Document:

Exhibit 10.1

 

METHODE ELECTRONICS, INC. 2010 CASH INCENTIVE PLAN

 

1.                                      Preamble.

 

Methode
Electronics, Inc., a Delaware corporation (the “Company”), hereby
establishes the Methode Electronics, Inc. 2010 Cash Incentive Plan (the “Plan”) as an incentive for selected
officers and key employees of the Company to improve corporate performance by
providing each participating officer and other selected key employees with an
opportunity to receive a cash incentive payment based upon the accomplishment of
certain performance criteria.

 

2.                                      Definitions and Rules of Construction.

 

2.01           Definitions.

 

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

 

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

 

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

 

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

 

(e)           “Cause” means:

 

(i)                                     Participant’s conviction of a felony;

 

(ii)                                  Participant’s commission of any act or acts of personal dishonesty
intended to result in substantial personal enrichment to Participant to the
detriment of the Company;

 

(iii)                               repeated violations of Participant’s responsibilities which are
demonstrably willful and deliberate, provided that such violations have
continued more than ten (10) days after the Board of Directors of the
Company has given written notice of such violations and of its intention to
terminate Participant’s employment because of such violations;

 

(iv)                              any willful misconduct by the Participant which affects the business
reputation of the Company;

 

(v)                                 breach by the Participant of any provision of any employment, consulting,
advisory, nondisclosure, non-competition or other similar agreement between the
Participant and the Company or any Affiliate or Subsidiary; or

 

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

 

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

 

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

 

(i)                                     the date any one “person” or more than one person acting as a “group” (as
such terms as used in the Securities Exchange Act of 1934, as amended) acquires
(or has acquired during the twelve (12) month period ending on the date of the
most recent acquisition by such person(s)) ownership of stock of the Company
possessing 30% or more of the total voting power of the stock of the Company;

 

(ii)                                  the date a majority of the members of the Company’s Board of Directors is
replaced during any twelve (12) month period by directors whose appointment or
election is not endorsed by a majority of the Company’s Board of Directors
before the date of the appointment or election; or

 

(iii)                               the date any one “person” or more than one person acting as a “group” (as
such terms as used in the Securities Exchange Act of 1934, as amended) acquires
ownership of stock of the Company that, together with stock held by such person
or group, constitutes more than 50% percent of the fair market value or total
voting power of the stock of the Company.

 

Notwithstanding
the foregoing, however, in any circumstance or transaction in which
compensation resulting from or in respect of an Award would result in the
imposition of an additional tax under Section 409A of the Code if the
foregoing definition of “Change of Control” were to apply, but would not result
in the imposition of any additional tax if the term “Change of Control” were
defined herein to mean a “change in control event” within the meaning of
Treasury Regulation Section  1.409A-3(i)(5), then “Change of Control”
shall mean a “change in control event” within the meaning of Treasury
Regulation Section 1.409A-3(i)(5), but only to the extent necessary to
prevent such compensation from becoming subject to an additional tax under Section 409A
of the Code.

 

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

 

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

 

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

 

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

 

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

 

(l)            “Plan” means the Methode Electronics, Inc.
2010 Cash Incentive Plan, as set forth herein and from time to time amended.

 

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

 

2.02           Rules of
Construction.

 

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

 

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

 

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

 

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

 

(e)           Conformity with Section 409A. 
Awards under the Plan are intended to comply with Section 409A of
the Code or an exception to Section 409A of the Code, and all provisions
of the Plan shall be construed in conformity with this intention.  To the extent required by Section 409A
of the Code, any reference to “termination of employment,” “discharge,” “resignation,”
or “retirement” shall not be sufficient to 

 

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constitute
a payment event for purposes of Section 409A of the Code unless such event
also constitutes a “separation from service” within the meaning of Section 409A
of the Code.

 

If
a Participant is a “specified employee” within the meaning of Section 409A
of the Code (and as applied according to procedures of the Company and its
Affiliates) as of the Participant’s separation from service, to the extent any
payment under this Plan constitutes deferred compensation within the meaning of
Section 409A of the Code (after taking into account any applicable
exemptions from Section 409A of the Code) that is payable upon a
separation from service, then, to the extent required by Section 409A of
the Code, no payments due under this Plan may be made until the earlier of: (i) the
first day of the seventh month following the Participant’s separation from
service, or (ii) the Participant’s date of death; provided, however, that
any payments delayed during this six-month period shall be paid in the
aggregate in a lump sum, on the first day of the seventh month following the
Participant’s separation from service.

 

Notwithstanding
any provision of the Plan or any agreement evidencing an Award to the contrary,
in the event that the Committee determines that any Award may not or does not
comply with Section 409A of the Code, the Board of Directors or the
Committee may adopt such amendments to the Plan and the agreement evidencing
the affected Award (without Participant consent) or adopt other policies and
procedures (including amendments, policies and procedures with retroactive
effect), or take any other actions, that the Committee or Board of Directors,
as applicable, determines are necessary or appropriate to comply with the
requirements of Section 409A of the Code. 
If this Plan or an Award fails to meet the requirements of Section 409A
of the Code, neither the Company nor any of its Affiliates shall have any
liability for any tax penalty or interest imposed on a Participant by Section 409A
of the Code, and the Participant shall have no recourse against the Company or
any of its Affiliates for payment of any such tax, penalty, or interest imposed
by Section 409A of the Code.

 

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

 

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

 

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

 

3.                                      Administration.

 

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

 

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(a)           to construe and interpret the Plan;

 

(b)           to establish, amend and rescind appropriate rules and
regulations relating to the Plan;

 

(c)           subject to the terms of the Plan, to select
the individuals who will receive Awards, the times when they will receive them,
the form of agreements which evidence such Awards, the amount of such Award,
the performance targets to be achieved to receive payment of the Award, the
expiration date applicable to each Award and other terms, provisions and
restrictions of the Awards (which need not be identical) and subject to Section 14
hereof, to amend or modify any of the terms of outstanding Awards;

 

(d)           to contest on behalf of the Company or
Participants, at the expense of the Company, any ruling or decision on any
matter relating to the Plan or to any Awards; and

 

(e)           generally, to administer the Plan, and to take
all such steps and make all such determinations in connection with the Plan and
the Awards granted thereunder as it may deem necessary or advisable.

