherwise determined by the Committee at grant, (i) in the event the Participant engages in Detrimental 

 

 

 

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Activity prior to any exercise of Non-Tandem Stock Appreciation Rights, all Non-Tandem Stock Appreciation Rights (whether vested or unvested) held by the Participant shall thereupon terminate and expire, (ii) as a condition of the exercise of a Tandem Stock Appreciation Right, the Participant shall be required to certify (or
shall be deemed to have certified) at the time of exercise in a manner acceptable to the Company that the Participant is in compliance with the terms and conditions of the Plan and that the Participant has not engaged in, and does not intend to engage in, any Detrimental Activity, and (iii) in the event the Participant engages in Detrimental Activity during the one year period following the later of (x) Participant's Termination of Employment or (y) the date the Non-Tandem Stock Appreciation Right
is exercised, that any Non-Tandem Stock Appreciation Rights shall be immediately forfeited (whether or not then vested) and the Company shall be entitled to recover from the Participant at any time within one year after the later of (x) or (y), and the Participant shall pay over to the Company, an amount equal to any gain realized as a result of the exercise (whether at the time of exercise or thereafter).

 

7.5 Limited Stock Appreciation Rights.  The Committee
may, in its sole discretion, grant a Tandem Stock Appreciation Right or a Non-Tandem Stock Appreciation Right as a Limited Stock Appreciation Right.  Limited Stock Appreciation Rights may be exercised only upon the occurrence of a Change in Control or such other event as the Committee may, in its sole discretion, designate at the time of grant or thereafter.  Upon the exercise of limited Stock Appreciation Rights, except as otherwise provided in an Award agreement, the Participant shall receive
in cash or Common Stock, as determined by the Committee, an amount equal to the amount (i) set forth in Section 7.2(d) with respect to Tandem Stock Appreciation Rights, or (ii) set forth in Section 7.4(d) with respect to Non-Tandem Stock Appreciation Rights, as applicable.

 

 

ARTICLE VIII

 

RESTRICTED STOCK

 

8.1 Awards of Restricted Stock.  Shares of Restricted
Stock may be issued to Eligible Employees or Consultants either alone or in addition to other Awards granted under this Plan.  The Committee shall determine the eligible persons to whom, and the time or times at which, grants of Restricted Stock will be made, the number of shares to be awarded, the price (if any) to be paid by the recipient (subject to Section 8.2), the time or times within which such Awards may be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all
other terms and conditions of the Awards.  The Committee may condition the grant or vesting of Restricted Stock upon the attainment of specified performance goals, including established Performance Goals in accordance with Section 162(m) of the Code, or such other factors as the Committee may determine, in its sole discretion.

 

8.2 Awards and Certificates.  An Eligible Employee or
Consultant selected to receive Restricted Stock shall not have any rights with respect to such Award, 

 

 

21

 

 

unless and until such Participant has delivered to the Company a fully executed copy of the applicable Award agreement relating thereto and has otherwise complied with the applicable terms and conditions of such Award.  Further, such Award shall be subject to the following conditions:

 

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

 

   (b) Acceptance.  Awards
of Restricted Stock must be accepted within a period of 90 days (or such shorter period as the Committee may specify at grant) after the Award date by executing a Restricted Stock Award agreement and by paying whatever price (if any) the Committee has designated thereunder.

 

   (c) Legend.  Each
Participant receiving shares of Restricted Stock shall be issued a stock certificate in respect of such shares of Restricted Stock, unless the Committee elects to use another system, such as book entries by the transfer agent, as evidencing ownership of shares of Restricted Stock.  Such certificate shall be registered in the name of such Participant, and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award, substantially in the following form:

 

    "The anticipation, alienation, attachment, sale, transfer, assignment, pledge, encumbrance or charge of the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of The Comtech Telecommunications Corp. 2000 Stock
Incentive Plan (the "Plan") and an Agreement entered into between the registered owner and the Company dated _______.  Copies of such Plan and Agreement are on file at the principal office of the Company."

 

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

 

8.3 Restrictions and Conditions on Restricted Stock Awards.  Shares
of Restricted Stock awarded pursuant to this Plan shall be subject to Article XII and the following restrictions and conditions:

 

   (a) Restriction Period; Vesting
and Acceleration of Vesting.  (i) The Participant shall not be permitted to Transfer shares of Restricted Stock awarded under this Plan during the period or periods set by the Committee (the "Restriction Period") commencing on the date of such Award, as set forth in the Restricted Stock Award agreement and such agreement shall set forth a vesting schedule and any events which would accelerate vesting of the shares of 

 

 

22

 

 

Restricted Stock.  Within these limits, based on service, attainment of Performance Goals pursuant to Section 8.3(a)(ii) below and/or such other factors or criteria as the Committee may determine in its sole discretion, the Committee may provide for the lapse of such restrictions in installments in whole or in part, or
may accelerate the vesting of all or any part of any Restricted Stock Award and/or waive the deferral limitations for all or any part of any Restricted Stock Award.