 

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

 

4.                                      Eligible Participants.

 

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

 

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

 

Subject
to the terms of the Plan, the Committee, in its discretion, may make the grant
or vesting of an Award to a “covered employee” (as defined in Section 162(m) of
the Code and the regulations thereunder), or any other Participant who is a key
employee of the Company or a Subsidiary and is identified as a covered employee
in the agreement evidencing the Award, subject to performance criteria (a “162(m) Award”).  All 162(m) Awards shall be granted by
the Committee when composed of two or more outside directors, as prescribed by Section 162(m) of
the Code and the regulations thereunder. 
The Committee shall certify that the performance goals and other
material terms have been satisfied before payment of a 162(m) Award is
made.  All 162(m) Awards shall be
paid solely on account of the attainment of one or more pre-established,
objective performance goals, which goals shall be established on a timely
basis, in conformity with the timing requirements of Section 162(m) of
the Code.  Notwithstanding any provision
of the Plan to the contrary, the Committee shall not have discretion to waive
or amend such performance goals or to increase the amount payable pursuant to a
162(m) Award after the 

 

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performance
goals have been established; provided, however, the Committee may, in its sole
discretion, reduce the amount that would otherwise be payable with respect to
any 162(m) Award; and provided further that the Committee shall have the
authority, to the extent consistent with the “qualified performance-based
compensation” exception of Section 162(m) of the Code and Treasury
Regulation Section 1.162-27(e), to make equitable adjustments to the
performance goals in recognition of unusual or nonrecurring events affecting
the Company or any Subsidiary or the financial statements of the Company or any
Subsidiary in response to changes in applicable laws or regulations, or to
account for items of gain, loss or expense determined to be extraordinary or
unusual in nature or infrequent in occurrence or related to the disposal of a
segment of a business or related to a change in accounting principles.

 

Permissible
performance goals include any one of the following or combination thereof which
may be applicable on a Company-wide basis and/or with respect to operating units,
divisions, subsidiaries, acquired businesses, minority investments,
partnerships or joint ventures:

 

(a)           meeting specific targets for or growth in:

 

(1)                                 stock price,

(2)                                 net sales (dollars or volume),

(3)                                 cash flow,

(4)                                 operating income,

(5)                                 net income,

(6)                                 earnings per share,

(7)                                 earnings before taxes,

(8)                                 earnings before interest and taxes,

(9)                                 earnings before interest, taxes, depreciation
and amortization (EBITDA),

(10)                          internal enterprise value (the product of the
last twelve (12) months EBITDA times the “historic multiple of EBITDA” adjusted
for cash, short-term investments on hand, debt and preferred stock at the end
of the measurement period.  The “historic multiple of EBITDA” is
determined by dividing (i) the product of the average price per share of
Common Stock for the year of measurement (adjusted for cash, short-term
investments on hand, debt and preferred stock at the end of the measurement
period) times the average number of shares of Common Stock outstanding during
the year of measurement, by (ii) the actual EBITDA for the corresponding
year.  Internal enterprise value can be
based on a gross value or a per share of Common Stock basis), or

(11)                          external enterprise value (the fair market
value per share of Common Stock as determined by a bona fide offer for the
purchase of the Company’s Common Stock outstanding (including any stock
equivalents convertible to Common Stock));

 

(b)           return on:

 

(1)                                 net sales,

 

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(2)                                 assets or net assets, or

(3)                                 invested capital;

 

(c)           management of:

 

(1)                                 working capital,

(2)                                 expenses,

(3)                                 cash flow,

(4)                                 debt or debt service, or

(5)                                 leverage;

 

(d)           meeting specific targets for or growth in:

 

(1)                                 productivity,

(2)                                 specified product lines,

(3)                                 market share,

(4)                                 product development,

(5)                                 customer service or satisfaction,

(6)                                 employee satisfaction,

(7)                                 strategic innovation, or

(8)                                 acquisitions;

 

(e)           specific personal performance improvement
objectives relative to:

 

(1)                                 formal education,

(2)                                 executive training,

(3)                                 leadership training; or

(4)                                 succession planning;

 

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

 

The
material terms of this Plan shall be disclosed and approved by stockholders
prior to payment of any 162(m) Award, in conformity with the requirements
under Section 162(m) of the Code. 
Subject to such deferral and/or other conditions as may be permitted or
required by the Committee, cash amounts earned under an award will be paid or
distributed as soon as practicable following the Committee’s determination and
certification of such amounts.  Unless
such a 162(m) Award is properly deferred under Section 9, all 162(m) Awards
shall be paid to the Participant within two and one-half (2 1⁄2) months after the
end of the Company’s or the Participant’s taxable year in which the Participant
became entitled to the payment of the 162(m) Award.  Notwithstanding anything to the contrary
contained herein, no Participant may earn more than two (2) times his or
her annual base salary at the beginning of the applicable performance period
pursuant to an Award made under the Plan, except that Tandem Cash Awards shall
be subject to a different limitation.  A
Tandem Cash Award is an Award made under this Plan which Award is made at the
same time as a restricted stock award. 
Tandem Cash Awards shall have a maximum value of 50% of the aggregate
fair market value as of the vesting date of the tandem restricted stock
award.  Both a Tandem Cash Award and an
award that is not a Tandem Cash Award subject to the dollar limitation listed
above may be made in the same 

 

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calendar
year.  Any 162(m) Award that fails
to meet the requirements under this Section 5 or the requirements under Section 162(m) and
its regulations shall not be nullified or voided.  Instead, the Company may delay payment of
such a 162(m) Award until the first date on which the Company anticipates
or reasonably should anticipate that, if the payment were made on such date,
the deduction with respect to such payment would no longer be restricted due to
the application of Section 162(m) of the Code.

 

6.                                      Terms and Conditions of Cash Incentive Awards.

 

The
Committee may, in its discretion, grant an Award to any Participant under the
Plan.  Each Award shall be evidenced by
an agreement between the Company and the Participant.  Such Award shall specify a performance period
and performance criteria that must be satisfied in order for a payment to be
made.  Such performance criteria may (but
need not) include the goals itemized in Section 5 above.  The Award agreement shall specify the amount
to be paid (or formula for determining the payment amount), the payment
schedule for such Award, the expiration of such Award, and such other
information necessary or desirable for the proper administration of such
Award.  Unless such Award is properly
deferred under Section 9, all Awards shall be paid to the Participant
within two and one-half (2 1⁄2) months after the end of the Company’s or the
Participant’s taxable year in which the Participant became entitled to the
Award payment.

 

7.                                      Acceleration of Payment.

 

Notwithstanding
the above schedule, unless otherwise determined by the Committee and set forth
in the agreement evidencing an Award, payment of a Participant’s Awards shall
accelerate if a Participant’s employment with the Company and its Subsidiaries
and Affiliates or service on the board of directors of the Company, a
Subsidiary or an Affiliate is terminated due to: (i) retirement on or
after such Participant’s sixty-fifth birthday; (ii) retirement on or after
such Participant’s fifty-fifth birthday with consent of the Company; (iii) retirement
at any age on account of disability within the meaning of Treasury Regulation Section 1.409A-3(i)(4);
or (iv) death.  Any such payment
shall be made within thirty (30) days following such retirement or death and
shall be pro rated based on the performance to the date of retirement or death,
as applicable.  The proration shall be
based upon the method set forth in the agreements evidencing the applicable
Awards, or if no method is specified, based upon the total number of days
during the performance period prior to the date of retirement or death, as
applicable, in relation to the total number of days during the performance
period.

 

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

 

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8.                                      Effect of Change of Control.

 

Unless
otherwise determined by the Committee and set forth in the agreement evidencing
an Award, immediately following a Change of Control, payment of any outstanding
Award shall be accelerated and paid within thirty (30) days following such
Change of Control.  Payment of an Award
shall be pro rated based on the performance to the date of the Change of
Control.  The proration shall be based
upon the method set forth in the agreements evidencing the applicable Awards,
or if no method is specified, based upon the total number of days during the
performance period prior to the Change of Control in relation to the total
number of days during the performance period.

 

Payment
of an Award subject to performance criteria shall be made on a pro rata basis,
based on performance to date and on the total number of days during the
performance period before the Change of Control in relation to the entire
performance period.

 

9.                                      Deferrals.

 

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

 

(a)           a deferral may be made for any amount of time,
if the election is received by the Committee no later than the calendar year
prior to the date of the grant of the applicable Award;

 

(b)           a deferral may be made no later than twelve
(12) months before the portion of the Award vests, but payment must be deferred
for at least five (5) years from the original payment date;

 

(c)           a Participant who first becomes eligible to
participate in the Plan (or any other plan subject to the aggregation rules under
Section 409A of the Code) may make a deferral for any amount of time, but
such deferral must be made within the first thirty (30) days in which the
Participant becomes eligible to participate and the deferral may only apply to compensation
earned after the election is made;

 

(d)           a deferral may be made for any amount of time,
but

 

(1)                                 such election must be made within thirty (30)
days of the grant;

 

(2)                                 such election may only apply with respect to
the portion of the Award whose vesting is contingent on the Participant
performing services for at least an additional twelve (12) months from the date
of election; and

 

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

 

(e)           a deferral may be made for any amount of time
up until six (6) months before the Award vests if the Award is for
performance-based compensation (as 

 

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determined
under Section 409A of the Code) measured over a period of at least twelve
(12) months and either

 

(1)                                 the amount of the compensation cannot be
reasonably ascertained at the time of the election, or

 

(2)                                 the performance requirement is still not
substantially certain to be met at the time of the election.

 

Notwithstanding
any other provision of this Plan, a deferred Award shall be accelerated and
paid out upon a Participant’s separation from service as defined in Section 409A
of the Code or death, except that a Participant who is a “specified employee”
under Section 409A of the Code shall have the payment of such Participant’s
deferred Award delayed for an additional six (6) months after his
separation from service to the extent required to comply with Section 409A
of the Code.

 

10.                               Nontransferability of Awards.

 

All
Awards granted pursuant to this Plan are transferable by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Code, or in the Committee’s discretion after vesting.  With the approval of the Committee, a
Participant may transfer an Award for no consideration to or for the benefit of
one or more Family Members of the Participant subject to such limits as the
Committee may establish, and the transferee shall remain subject to all the
terms and conditions applicable to the Award prior to such transfer.  The transfer of an Award pursuant to this Section 10
shall include a transfer of the right set forth in Section 14 hereof to
consent to an amendment or revision of the Plan and, in the discretion of the
Committee, shall also include transfer of ancillary rights associated with the
Award.

 

11.                               Withholding Taxes.

 

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

 

12.                               No Right to Employment.

 

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

 

13.                               Funding.

 

No
provision of the Plan shall require the Company, for the purpose of satisfying
any obligations under the Plan, to purchase assets or place any assets in a
trust or other entity to which contributions are made or otherwise to segregate
any assets in a manner that would provide any Participant any rights that are
greater than those of a general creditor of the Company, nor shall the Company
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund if such

 

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action
would provide any Participant with any rights that are greater than those of a
general creditor of the Company. 
Participants shall have no rights under the Plan other than as unsecured
general creditors of the Company except that insofar as they may have become
entitled to payment of additional compensation by performance of services, they
shall have the same rights as other employees under applicable law.  However, the Company may establish a “Rabbi
Trust” for purposes of securing the payment pursuant to or following a Change
of Control provided the funding of such trust does not violate Section 409A(b)(3) of
the Code.

 

14.                               Amendment of the Plan.

 

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

 

15.                               Forfeiture; Clawback.

 

The
Committee may, in its sole discretion, specify in the applicable agreement
evidencing an Award that any realized gain with respect to options or stock
appreciation rights and any realized value with respect to other Awards shall
be subject to forfeiture or clawback, in the event of (i) a Participant’s
breach of any non-competition, non-solicitation, confidentiality or other
restrictive covenants with respect to the Company or any of its Affiliates or (ii) a
financial restatement that reduces the amount of bonus or incentive
compensation previously awarded to a Participant that would have been earned
had results been properly reported.

 

16.                               Effective Date and Termination of Plan.

 

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

 

(b)           Termination of the Plan.  The Plan
will terminate five (5) years after the date it is approved by the Board
of Directors; provided, however, that the Board of Directors may terminate the
Plan at any time prior thereto. 
Termination of the Plan will not affect the rights and obligations of
any Participant with respect to Awards granted before termination.