 

       (ii) Objective
Performance Goals, Formulae or Standards.  If the grant of shares of Restricted Stock or the lapse of restrictions is based on the attainment of Performance Goals, the Committee shall establish the Performance Goals and the applicable vesting percentage of the Restricted Stock Award applicable to each Participant or class of Participants in writing prior to the beginning of the applicable fiscal year or at such later
date as otherwise determined by the Committee and while the outcome of the Performance Goals are substantially uncertain.  Such Performance Goals may incorporate provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances.  With regard to a Restricted Stock Award that is intended to comply with Section 162(m) of the Code, to the extent any such
provision would create impermissible discretion under Section 162(m) of the Code or otherwise violate Section 162(m) of the Code, such provision shall be of no force or effect.  The applicable Performance Goals shall be based on one or more of the Performance Criteria set forth in Exhibit A hereto.

 

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

 

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

 

   (d) Detrimental Activity.  Unless
otherwise determined by the Committee at grant, each Award of Restricted Stock shall provide that in the event the Participant engages in Detrimental Activity prior to, or during the one year period following the later of Termination of Employment or any vesting of Restricted Stock, the Committee may direct (at any time within one year thereafter) that all unvested Restricted Stock shall be immediately forfeited to the 

 

 

23

 

 

Company and that the Participant shall pay over to the Company an amount equal to the gain realized at the time of vesting of any Restricted Stock.

 

 

ARTICLE IX

 

PERFORMANCE SHARES

 

9.1 Award of Performance Shares.  Performance Shares
may be awarded either alone or in addition to other Awards granted under this Plan.  The Committee shall, in its sole discretion, determine the Eligible Employees and Consultants to whom and the time or times at which such Performance Shares shall be awarded, the duration of the period (the "Performance Period") during which, and the conditions under which, a Participant's right to Performance Shares will be vested and the other terms and conditions of the Award in addition to those set forth in Section
9.2.

 

    Each Performance Share awarded shall be referenced to one share of Common Stock.  Except as otherwise provided herein, the Committee shall condition the right to payment of any Performance Share Award upon the attainment of objective Performance Goals established pursuant to Section 9.2(c) below and
such other non-performance based factors or criteria as the Committee may determine in its sole discretion.

 

9.2 Terms and Conditions.  A Participant selected to
receive Performance Shares shall not have any rights with respect to such Awards, unless and until such Participant has delivered a fully executed copy of a Performance Share Award agreement evidencing the Award to the Company and has otherwise complied with the following terms and conditions:

 

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

 

    (b) Payment.  Following
the Committee's determination in accordance with subsection (a) above, shares of Common Stock or, as determined by the Committee in its sole discretion, the cash equivalent of such shares shall be delivered to the Participant, in an amount equal to such Participant's earned Performance Share Award.  Notwithstanding the foregoing, except as may be set forth in the agreement covering the Award, the Committee may, in its sole discretion and in accordance with Section 162(m) of the Code, award an amount
less than the earned Performance Share Award and/or subject the payment of all or part of any Performance Share Award to additional vesting and forfeiture conditions as it deems appropriate.

 

   (c) Objective Performance Goals,
Formulae or Standards.  The Committee shall establish the objective Performance Goals for the earning of Performance Shares based on a Performance Period applicable to each Participant or class of Participants in writing prior to the beginning of the applicable 

 

 

24

 

 

Performance Period or at such later date as permitted under Section 162(m) of the Code and while the outcome of the Performance Goals are substantially uncertain.  Such Performance Goals may incorporate, if and only to the extent permitted under Section 162(m) of the Code, provisions for disregarding (or adjusting for)
changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances.  To the extent any such provision would create impermissible discretion under Section 162(m) of the Code or otherwise violate Section 162(m) of the Code, such provision shall be of no force or effect.  The applicable Performance Goals shall be based on one or more of the Performance Criteria set forth in Exhibit A hereto.

 

    (d) Dividends and Other
Distributions.  At the time of any Award of Performance Shares, the Committee may, in its sole discretion, award an Eligible Employee or Consultant the right to receive the cash value of any dividends and other distributions that would have been received as though the Eligible Employee or Consultant had held each share of Common Stock referenced by the earned Performance Share Award from the last day of the first year
of the Performance Period until the actual distribution to such Participant of the related share of Common Stock or cash value thereof.  Such amounts, if awarded, shall be paid to the Participant as and when the shares of Common Stock or cash value thereof are distributed to such Participant and, at the discretion of the Committee, may be paid with interest from the first day of the second year of the Performance Period until such amounts and any earnings thereon are distributed.  The applicable
rate of interest shall be determined by the Committee in its sole discretion; provided, however, that for each fiscal year or part thereof, the applicable interest rate shall not be greater than a rate equal to the four-year U.S. Government Treasury rate on the first day of each applicable fiscal year.

 

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

 

 

ARTICLE X

 

CASH INCENTIVE AWARDS AND PERFORMANCE UNITS

  

10.1 Cash Incentive Awards.  Cash incentive Awards may
be awarded either alone or in addition to other Awards granted under this Plan.  The Committee shall, in its sole discretion, determine the Eligible Employees and Consultants to whom and the time or times at which such cash incentive Awards shall be awarded, the duration of the period 

 

 

25

 

 

(the "Performance Cycle") during which, and the conditions under which, a Participant shall earn the cash incentive Award and the other terms and conditions of the Award in addition to those set forth in Section 10.3.  Cash incentive Awards granted with a Performance Cycle of one year shall be designated as “Annual Incentive Awards.”