 

A-11Exhibit 10.2

 

METHODE ELECTRONICS, INC. 2010 STOCK PLAN

 

1.                                      Preamble.

 

Methode
Electronics, Inc., a Delaware corporation (the “Company”), hereby
establishes the Methode Electronics, Inc. 2010 Stock Plan (the “Plan”) as a means whereby the Company may,
through awards of (i) incentive stock options (“ISOs”) within the meaning
of Section 422 of the Code, (ii) non-qualified stock options (“NSOs”),
(iii) stock appreciation rights (“SARs”), (iv) restricted stock (“Restricted
Stock”); (v) restricted stock units (“Restricted Stock Units”) and (vi) performance
share units (“Performance Share Units”):

 

(a)                                 provide selected officers, directors and key
employees with additional incentive to promote the success of the Company’s
business;

 

(b)                                 encourage such persons to remain in the
service of the Company; and

 

(c)                                  enable such persons to acquire proprietary
interests in the Company.

 

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

 

2.                                      Definitions and Rules of Construction.

 

2.01                                 Definitions.

 

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

 

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

 

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

 

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

 

(e)                                  “Cause” means:

 

(i)                                     Participant’s conviction of a felony;

 

(ii)           Participant’s
commission of any act or acts of personal dishonesty intended to result in
substantial personal enrichment to Participant to the detriment of the Company;

 

B-1

 

(iii)          repeated
violations of Participant’s responsibilities which are demonstrably willful and
deliberate, provided that such violations have continued more than ten (10) days
after the Board of Directors of the Company has given written notice of such
violations and of its intention to terminate Participant’s employment because
of such violations;

 

(iv)          any
willful misconduct by the Participant which affects the business reputation of
the Company;

 

(v)           breach
by the Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or other similar agreement between the
Participant and the Company or any Affiliate or Subsidiary; or

 

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

 

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

 

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

 

(i)                                     the date any one “person” or more than one person acting as a “group” (as
such terms are used in the Exchange Act) acquires (or has acquired during the
twelve (12) month period ending on the date of the most recent acquisition by
such person(s)) ownership of Common Stock possessing 30% or more of the total voting
power of the Common Stock of the Company;

 

(ii)           the
date a majority of the members of the Company’s Board of Directors is replaced
during any twelve (12) month period by directors whose appointment or election
is not endorsed by a majority of the Company’s Board of Directors before the
date of the appointment or election; or

 

(iii)          the
date any one “person” or more than one person acting as a “group” (as such
terms are used in the Exchange Act) acquires ownership of stock of the Company
that, together with stock held by such person or group, constitutes more than
50% of the Fair Market Value or total voting power of the Common Stock of the
Company.

 

Notwithstanding
the foregoing, however, in any circumstance or transaction in which
compensation resulting from or in respect of an Award would result in the
imposition of an additional tax under Section 

 

B-2

 

409A
of the Code if the foregoing definition of “Change of Control” were to apply,
but would not result in the imposition of any additional tax if the term “Change
of Control” were defined herein to mean a “change in control event” within the
meaning of Treasury Regulation Section 1.409A-3(i)(5), then “Change of
Control” shall mean a “change in control event” within the meaning of Treasury
Regulation Section 1.409A-3(i)(5), but only to the extent necessary to
prevent such compensation from becoming subject to an additional tax under Section 409A
of the Code.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

B-3

 

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

 

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

 

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

 

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

 

(t)                                    “Plan” means the Methode Electronics, Inc.
2010 Stock Plan, as set forth herein and from time to time amended.

 

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

 

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

 

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

 

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

 

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

 

(i)                                     the outstanding capital stock, or

 

(ii)           the
combined voting power of all classes of stock.

 

2.02                                 Rules of
Construction.

 

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

 

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

 

B-4

 

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

 

(d)                                 Conformity with Section 162(m).  Any
Awards issued to covered employees (as defined in Section 162(m) of
the Code) with any of the performance criteria listed in Section 6 are
intended to qualify as performance-based compensation under Section 162(m) of
the Code to which the applicable remuneration limits of Section 162(m)(1) of
the Code do not apply, and all provisions of the Plan relating to such Awards
shall be construed in conformity with this intention.

 

(e)                                  Conformity with Section 409A. 
Awards under the Plan are intended to comply with Section 409A of
the Code or an exception to Section 409A of the Code, and all provisions
of the Plan shall be construed in conformity with this intention.  To the extent required by Section 409A
of the Code, any reference to “termination of employment,” “discharge,” “resignation,”
or “retirement” shall not be sufficient to constitute a payment event for
purposes of Section 409A of the Code unless such event also constitutes a “separation
from service” within the meaning of Section 409A of the Code.

 

If
a Participant is a “specified employee” within the meaning of Section 409A
of the Code (and as applied according to procedures of the Company and its
Affiliates) as of the Participant’s separation from service, to the extent any
payment under this Plan constitutes deferred compensation within the meaning of
Code (after taking into account any applicable exemptions from Section 409A
of the Code) that is payable upon a separation from service, then, to the
extent required by Section 409A of the Code, no payments due under this
Plan may be made until the earlier of: (i) the first day of the seventh
month following the Participant’s separation from service, or (ii) the
Participant’s date of death; provided, however, that any payments delayed
during this six-month period shall be paid in the aggregate in a lump sum, on
the first day of the seventh month following the Participant’s separation from
service.

 

Notwithstanding
any provision of the Plan or any agreement evidencing an Award to the contrary,
in the event that the Committee determines that any Award may not or does not
comply with Section 409A of the Code, the Board of Directors or the
Committee may adopt such amendments to the Plan and the agreement evidencing
the affected Award (without Participant consent) or adopt other policies and
procedures (including amendments, policies and procedures with retroactive effect),
or take any other actions, that the Committee or Board of Directors, as
applicable, determines are necessary or appropriate to comply with the
requirements of Section 409A of the Code. 
If this Plan or an Award fails to meet the requirements of Section 409A
of the Code, neither the Company nor any of its Affiliates shall have any
liability for any tax penalty or interest 

 

B-5

 

imposed
on a Participant by Section 409A of the Code, and the Participant shall have
no recourse against the Company or any of its Affiliates for payment of any
such tax, penalty, or interest imposed by Section 409A of the Code.