 

    Cash incentive Awards shall be awarded in a dollar amount or a formula that will ultimately yield a dollar amount, as determined by the Committee.  Except as otherwise provided herein, the Committee shall condition the right to payment of any cash
incentive Award upon the attainment of at least one objective Performance Goal established pursuant to Section 10.3(a) and such other factors or criteria as the Committee may determine in its sole discretion.

 

    Cash incentive Awards under this Section 10.1 may be settled and paid only if stockholders of the Company previously have approved the amendment and restatement of the Plan containing the authorization of cash incentive Awards in this Section 10.1.

 

10.2 Awards of Performance Units.  Performance Units
may be awarded either alone or in addition to other Awards granted under this Plan.  The Committee shall, in its sole discretion, determine the Eligible Employees and Consultants to whom and the time or times at which such Performance Units shall be awarded, the duration of the period (the "Performance Unit Cycle") during which, and the conditions under which, a Participant's right to Performance Units will be vested and the other terms and conditions of the Award in addition to those set forth in Section
10.3.

 

    Performance Units shall be awarded in a dollar amount determined by the Committee and shall be converted for purposes of calculating growth in value to a referenced number of shares of Common Stock based on the Fair Market Value of shares of Common Stock at the close of trading on the first business day following the announcement
of the annual financial results of the Company for the fiscal year of the Company immediately preceding the fiscal year of the commencement of the relevant Performance Unit Cycle, provided that the Committee may provide that the minimum price for such conversion shall be the Fair Market Value on the date of grant.

 

    Each Performance Unit shall be referenced to one share of Common Stock.  Except as otherwise provided herein, the Committee shall condition the right to payment of any Performance Unit Award upon the attainment of objective Performance Goals established pursuant to Section 10.3(a) and such other non-performance based factors
or criteria as the Committee may determine in its sole discretion.  The cash value of any fractional Performance Unit Award subsequent to conversion to shares of Common Stock shall be treated as a dividend or other distribution under Section 10.3(e) to the extent any portion of the Performance Unit Award is earned.

 

10.3 Terms and Conditions.  The cash incentive Awards
or Performance Units awarded pursuant to this Article 10 shall be subject to the following terms and conditions:

 

 

26

 

 

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

 

   (b) Vesting.  At
the expiration of the Performance Cycle or Performance Unit Cycle, the Committee shall determine and certify in writing the extent to which the Performance Goals have been achieved, and the corresponding extent to which a cash incentive Award or a Performance Unit has been earned in respect of each Participant.

 

    (c) Payment.  Subject
to the applicable provisions of the Award agreement and this Plan, at the expiration of the Performance Cycle or Performance Unit Cycle or any vesting period extending beyond the Performance Cycle or Performance Unit Cycle, cash or, with respect to Performance Units, shares of Common Stock (as the Committee may determine in its sole discretion at grant, or thereafter if no rights of a Participant are reduced), shall be delivered to the Participant in payment of any earned and vested cash incentive Award or any
earned and vested Performance Units covered by the Performance Unit Award.  Notwithstanding the foregoing, except as may be set forth in the agreement covering the Award, the Committee may, in its sole discretion, and to the extent applicable and permitted under Section 162(m) of the Code, award an amount less than the earned cash incentive Award or earned Performance Unit Award and/or subject the payment of all or part of any such Award to additional vesting and forfeiture conditions or conditions
mandating the deferral of settlement of the Award as it deems appropriate.  If an Award is deferred such Award shall not increase (between the date on which the Award is credited to any deferred compensation program applicable to such Participant and the payment date) by an amount that would result in such deferral being deemed as an “increase in the amount of compensation” under Section 162(m) of the Code.

 

   (d) Accelerated Vesting.  Based
on service, performance and/or such other factors or criteria, if any, as the Committee may determine, the Committee may, at or after grant, accelerate the date of earning or vesting of all or any part of any cash incentive Award or Performance Unit Award and/or waive the deferral limitations for all or any part of such Award.

 

 

27

 

 

    (e) Dividends and Other
Distributions.  At the time of any Award of Performance Units, the Committee may, in its sole discretion, award an Eligible Employee or Consultant the right to receive the cash value of any dividends and other distributions that would have been received as though the Eligible Employee or Consultant had held each share of Common Stock referenced by the earned Performance Unit Award from the last day of the first year
of the Performance Cycle or Performance Unit Cycle until the actual distribution to such Participant of the related share of Common Stock or cash value thereof.  Such amounts, if awarded, shall be paid to the Participant as and when the shares of Common Stock or cash value thereof are distributed to such Participant and, at the discretion of the Committee, may be paid with interest from the first day of the second year of the Performance Cycle or Performance Unit Cycle until such amounts and any earnings
thereon are distributed.  The applicable rate of interest shall be determined by the Committee in its sole discretion; provided, however, that for each fiscal year or part thereof, the applicable interest rate shall not be greater than a rate equal to the four-year U.S. Government Treasury rate on the first day of each applicable fiscal year.

 

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

 

 

ARTICLE XI

 

OTHER STOCK-BASED AWARDS

 

11.1 Other Awards.  Other Stock-Based Awards may be
granted either alone or in addition to or in tandem with Stock Options, Stock Appreciation Rights, Restricted Stock, Performance Shares or Performance Units.

 

    Subject to the provisions of this Plan, the Committee shall have authority to determine the persons to whom and the time or times at which such Awards shall be made, the number of shares of Common Stock to be awarded pursuant to such Awards, and all other conditions
of the Awards.  The Committee may also provide for the grant of Common Stock under such Awards upon the completion of a specified performance period.

 

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

 

 

28

 

 

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

 

   (b) Dividends.  Unless
otherwise determined by the Committee at the time of Award, subject to the provisions of the Award agreement and this Plan, the recipient of an Award under this Article XI shall be entitled to receive, currently or on a deferred basis, dividends or dividend equivalents with respect to the number of shares of Common Stock covered by the Award, as determined at the time of the Award by the Committee, in its sole discretion.

 

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

 

    (d) Waiver of Limitation.  The
Committee may, in its sole discretion, waive in whole or in part any or all of the limitations imposed hereunder (if any) with respect to any or all of an Award under this Article XI.

 

    (e) Price.  Common
Stock or Other Stock-Based Awards issued on a bonus basis under this Article XI may be issued for no cash consideration; Common Stock or Other Stock-Based Awards purchased pursuant to a purchase right awarded under this Article XI shall be priced as determined by the Committee.  Subject to Section 4.3, the purchase price of shares of Common Stock or Other Stock-Based Awards may be zero to the extent permitted by applicable law, and, to the extent not so permitted, such purchase price may not be less
than par value.  The purchase of shares of Common Stock or Other Stock-Based Awards may be made on either an after-tax or pre-tax basis, as determined by the Committee; provided, however, that if the purchase is made on a pre-tax basis, such purchase shall be made pursuant to a deferred compensation program established by the Committee, which will be deemed a part of this Plan.

 

    (f) Detrimental Activity.  Other
Stock-Based Awards under this Article XI and any Common Stock covered by any such Award shall be forfeited in the event the Participant engages in Detrimental Activity under such conditions set forth by the Committee in the Award agreement.

 

 

ARTICLE XII

 

NON-TRANSFERABILITY AND TERMINATION

OF EMPLOYMENT/CONSULTANCY

 

12.1 Non-Transferability.  No Stock Option, Stock Appreciation
Right, Performance Unit, Performance Share or Other Stock-Based Award shall be Transferable by the Participant otherwise than by will or by the laws of descent and distribution.  All 

 

 

29

 

 

Stock Options and all Stock Appreciation Rights shall be exercisable, during the Participant's lifetime, only by the Participant.  Tandem Stock Appreciation Rights shall be Transferable, to the extent permitted above, only with the underlying Stock Option.  Shares of Restricted Stock under Article VIII may not be Transferred prior to the date on which shares are
issued, or, if later, the date on which any applicable restriction, performance or deferral period lapses.  No Award shall, except as otherwise specifically provided by law or herein, be Transferable in any manner, and any attempt to Transfer any such Award shall be void, and no such Award shall in any manner be liable for or subject to the debts, contracts, liabilities, engagements or torts of any person who shall be entitled to such Award, nor shall it be subject to attachment or legal process for
or against such person.  Notwithstanding the foregoing, the Committee may determine at the time of grant or thereafter, that a Non-Qualified Stock Option that is otherwise not transferable pursuant to this Section 12.1 is transferable to a Family Member in whole or in part and in such circumstances, and under such conditions, as specified by the Committee.  A Non-Qualified Stock Option that is transferred to a Family Member pursuant to the preceding sentence may not be subsequently transferred
otherwise than by will or by the laws of descent and distribution.

 

12.2 Termination of Employment or Termination of Consultancy.  The
following rules apply with regard to the Termination of Employment or Termination of Consultancy of a Participant:

 

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

 

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

 

       (ii) Involuntary
Termination Without Cause.  If a Participant's Termination of Employment or Termination of Consultancy is by involuntary termination without Cause, all Stock Options and Stock Appreciation Rights held by such Participant may be exercised, to the extent exercisable at Termination of 

 

 

30

 

 

Employment or Termination of Consultancy, by the Participant at any time within a period of 90 days from the date of such Termination of Employment or Termination of Consultancy, but in no event beyond the expiration of the stated term of such Stock Options and Stock Appreciation Rights.

 

        (iii) Voluntary
Termination.  If a Participant's Termination of Employment or Termination of Consultancy is voluntary (other than a voluntary termination described in Section 12.2(a)(iv)(B) below), all Stock Options and Stock Appreciation Rights held by such Participant may be exercised, to the extent exercisable at Termination of Employment or Termination of Consultancy, by the Participant at any time within a period of 30 days from
the date of such Termination of Employment or Termination of Consultancy, but in no event beyond the expiration of the stated terms of such Stock Options and Stock Appreciation Rights.  Notwithstanding the foregoing, effective for Stock Options and Stock Appreciation Rights granted on or after October 19, 2000, if a Participant's Termination of Employment or Termination of Consultancy is voluntary, all Stock Options and Stock Appreciation Rights held by such Participant shall thereupon terminate and
expire as of the date of such Termination of Employment or Termination of Consultancy.