 

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

 

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

 

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

 

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

 

3.                                      Stock Subject to the Plan.

 

Subject
to adjustment as provided in Section 15 hereof, the aggregate number of
shares of Common Stock for which Awards may be issued under this Plan may not
exceed 2,000,000 shares.  Reserved shares
may be either authorized but unissued shares or treasury shares, in the Board’s
discretion.  If any Award shall
terminate, expire, be cancelled or forfeited as to any number of shares of
Common Stock, new Awards may thereafter be awarded with respect to such
shares.  Notwithstanding the foregoing,
the total number of shares of Common Stock with respect to which Awards may be
granted to any Participant in any calendar year shall not exceed 340,000 shares
(subject to adjustment as provided in Section 15 hereof).

 

4.                                      Administration.

 

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

 

(a)           to construe and interpret the Plan;

 

(b)           to establish, amend and rescind appropriate rules and
regulations relating to the Plan;

 

B-6

 

(c)           subject to the terms of the Plan, to select the
individuals who will receive Awards, the times when they will receive them, the
form of agreements which evidence such Awards, the number of Options,
Restricted Stock, Restricted Stock Units, Performance Share Units and/or SARs
to be subject to each Award, the Option Price, the vesting schedule (including
any performance targets to be achieved in connection with the vesting of any
Award), the expiration date applicable to each Award and other terms,
provisions and restrictions of the Awards (which need not be identical) and
subject to Section 21 hereof, to amend or modify any of the terms of
outstanding Awards provided, however, that except as permitted by Section 15.01,
no outstanding Award may be repriced, whether through cancellation of the Award
and the grant of a new Award, or the amendment of the Award, without the
approval of the stockholders of the Company;

 

(d)           to contest on behalf of the Company or
Participants, at the expense of the Company, any ruling or decision on any
matter relating to the Plan or to any Awards;

 

(e)           generally, to administer the Plan, and to take all
such steps and make all such determinations in connection with the Plan and the
Awards granted thereunder as it may deem necessary or advisable; and

 

(f)            to determine the form in which tax withholding
under Section 18 of this Plan will be made (i.e., cash, Common Stock or a
combination thereof).

 

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

 

5.                                      Eligible Participants.

 

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

 

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

 

Subject
to the terms of the Plan, the Committee, in its discretion, may make the grant
or vesting of an Award to a covered employee (as defined in Section 162(m) of
the Code and the regulations thereunder), or any other Participant who is a key
employee of the Company or a Subsidiary and is identified as a covered employee
in the agreement evidencing the Award, 

 

B-7

 

subject
to performance criteria (a “162(m) Award”).  All 162(m) Awards shall be granted by
the Committee when composed of two or more outside directors, as prescribed by Section 162(m) of
the Code and the regulations thereunder. 
The Committee shall certify that the performance goals and other
material terms have been satisfied before payment of a 162(m) Award is
made.  All 162(m) Awards shall be
paid solely on account of the attainment of one or more pre-established,
objective performance goals, which goals shall be established on a timely
basis, in conformity with the timing requirements of Section 162(m) of
the Code.  Notwithstanding any provision
of the Plan to the contrary, the Committee shall not have discretion to waive
or amend such performance goals or to increase the amount payable pursuant to a
162(m) Award after the performance goals have been established; provided,
however, the Committee may, in its sole discretion, reduce the amount that
would otherwise be payable with respect to any 162(m) Award; and provided
further that the Committee shall have the authority, to the extent consistent
with the “qualified performance-based compensation” exception of Section 162(m) of
the Code and Treasury Regulation Section 1.162-27(e), to make equitable
adjustments to the performance goals in recognition of unusual or nonrecurring
events affecting the Company or any Subsidiary or the financial statements of
the Company or any Subsidiary in response to changes in applicable laws or
regulations, or to account for items of gain, loss or expense determined to be
extraordinary or unusual in nature or infrequent in occurrence or related to
the disposal of a segment of a business or related to a change in accounting
principles.

 

Permissible
performance goals include any one of the following or combination thereof which
may be applicable on a Company-wide basis and/or with respect to operating
units, divisions, subsidiaries, acquired businesses, minority investments,
partnerships or joint ventures:

 

(a)                                 meeting specific targets for or growth in:

 

(1)                                 stock price,

(2)                                 net sales (dollars or volume),

(3)                                 cash flow,

(4)                                 operating income,

(5)                                 net income,

(6)                                 earnings per share,

(7)                                 earnings before taxes,

(8)                                 earnings before interest and taxes,

(9)                                 earnings before interest, taxes, depreciation
and amortization (EBITDA),

(10)                          internal enterprise value (the product of the
last twelve (12) months EBITDA times the “historic multiple of EBITDA” adjusted
for cash, short-term investments, debt and preferred stock on hand at the end
of the measurement period.The “historic multiple of EBITDA” is
determined by dividing (i) the product of the average price per share of
Common Stock for the year of measurement (adjusted for cash, short-term
investments, debt and preferred stock on hand at the end of the measurement
period) times the average number of shares of Common Stock outstanding during
the year of measurement, by (ii) the actual EBITDA for the 

 

B-8

 

corresponding
year.  Internal enterprise value can be
based on a gross value or a per share of Common Stock basis), or

(11)                          external enterprise value (the fair market
value per share of Common Stock as determined by a bona fide offer for the
purchase of the Company’s Common Stock outstanding (including any stock
equivalents convertible to Common Stock));

 

(b)                                 return on:

 

(1)                                 net sales,

(2)                                 assets or net assets, or

(3)                                 invested capital;

 

(c)                                  management of:

 

(1)                                 working capital,

(2)                                 expenses,

(3)                                 cash flow,

(4)                                 debt or debt service, or

(5)                                 leverage;

 

(d)                                 meeting specific targets for or growth in:

 

(1)                                 productivity,

(2)                                 specified product lines,

(3)                                 market share,

(4)                                 product development,

(5)                                 customer service or satisfaction,

(6)                                 employee satisfaction,

(7)                                 strategic innovation, or

(8)                                 acquisitions;

 

(e)                                  specific personal performance improvement
objectives relative to:

 

(1)                                 formal education,

(2)                                 executive training,

(3)                                 leadership training, or

(4)                                 succession planning;

 

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

 

The
material terms of this Plan shall be disclosed and approved by stockholders
prior to payment of any 162(m) Award, in conformity with the requirements
under Section 162(m) of the Code. 
Notwithstanding anything to the contrary contained herein, no
Participant may be granted more than 340,000 shares (subject to adjustment as
provided in Section 15 hereof) in any calendar year pursuant to a 162(m) Award
made under the Plan.  Any 162(m) Award
that fails to meet the requirements under this Section 6 or the
requirements under Section 162(m) and its 

 

B-9

 

regulations
shall not be nullified or voided. 
Instead, the Company may delay payment of such a 162(m) Award until
the first date on which the Company anticipates or reasonably should anticipate
that, if the payment were made on such date, the deduction with respect to such
payment would no longer be restricted due to the application of Section 162(m) of
the Code.