 

       (iv) Termination
for Cause.  If a Participant's Termination of Employment or Termination of Consultancy (A) is for Cause or (B) is a voluntary termination (as provided in subsection (iii) above) within 90 days after an event which would be grounds for a Termination of Employment or Termination of Consultancy for Cause, all Stock Options and Stock Appreciation Rights held by such Participant shall thereupon terminate and expire
as of the date of such Termination of Employment or Termination of Consultancy.

 

    (b) Rules Applicable to
Restricted Stock.  Subject to the applicable provisions of the Restricted Stock Award agreement and this Plan, upon a Participant's Termination of Employment or Termination of Consultancy for any reason during the relevant Restriction Period, all Restricted Stock still subject to restriction will vest or be forfeited in accordance with the terms and conditions established by the Committee at grant or thereafter.

 

    (c) Rules Applicable to
Performance Shares and Performance Units.  Subject to the applicable provisions of the Award agreement and this Plan, upon a Participant's Termination of Employment or Termination of Consultancy for any reason during the Performance Period, the Performance Unit Cycle or other period or restriction as may be applicable for a given Award, the Performance Shares or Performance Units in question will vest (to the extent
applicable and to the extent permissible under Section 162(m) of the Code) or be forfeited in accordance with the terms and conditions established by the Committee at grant or thereafter.

 

   (d) Rules Applicable to Other
Stock-Based Awards.  Subject to the applicable provisions of the Award agreement and this Plan, upon a Participant's 

 

 

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Termination of Employment or Termination of Consultancy for any reason during any period or restriction as may be applicable for a given Award, the Other Stock-Based Awards in question will vest or be forfeited in accordance with the terms and conditions established by the Committee at grant or thereafter.

 

 

ARTICLE XIII

 

NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS

 

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

 

13.2 Grants.  Without further action by the Board or
the stockholders of the Company, each Non-Employee Director shall, subject to the terms of the Plan, be granted:

 

    (a) Stock Options to purchase 4,500 shares of Common Stock as of the date the Non-Employee Director begins service as a Non-Employee Director on the Board
(subject to increase or decrease pursuant to Section 4.2), provided that the Non-Employee Director began service on or after the Effective Date; and

 

    (b) In addition to Stock Options granted pursuant to (a) above, Stock Options to purchase 12,500 shares of Common Stock as of the June 2 of each year
(subject to increase or decrease pursuant to Section 4.2), commencing June 2, 2009, provided he or she has not, as of such day, experienced a Termination of Directorship and provided further that he or she has been a Non-Employee Director for at least six months as of such June 2 date.

 

13.3 Non-Qualified Stock Options.  Stock Options granted
under this Article XIII shall be Non-Qualified Stock Options.

 

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

 

    (a) Stock Option Price.  The
Stock Option price per share of Common Stock purchasable under a Stock Option shall equal 100% of the Fair Market Value of the share of Common Stock at the time of grant.

 

    (b) Stock Option Term.  The
term of each Stock Option granted (i) prior to August 1, 2005 shall be ten (10) years and (ii) on or after August 1, 2005 shall be five (5) years.

 

   (c) Exercisability.  Stock
Options granted to Non-Employee Directors pursuant to Section 13.2 shall vest and become exercisable (i) on the first anniversary of date of grant for Stock Options granted prior to August 1, 2005 and 

 

 

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(ii) in installments over a three (3) year period, commencing on the date of grant for Stock Options granted on or after August 1, 2005, at the rate of 25% effective on the first and second anniversaries of the date of grant and 50% on the third anniversary of the date of grant; provided that in any event the Stock Option may become
vested only during the continuance of his or her service as a director of the Company.

 

    (d) Method of Exercise.  Subject
to whatever waiting period provisions apply under subsection (c) above, Stock Options may be exercised in whole or in part at any time and from time to time during the Stock Option term, by giving written notice of exercise to the Company specifying the number of shares to be purchased.  Such notice shall be accompanied by payment in full of the purchase price as follows:  (i) in cash or by check, bank draft or money order payable to the Company; (ii) to the extent permitted by law,
if the Common Stock is traded on a national securities exchange, through a "cashless exercise" procedure whereby the Participant delivers irrevocable instructions to a broker satisfactory to the Company to deliver promptly to the Company an amount equal to the purchase price; or (iii) such other arrangement for the satisfaction of the purchase price, as the Board may accept.  If and to the extent determined by the Board in its sole discretion at or after grant, payment in full or in part may also
be made in the form of Common Stock owned by the Participant (and for which the Participant has good title free and clear of any liens and encumbrances) based on the Fair Market Value of the Common Stock on the payment date.  No shares of Common Stock shall be issued until payment, as provided herein, therefore has been made or provided for.

 

    (e) Form, Modification,
Extension and Renewal of Stock Options.  Subject to the terms and conditions and within the limitations of the Plan, a Stock Option shall be evidenced by such form of agreement or grant as is approved by the Board, and the Board may modify, extend or renew outstanding Stock Options granted under the Plan (provided that the rights of a Participant are not reduced without his consent).

 

13.5 Termination of Directorship.  The following rules
apply with regard to Stock Options upon the Termination of Directorship:

 

    (a) Termination of Directorship
by Reason of Death, Disability or Otherwise Ceasing to be a Director.  Except as otherwise provided herein, upon the Termination of Directorship by reason of death, Disability, resignation, failure to stand for reelection or failure to be reelected or otherwise, all outstanding Stock Options exercisable and not exercised shall remain exercisable to the extent exercisable on such date of Termination of Directorship by
the Participant or, in the case of death, by the Participant's estate or by the person given authority to exercise such Stock Options by his or her will or by operation of law, at any time prior to the expiration of the stated term of such Stock Option.

 

 

 

33

 

 

    (b) Cancellation of Options.  Except
as provided in Section 13.6, no Stock Options that were not exercisable as of the date of Termination of Directorship shall thereafter become exercisable upon a Termination of Directorship for any reason or no reason whatsoever, and such Stock Options shall terminate and become null and void upon a Termination of Directorship.  If a Non-Employee Director's Termination of Directorship is for Cause, all Stock Options held by the Non-Employee Director shall thereupon terminate and expire as of the date
of termination.

 

13.6 Acceleration of Exercisability.  All Stock Options
granted to a Non-Employee Director and not previously exercisable shall become fully exercisable upon such Director's death, and all Stock Options granted to Non-Employee Directors and not previously exercisable shall become fully exercisable immediately upon a Change in Control (as defined in Section 14.2).

 

13.7 Changes.

 

    (a) The Awards to a Non-Employee Director shall be subject to Sections 4.2(a), (b) and (c) of the Plan and this Section 13.7, but shall not be subject to Section 4.2(d).

 

    (b) If the Company shall not be the surviving corporation in any merger or consolidation, or if the Company is to be dissolved or liquidated, then, unless the surviving corporation
assumes the Stock Options or substitutes new Stock Options which are determined by the Board in its sole discretion to be substantially similar in nature and equivalent in terms and value for Stock Options then outstanding, upon the effective date of such merger, consolidation, liquidation or dissolution, any unexercised Stock Options shall expire without additional compensation to the holder thereof; provided, that, the Board shall deliver notice to each Non-Employee Director at least 30 days prior to the date
of consummation of such merger, consolidation, dissolution or liquidation which would result in the expiration of the Stock Options and during the period from the date on which such notice of termination is delivered to the consummation of the merger, consolidation, dissolution or liquidation, such Participant shall have the right to exercise in full, effective as of such consummation, all Stock Options that are then outstanding (without regard to limitations on exercise otherwise contained in the Stock Options)
but contingent on occurrence of the merger, consolidation, dissolution or liquidation, and, provided that, if the contemplated transaction does not take place within a 90 day period after giving such notice for any reason whatsoever, the notice, accelerated vesting and exercise shall be null and void and, if and when appropriate, new notice shall be given as aforesaid.

 

 

34

 

 

ARTICLE XIV

 

CHANGE IN CONTROL PROVISIONS

 

14.1 Benefits.  In the event of a Change in Control
of the Company, except as otherwise provided by the Committee upon the grant of an Award, the Participant shall be entitled to the following benefits:

 

    (a) Except to the extent provided in the applicable Award agreement, the Participant's employment agreement
with the Company or an Affiliate, as approved by the Committee, or other written agreement approved by the Committee (as such agreement may be amended from time to time), (i) Equity Awards granted and not previously exercisable shall become exercisable upon a Change in Control, (ii) restrictions to which any shares of Restricted Stock granted prior to the Change in Control are subject shall lapse upon a Change in Control, and (iii) the conditions required for vesting of any unvested Performance
Units and/or Performance Shares shall be deemed to be satisfied upon a Change in Control.

 

    (b) The Committee, in its sole discretion, may provide for the purchase of any Stock Option by the Company
or an Affiliate for an amount of cash equal to the excess of the Change in Control Price (as defined below) of the shares of Common Stock covered by such Stock Options, over the aggregate exercise price of such Stock Options.  For purposes of this Section 14.1, Change in Control Price shall mean the higher of (i) the highest price per share of Common Stock paid in any transaction related to a Change in Control of the Company, or (ii) the highest Fair Market Value per share of Common Stock
at any time during the sixty (60) day period preceding a Change in Control.

 

    (c) Notwithstanding anything to the contrary herein, unless the Committee provides otherwise at the time
a Stock Option is granted hereunder or thereafter, no acceleration of exercisability shall occur with respect to such Stock Options if the Committee reasonably determines in good faith, prior to the occurrence of the Change in Control, that the Stock Options shall be honored or assumed, or new rights substituted therefore (each such honored, assumed or substituted stock option hereinafter called an "Alternative Option"), by a Participant's employer (or the parent or a subsidiary of such employer) immediately
following the Change in Control, provided that any such Alternative Option must meet the following criteria:

 

    (i) the Alternative Option must be based on stock which is traded on an established securities market,
or which will be so traded within 30 days of the Change in Control;

 

    (ii) the Alternative Option must provide such Participant with rights and entitlements substantially equivalent
to or better than the rights, 

 

 

35

 

 

terms and conditions applicable under such Stock Option, including, but not limited to, an identical or better exercise schedule; and

 

    (iii) the Alternative Option must have economic value substantially equivalent to the value of such Stock
Option (determined at the time of the Change in Control).