 

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

 

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

 

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

 

(a)                                 the date on which it is forfeited under the
provisions of Sections 13.01 and 13.03;

 

(b)                                 ten (10) years from the Award Date;

 

(c)                                  in the case of a Participant who is an
employee of the Company or a Subsidiary, three (3) months after the
Participant’s termination of employment with the Company and its Subsidiaries
and Affiliates for any reason other than for Cause or death or total and
permanent disability;

 

(d)                                 in the case of a Participant who is a member
of the board of directors of the Company or a Subsidiary or Affiliate, but not
an employee of the Company, a Subsidiary or an Affiliate, three (3) months
after the Participant’s termination as a member of the board for any reason
other than for Cause or death or total and permanent disability;

 

(e)                                  immediately upon the Participant’s termination
of employment with the Company and its Subsidiaries and Affiliates or service
on a board of directors of the Company or a Subsidiary or Affiliate for Cause;

 

(f)                                   twelve (12) months after the Participant’s
death or total and permanent disability; or

 

(g)                                  any other date specified by the Committee when
the NSO is granted.

 

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

 

7.02                                 Option
Price.  At
the time granted, the Committee shall determine the Option Price of any NSO,
which shall be no less than 100% of the Fair Market Value of the Common Stock
subject to the NSO on the Award Date and in the absence of such determination,
the 

 

B-10

 

Option Price shall be
100% of the Fair Market Value of the Common Stock subject to the NSO on the
Award Date.

 

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

 

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

 

8.                                      Terms and Conditions of Incentive Stock Option
Awards.

 

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

 

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

 

(a)                                 the date on which it is forfeited under the
provisions of Section 13.01 and 13.03;

 

(b)                                 ten (10) years from the Award Date,
except as set forth in Section 8.02 below;

 

(c)                                  immediately upon the Participant’s termination
of employment with the Company and its Subsidiaries for Cause;

 

(d)                                 three (3) months after the Participant’s
termination of employment with the Company and its Subsidiaries for any reason
other than for Cause or death or total and permanent disability;

 

(e)                                  twelve (12) months after the Participant’s
death or total and permanent disability; or

 

(f)                                   any other date (within the limits of the Code)
specified by the Committee when the ISO is granted.

 

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

 

8.02                                 Option
Price and Expiration.  The Option Price of any ISO shall be
determined by the Committee at the time an ISO is granted, and shall be no less
than 100% of the Fair Market Value of the Common Stock subject to the ISO on
the Award Date; provided, however,

 

B-11

 

that if an ISO is granted
to a Participant who, immediately before the grant of the ISO, beneficially
owns stock representing more than 10% of the total combined voting power of all
classes of stock of the Company or its parent or subsidiary corporations, the
Option Price shall be at least 110% of the Fair Market Value of the Common
Stock subject to the ISO on the Award Date and in such cases, the exercise
period specified in the Option agreement shall not exceed five (5) years
from the Award Date.

 

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

 

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

 

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

 

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

 

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

 

(a)                                  Restricted Period.  Except as
permitted by Section 16 hereof, shares of Restricted Stock awarded under
this Section 9 may not be sold, assigned, transferred, pledged or
otherwise encumbered before they vest, and Restricted Stock Units may not be
sold, assigned, transferred, pledged, or otherwise encumbered at any time.

 

(b)                                 Vesting.  Unless
otherwise determined by the Committee and set forth in the agreement evidencing
an Award, Awards of Restricted Stock and Restricted Stock Units under this Section 9
shall vest in accordance with Sections 13.01 and 13.03.

 

(c)                                  Certificate Legend for Restricted Stock Awards.  Each
certificate issued in respect of shares of Restricted Stock awarded under this Section 9
shall be registered in the name of the Participant and shall bear the following
(or a similar) legend until such shares have vested:

 

B-12

 

“The
transferability of this certificate and the shares of stock represented hereby
are subject to the terms and conditions (including forfeiture) relating to
Restricted Stock contained in Section 9 of the Methode Electronics, Inc.
2010 Stock Plan and an Agreement
entered into between the registered owner and Methode Electronics, Inc.  Copies of such Plan and Agreement are on file
at the principal office of Methode Electronics, Inc.”

 

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

 

10.                                 Terms and Conditions of Stock Appreciation Right
Awards.

 

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

 

Except
as otherwise determined by the Committee and set forth in the agreement
evidencing an Award, an SAR granted in conjunction with an ISO or NSO shall
terminate on the same date as the related ISO or NSO and shall be exercisable
only if the Fair Market Value of a share of Common Stock exceeds the Option
Price for the related ISO or NSO, and then shall be exercisable to the extent,
and only to the extent, that the related ISO or NSO is exercisable.  The Committee may at the time of granting any
SAR add such additional conditions and limitations to the SAR as it shall deem
advisable, including, but not limited to, limitations on the period or periods
within which the SAR shall be exercisable and the maximum amount of
appreciation to be recognized with regard to such SAR.  Any ISO or NSO or portion thereof which is
surrendered with an SAR shall no longer be exercisable.  An SAR that is not granted in conjunction
with an ISO or NSO shall terminate on such date as is specified by the
Committee in the agreement evidencing the SAR and shall vest in accordance with
Section 13.01 and 13.03.  The
Committee, in its sole discretion, may allow the Company to settle all or part
of the Company’s obligation arising out of the exercise of an SAR by the
payment of cash equal to the 

 

B-13

 

aggregate
Fair Market Value of the shares of Common Stock which the Company would
otherwise be obligated to deliver, less the withholding required under Section 18
hereof.

 

11.                                 Terms and Conditions of Performance Share Unit
Awards.

 

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

 

(a)                                  In the case of an Award of Performance Share
Units, no shares of Common Stock or other property shall be issued at the time
such Award is granted.  Upon the
achievement of specified performance goals, which goals may include (but are
not required to include) the criteria outlined in Section 6 above, shares
of Common Stock shall be issued to the holder of the Performance Share Units
and evidenced in such manner as the Committee may deem appropriate.

 

(b)                                 The Committee may elect in its sole
discretion, without further approval of the stockholders, to pay to the grantee
of any Performance Share Unit Award, in lieu of delivering all or any part of
the Common Stock that would be otherwise delivered to the Participant, a cash
amount equal to the aggregate Fair Market Value of such Common Stock that would
otherwise be delivered, less all amounts as may be required by law to be
withheld in the manner contemplated by Section 18 hereof.

 

12.                                 Manner of Exercise of Options.

 

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

 

(a)                                  two (2) years from the date the ISO was
granted; or

 

B-14

 

(b)                                 one (1) year after the transfer of the
shares of Common Stock to the Participant;

 

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

 

13.                                 Vesting.

 

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

 

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

 

	
  Number of Months

  Since Award Date

  	
   

  	
  Vested

  Percentage

  	
   

  
	
  fewer than 12 months

  	
   

  	
  0

  	
  %

  
	
  at least 12 months, but
  less than 24 months

  	
   

  	
  331/3

  	
  %

  
	
  at least 24 months, but
  less than 36 months

  	
   

  	
  662/3

  	
  %

  
	
  36 months or more

  	
   

  	
  100

  	
  %

  

 

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

 

B-15

 

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

 

13.02          Restricted
Stock, Restricted Stock Units and SARs.  The Committee shall establish the vesting
schedule to apply to any Award of Restricted Stock, Restricted Stock Units or
SARs that is not associated with an ISO or NSO granted under the Plan to a
Participant, and in the absence of such a vesting schedule set forth in the
Agreement evidencing the Award, such Award shall vest in accordance with Section 13.01,
except that no vesting in accordance with Section 13.01 shall operate to
accelerate the time of payment in violation of Section 409A of the Code.

 

13.03          Effect
of “Change of Control.” 
Notwithstanding Sections 13.01 and 13.02 above, except as provided below
and unless otherwise determined by the Committee and set forth in the agreement
evidencing an Award, immediately following a Change of Control, any Award
issued to the Participant shall be fully vested and payment of all Awards shall
be accelerated and paid within thirty (30) days following such Change of
Control.  Payment of an Award subject to
performance criteria shall be pro rated based on the performance from the Award
Date to the date of the Change of Control. 
The proration shall be based upon the method set forth in the agreements
evidencing the applicable Awards, or if no method is specified, based upon the
total number of days during the performance period prior to the Change of
Control in relation to the total number of days during the performance period.

 

14.                                 Deferrals.

 

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

 

(a)                                  a deferral may be made for any amount of time,
if the election is received by the Committee no later than the calendar year
prior to the date of the grant of the applicable Award;

 

(b)                                 a deferral may be made no later than twelve
(12) months before the portion of the Award vests, but payment must be deferred
for at least five (5) years from the original payment date;

 

(c)                                  a Participant who first becomes eligible to
participate in the Plan (or any other plan subject to the aggregation rules under
Section 409A of the Code) may make a deferral for any amount of time, but
such deferral must be made within the first thirty (30) days in which the
Participant becomes eligible to participate and the deferral may only apply to compensation
earned after the election is made;

 

(d)                                 a deferral may be made for any amount of time,
but

 

B-16

 

(1)                                  such election must be made within thirty (30)
days of the grant;

 

(2)                                  such election may only apply with respect to
the portion of the Award whose vesting is contingent on the Participant
performing services for at least an additional twelve (12) months from the date
of election; and

 

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

 

(e)                                  a deferral may be made for any amount of time
up until six (6) months before the Award vests if the Award is for
performance-based compensation (as determined under Section 409A of the
Code) measured over a period of at least twelve (12) months and either

 

(1)                                  the amount of the compensation cannot be
reasonably ascertained at the time of the election, or

 

(2)                                  the performance requirement is still not
substantially certain to be met at the time of the election.

 

Notwithstanding
any other provision of this Plan, a deferred Award shall be accelerated and
paid out upon a Participant’s “separation from service” within the meaning of Section 409A
of the Code or death, except that a Participant who is a “specified employee”
under Section 409A of the Code shall have the payment of such Participant’s
deferred Award delayed for an additional six months after his separation from
service to the extent required by Section 2.02(e).

 

15.                                 Adjustments to Reflect Changes in Capital Structure.

 

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

 

15.02          Cashouts.  Subject to the restrictions set forth in Section 15.03,
in the event of an extraordinary dividend or other distribution, merger,
reorganization, consolidation, combination, sale of assets, split up, exchange,
or spin off, or other extraordinary corporate transaction, the Committee may,
in such manner and to such extent (if any) as it deems 

 

B-17

 

appropriate and
equitable, make provision for a cash payment or for the substitution or
exchange of any or all outstanding Awards for the cash, securities or property
deliverable to the holder of any or all outstanding Awards based upon the
distribution or consideration payable to holders of Common Stock upon or in
respect of such event; provided, however, in each case:

 

(a)                                  that with respect to any ISO no such
adjustment may be made that would cause the Plan to violate Section 422 of
the Code (or any successor provision); and

 

(b)                                 that with respect to any NSO or SAR no such
adjustment may be made that would cause the NSO or SAR to provide for the deferral
of compensation within the meaning of Section 409A of the Code (or any
successor provision).

 

15.03          Repricing
Prohibited.  Except in
connection with a corporate transaction involving the Company (including,
without limitation, any stock dividend, stock split, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination, or exchange of shares), the terms of outstanding Awards
may not be amended to reduce the exercise price of outstanding Options or SARs
or cancel outstanding Options or SARS in exchange for cash, other Awards or
Options or SARs with an exercise price that is less than the exercise price of
the original Options or SARs without stockholder approval.