 

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

 

    (d) Notwithstanding anything else herein, the Committee may, in its sole discretion, provide for accelerated
vesting of an Award or accelerated lapsing of restrictions on shares of Restricted Stock at any time.

 

14.2 Change in Control.  A "Change in Control" shall
be deemed to have occurred:

 

    (a) upon any "person" as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than
the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Common Stock of the Company), becoming the owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding securities;

 

    (b) during any period of two (2) consecutive years, individuals who at the beginning of such period constitute
the Board of Directors, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in paragraph (a), (c), or (d) of this section) or a director whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf
of a person other than the Board of Directors of the Company whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board of Directors;

 

    (c) upon a merger or consolidation of the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of 

 

 

36

 

 

the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; provided, however, that a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person (other than those covered by the exceptions in (a) above) acquires
more than 50% of the combined voting power of the Company's then outstanding securities shall not constitute a Change in Control of the Company; or

 

    (d) upon approval by the stockholders of the Company of a plan of complete liquidation of the Company
or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets other than the sale or disposition of all or substantially all of the assets of the Company to a person or persons who beneficially own, directly or indirectly, at least 50% or more of the combined voting power of the outstanding voting securities of the Company at the time of the sale.

 

 

ARTICLE XV

 

TERMINATION OR AMENDMENT OF PLAN

 

      Notwithstanding any other provision of this Plan, the Board or the Committee may at any time, and from time to time, amend, in whole or in part,
any or all of the provisions of this Plan (including any amendment deemed necessary to ensure that the Company may comply with any regulatory requirement referred to in Article XVII), or suspend or terminate it entirely, retroactively or otherwise; provided, however, that, unless otherwise required by law or specifically provided herein, the rights of a Participant with respect to Awards granted prior to such amendment, suspension or termination, may not be impaired without the consent of such Participant and,
provided further, without the approval of the shareholders of the Company in accordance with the laws of the State of Delaware, to the extent required by the applicable provisions of Rule 16b-3 or Section 162(m) of the Code, or, to the extent applicable to Incentive Stock Options, Section 422 of the Code, no amendment may be made which would (i) increase the aggregate number of shares of Common Stock that may be issued under this Plan; (ii) increase the maximum individual Participant limitations for
a fiscal year under Section 4.1(b); (iii) change the classification of employees or Consultants eligible to receive Awards under this Plan; (iv) decrease the minimum option price of any Stock Option or Stock Appreciation Right; (v) extend the maximum option period under Section 6.3; (vi) materially alter the Performance Criteria for the Award of Restricted Stock, Performance Units, Performance Shares or cash incentive Awards as set forth in Exhibit A; or (vii) require stockholder approval
in order for this Plan to continue to comply with the applicable provisions of Section 162(m) of the Code or, to the extent applicable to Incentive Stock Options, Section 422 of the Code.  In no event may this Plan be amended without the approval of the stockholders of the Company in accordance with the applicable laws of the State of Delaware to increase the aggregate number of shares of Common Stock that may be issued under this Plan, decrease the minimum exercise price of any Stock Option or Stock
Appreciation Right, or to make any other amendment that would require stockholder approval under the rules of any exchange or system on which the Company's securities are listed or traded at the request of the Company.

 

 

37

 

 

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

 

 

ARTICLE XVI

 

UNFUNDED PLAN

 

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

 

 

ARTICLE XVII

 

GENERAL PROVISIONS

 

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

 

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

 

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

 

17.3 Right to Employment/Consultancy.  Neither this
Plan nor the grant of any Award hereunder shall give any Participant or other employee or Consultant any right with respect to continuance of employment or Consultancy by the Company or any Affiliate, nor shall they be a limitation in any way on the right of the Company or any Affiliate by which an employee is employed or a Consultant is retained to terminate his employment or Consultancy at any time.

 

 

 

38

 

 

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

 

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

 

17.5 Listing and Other Conditions.

 

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

 

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

 

    (c) Upon termination of any period of suspension under this Section 17.5, any Award affected by such suspension
which shall not then have expired or terminated shall be reinstated as to all shares available before such suspension and as to shares which would otherwise have become available during the period of such suspension, but no such suspension shall extend the term of any Stock Option.

 

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

 

17.7 Construction.  Wherever any words are used in this
Plan in the masculine gender they shall be construed as though they were also used in the feminine 

 

 

39

 

 

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

 

17.8 Other Benefits.  No Award payment under this Plan
shall be deemed compensation for purposes of computing benefits under any retirement plan of the Company or its subsidiaries nor affect any benefits under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation, unless otherwise specifically stated in such other benefit plan.

 

17.9 Costs.  The Company shall bear all expenses included
in administering this Plan, including expenses of issuing Common Stock pursuant to any Awards hereunder.