 

16.                                 Nontransferability of Awards.

 

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

 

16.02          Awards
Other Than ISOs.  All Awards
granted pursuant to this Plan other than ISOs are transferable by will or by
the laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Code, or in the Committee’s discretion after
vesting.  With the approval of the
Committee, a Participant may transfer an Award (other than an ISO) for no
consideration to or for the benefit of one or more Family Members of the Participant
subject to such limits as the Committee may establish, and the transferee shall
remain subject to all the terms and conditions applicable to the Award prior to
such transfer.  The transfer of an Award
pursuant to this Section 16 shall include a transfer of the right set
forth in Section 21 hereof to consent to an amendment or revision of the
Plan and, in the discretion of the Committee, shall also include transfer of
ancillary rights associated with the Award. 
The provisions of this Section 16 shall not apply to any Common
Stock issued pursuant to an Award for which all restrictions have lapsed and is
fully vested.

 

17.                                 Rights as Stockholder.

 

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

 

B-18

 

except
as otherwise determined by the Committee and set forth in the agreement
evidencing such Award.

 

18.                                 Withholding Taxes.

 

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

 

19.                                 No Right to Employment.

 

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

 

20.                                 Funding.

 

Except
as provided with respect to Restricted Stock under Section 9, no provision
of the Plan shall require the Company, for the purpose of satisfying any
obligations under the Plan, to purchase assets or place any assets in a trust
or other entity to which contributions are made or otherwise to segregate any
assets in a manner that would provide any Participant any rights that are
greater than those of a general creditor of the Company, nor shall the Company
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund if such
action would provide any Participant with any rights that are greater than
those of a general creditor of the Company. 
Participants shall have no rights under the Plan other than as unsecured
general creditors of the Company except that insofar as they may have become
entitled to payment of additional compensation by performance of services, they
shall have the same rights as other employees under applicable law.  However, the Company may establish a “Rabbi
Trust” for purposes of securing the payment pursuant to or following a Change
of Control provided the funding of such trust does not violate Section 409A(b)(3) of
the Code.

 

21.                                 Amendment of the Plan.

 

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

 

(a)                                  no amendment may, in the absence of written
consent to the change by the affected Participant (or, if the Participant is
not then living, the affected beneficiary), adversely affect the rights of any
Participant or beneficiary under any Award granted under the Plan prior to the
date such amendment is adopted by the Board; provided, however, no such consent
shall be required if the Committee determines in its sole and absolute
discretion that the amendment or revision (i) is required or advisable in
order for the 

 

B-19

 

Company,
the Plan or the Award to satisfy applicable law, to meet the requirements of
any accounting standard or to avoid any adverse accounting treatment, or (ii) in
connection with any transaction or event described in Section 15, is in
the best interests of the Company or its stockholders.  The Committee may, but need not, take the tax
consequences to affected Participants into consideration in acting under the
preceding sentence;

 

(b)                                 no amendment may increase the limitations on
the number of shares set forth in Section 3, unless any such amendment is
approved by the Company’s stockholders; and

 

(c)                                  no amendment may be made to the provisions of Section 4(c) relating
to repricing unless such amendment is approved by the Company’s stockholders;

 

provided,
however, that adjustments pursuant to Section 15.01 shall not be subject
to the foregoing limitations of this Section 21.

 

22.                                 Conditions Upon Issuance of Shares.

 

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

 

23.                                 Dividends.

 

Unless
otherwise specified in the agreement evidencing an Award, all Restricted Stock
and Restricted Stock Unit Awards shall be entitled to dividends, even if not
vested or the restrictions applicable thereto have not yet lapsed.  For all other Awards (except if specified
otherwise in the agreement evidencing the Award), no dividends shall be paid
unless and until Common Stock is issued under the Award, the Award is fully
vested, and all restrictions upon the Award have lapsed or been waived.  If this Section 23 or the agreement
evidencing an Award allows for the payment of dividends, all noncash dividends
and distributions shall be subject to the same vesting and other restrictions
applicable to the underlying Award.

 

24.                                 Substitution or Assumption of Awards by the
Company.

 

The
Company, from time to time, also may substitute or assume outstanding awards
granted by another company, whether in connection with an acquisition of such
other company or otherwise, by either (i) granting an Award under the Plan
in substitution of such other 

 

B-20

 

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

 

24.01          Participants
Based Outside the United States. 
In order to conform with provisions of local laws and regulations in
foreign countries in which the Company or its Subsidiaries operate, the
Committee may (i) modify the terms and conditions of Awards granted to
Participants employed outside the United States, (ii) establish subplans
with modified exercise procedures and such other modifications as may be
necessary or advisable under the circumstances presented by local laws and
regulations, and (iii) take any action which it deems advisable to obtain,
comply with or otherwise reflect any necessary governmental regulatory
procedures, exemptions or approvals with respect to the Plan or any subplan
established hereunder, provided, however, that the Committee may not make any
subplan that (a) increases the limitations contained in Section 3, (b) increases
the number of shares available under the Plan, as set forth in Section 3;
or (c) causes the Plan to cease to satisfy any conditions under Rule 16b-3
under the Exchange Act or causes the grant of any performance Award to fail to
qualify for an income tax deduction pursuant to Section 162(m) of the
Code.  Subject to the foregoing, the
Committee may amend, modify, administer or terminate such subplans, and
prescribe, amend and rescind rules and regulations relating to such
subplans.

 

24.02          Forfeiture;
Clawback.  The Committee may,
in its sole discretion, specify in the applicable agreement evidencing an Award
that any realized gain with respect to options or stock appreciation rights and
any realized value with respect to other Awards shall be subject to forfeiture
or clawback, in the event of (i) a Participant’s breach of any
non-competition, non-solicitation, confidentiality or other restrictive
covenants with respect to the Company or any of its Affiliates or (ii) a
financial restatement that reduces the amount of bonus or incentive
compensation previously awarded to a Participant that would have been earned
had results been properly reported.

 

25.                                 Effective Date and Termination of Plan.

 

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

 

25.02          Termination
of the Plan.  The Plan will
terminate ten (10) years after the date it is approved by the Board of
Directors; provided, however, that the Board of Directors may terminate the
Plan at any time prior thereto with respect to any shares that are not then
subject to 

 

B-21

 

Awards.  Termination of the Plan will not affect the
rights and obligations of any Participant with respect to Awards granted before
termination.

 

B-22

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