 

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

 

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

 

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

 

17.13 Section 409A of the Code.  This Plan is intended
to comply with the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in a manner so as to comply therewith.  Notwithstanding anything herein to the contrary, any provision in this Plan that is inconsistent with Section 409A of the Code shall be deemed to be amended to comply with Section 409A of the Code and to the extent such provision cannot be amended to comply therewith, such provision shall be null and void.

 

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

 

 

 

40

 

 

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

 

 

ARTICLE XVIII

 

EFFECTIVE DATE OF PLAN

 

          The Plan was originally adopted by the Board and effective on October 19, 1999, subject to approval by the stockholders
of the Company (which was obtained at the stockholders meeting held on December 14, 1999).  The Plan was thereafter amended and restated in accordance with the requirements of the laws of the State of Delaware.  The Board approved the amendment and restatement of the Plan on October 9, 2006 and such amended and restated plan became effective on October 9, 2006, subject to approval of the provisions of this Plan adding a cash incentive Award and re-approval of the Performance Criteria for performance-based
Equity Awards by the stockholders of the Company in accordance with the requirements of the laws of the State of Delaware or such later date as provided in the adopting resolution.  The stockholders of the Company approved the amendments that were subject to stockholder approval at the stockholder meeting held on December 5, 2006.  A further restatement of the Plan was approved by the Board on December 6, 2007 which incorporated amendments effective on November 9, 2007 (deleting the Plan provision
authorizing the Committee with the authority to buy out previously granted stock options based on terms and conditions established by the Committee) and on December 6, 2007 (increasing the number of shares available for grant of awards under the plan by 850,000).  This restatement was approved by the Board on June 2, 2009 and incorporates amendments effective on June 2, 2009 (changing the date of grant of the annual grants of Stock Options to Non-Employee Directors).

 

 

ARTICLE XIX

 

TERM OF PLAN

 

          No Award shall be granted pursuant to this Plan on or after the tenth anniversary of the date this Plan was initially adopted,
but Awards granted prior to such tenth anniversary may extend beyond that date.  The foregoing notwithstanding, cash incentive Awards may be granted under Section 10.1 until the date of the Annual Meeting of Stockholders in the fifth year after the year in which the amendment and restatement of the Plan that included the authorization of cash incentive Awards was approved by the Company’s stockholders (even if this deadline extends past the date at which other Awards may be granted under the Plan).

 

  

41

  

EXHIBIT A

 

PERFORMANCE CRITERIA

 

          Performance Goals established for purposes of conditioning the grant of an Award of Restricted Stock based on performance
or the vesting of performance-based Awards of Restricted Stock, Performance Units, Performance Shares and/or cash incentive Awards shall be based on one or more of the following performance criteria ("Performance Criteria"): (i) the attainment of certain target levels of, or a specified percentage increase in, revenues, income before income taxes and extraordinary items, net income, income before income tax and stock based compensation expense, earnings before income tax, earnings before interest, taxes,
depreciation and amortization or a combination of any or all of the foregoing; (ii) the attainment of certain target levels of, or a percentage increase in, after-tax or pre-tax profits including, without limitation, that attributable to continuing and/or other operations; (iii) the attainment of certain target levels of, or a specified increase in, operational cash flow; (iv) the achievement of a certain level of, reduction of, or other specified objectives with regard to limiting the level of
increase in, all or a portion of, the Company's bank debt or other long-term or short-term public or private debt or other similar financial obligations of the Company, which may be calculated net of such cash balances and/or other offsets and adjustments as may be established by the Committee; (v) the attainment of target levels of or a specified percentage increase in earnings per share or earnings per share from continuing operations; (vi) the attainment of certain target levels of, or a specified
increase in return on capital employed or return on invested capital; (vii) the attainment of certain target levels of, or a percentage increase in, after-tax or pre-tax return on stockholders' equity; (viii) the attainment of certain target levels of, or a specified increase in, economic value added targets based on a cash flow return on investment formula; (ix) the attainment of certain target levels of or specified increases in the fair market value of the shares of the Company's common stock;
and (x) the growth in the value of an investment in the Company's common stock assuming the reinvestment of dividends.  For purposes of item (i) above, "extraordinary items" shall mean all items of gain, loss or expense for the fiscal year determined to be extraordinary or unusual in nature or infrequent in occurrence or related to a corporate transaction (including, without limitation, a disposition or acquisition) or related to a change in accounting principle, all as determined in accordance
with standards established by Opinion No. 30 of the Accounting Principles Board.  The Committee may specify that specific items of income or expense may be included or excluded from the calculation of achievement of any of the foregoing Performance Criteria.

 

          In addition, such Performance Criteria may be based upon the attainment of specified levels of Company (or subsidiary, division
or other operational unit of the Company) performance under one or more of the measures described above relative to the performance of other corporations.  To the extent permitted under Code Section 162(m), but only to the extent permitted under Code Section 162(m) (including, without limitation, compliance with any requirements for stockholder approval), the Committee may:  (i) designate additional business criteria on which the Performance Criteria may be based or (ii) adjust,
modify or amend the aforementioned business criteria.

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